atans1

Posts Tagged ‘agribusiness’

Linking why staple food agribiz is a gd bet & why the 2.5% CPF rate sucks & a constructive, nation-building suggestion

In CPF, Financial competency on 26/06/2014 at 4:32 am

Change in price

So investing in agribiz that are connected with stapled foods makes gd sense and why recent inflation rates should not have surprised

  • 2010 – 2.8%
  • 2011 – 5.2%
  • 2012 – 4.6%
  • 2013 – 2.4%

It’s largely about the rising cost of staples (and oil at around US$100). Tuesday’s BT reported

Last month’s moderation in core inflation was due to lower contributions from food items and services. Food inflation came in slightly lower at 3 per cent in May compared with 3.1 per cent in the previous month, reflecting a smaller increase in non-cooked food prices.

Services inflation edged down to 2.5 per cent from 2.7 per cent in April, as holiday travel costs and health insurance premiums rose more moderately.

But Barclays and CIMB economists believe the reprieve will be short-lived. Said CIMB economist Song Seng Wun: “Services inflation is going to go up as a result of domestic cost pressures – and firms are likely to pass these on to consumers.”

MAS and MTI reiterated that core inflation is projected to “stay elevated” at 2-3 per cent in 2014, while headline inflation is expected to come in at 1.5-2.5 per cent.

So time for govt to increase the basic CPF rate? After all in the not so distant past, one reason it gave for the rate, was that it was above inflation of around 1%.

As to the excuse of low the yield on govt bonds are, well the govt is already paying more than the yield on govt bonds. It knows that cutting the rate would seriously damage its credibility with the 35% swing voters. So increasing the yield by another 0.5% should be considered.

After all Temasek and GIC, as savvy investors, should have been buying agricultural land in the West. The govt can use the profits from these investments to fund an increase to 3%.

 

SCCCI SME Survey proves LKY’s point?

In China, India, Indonesia, Malaysia, Vietnam on 17/08/2013 at 1:41 pm

Indonesia has overtaken China as a preferred investment destination for small and medium-sized enterprises (SMEs), This was a key finding of the Singapore Chinese Chamber of Commerce and Industry (SCCCI) SME Survey 2013, which polled 516 companies in June and July.

Of the 63% SMEs which are venturing into markets abroad, 39.9% favour investing in Malaysia and 28.1% Indonesia, a hair’s breadth more than the 27.2% looking towards China.

One reason given is that as the Chinese economy develops and wages rise, Indonesia could stand to position itself as an undertapped source of low-cost labour. As I blogged here, a few days back, LKY said that SMEs would flee S’pore if FTs were not allowed in by the cattle-truck load: they want cheap labour. The survey indicates that securing cheap labour is all that SMEs care about?

Other Asean-round up news:

Express link to KL

M’sia should talk to billionaire inventor Elon Musk. He wants to build a Hyperloop that would cut travel time between SF and LA to 35 minute. 12 minutes to KL based on the 35 minutes time

http://www.bbc.co.uk/news/technology-23681266

Shrimps

THe US Commerce Department declined to set duties on shrimp imports from Thailand and Indonesia. It has imposed duties on shrimp imports from five nations.

The ruling applies to about US$2bn of shrimp imports, from India, Ecuador, China, Malaysia and Vietnam. The Commerce Department found that those nations had been subsidising their shrimp producers.

Malaysia faces the highest duties of up to 54.5%, the lowest were set for Vietnam which faces duties of up to 7.8%.

A final approval is needed by another government body, the International Trade Commission (ITC), before the duties can take effect, The ITC will consider whether US producers have been threatened by the imports and make its decision in September.

Fighting inflation the Indon way

Bit like the way they fight the haze: wayang all the way.

Indonesia’s central bank held its benchmark interest rate on Thursday and took steps to contain loan expansion to battle inflation without taking any more steam out of slowing economic growth.

Many economists do expect another rate hike later this year but the central bank faces a tricky combination of surging prices, a falling rupiah, a stubborn current account deficit and slowing economic growth.

More bad news for Noble, Olam and Wilmar

In China, Commodities, Logistics on 21/05/2012 at 5:48 am

The FT reports that Chinese importers are requesting trading houses to defer shipments of commodities. Sometimes they have broken agreements by refusing to accept deliveries.

Commodities specifically mentioned are iron ore and thermal coal (Noble’s specialities), cotton (Olam speciality) and soyabeans (Wilmar is world’s boiggest crusher). No wonder the price of these stocks keep weakening.

BTW, until I read below, I didn’t realise Noble is a big player in coffee and cocoa (but revenue is “peanuts” compared to iron ore and energy).

http://seekingalpha.com/article/572831-commodity-trading-firms-bunge-and-noble-offer-investors-good-value

What a sick joke on Olam

In Commodities on 16/05/2012 at 3:12 pm

Stock has collapsed today because analysts warned of cuts to full-year estimates after the commodity trader reported disappointing earnings  (Q3 net profit falls 22.5%  to S$98.7 million) and warned of a weak outlook.

The sick joke is that 0ut of 24 analysts tracking Olam, 18 had a buy or strong buy rating, four rated it a hold and only two had a sell rating, according to Thomson Reuters data as of Tuesday (yesterday).

Felda’s cornerstone investor: Louis Dreyfus

In Commodities on 15/05/2012 at 10:34 am

Commodities group Louis Dreyfus has agreed to take a minority stake in Malaysian palm oil firm Felda, it said on Monday, conditional on a successful June stock market float for Felda. The amount could be US$150m.

http://www.reuters.com/article/2012/05/14/us-dreyfus-felda-idUSBRE84D0XG20120514

Louis Dreyfus Commodities told FT it was planning to take part in the wave of consolidation among agribusinesses, unveiling a US$7bn warchest, underpinned by cashflow and the trader’s first access to capital markets in its 160-year history. It is likely to raise US$500m in bonds soon.

The farm commodities trading giant, which earlier this month agreed to buy US sugar refiner Imperial Sugar for US$203m including debt, said it was to spend US$7bn building assets and buying companies, following investment of $4.9bn in the 2006-11 timespan.

It plans to move from middleman to a vertically integrated trading house: like Wilmar. Seems to be the fashion. Olam is doing this too.

Update on !7 May 2012:

Fidelity and Hong Kong-based Value Partners Group have agreed to become cornerstone investors of Felda Global Ventures Holdings’ US$3.3 billion (S$4.2 billion) initial public offering (IPO) in Malaysia, the Edge daily reported yesterday, citing unnamed financial executives involved in the listing.

Other cornerstone investors include Malaysian tycoons Quek Leng Chan and Chua Ma Yu, pension fund Employees Provident Fund and state-owned asset manager Permodalan Nasional, the report cited the executives as saying.

Value in investing in agribusiness here?

In Uncategorized on 09/05/2010 at 11:59 am

“You can get into vegetable or meat, but because of the land scarcity issue, and because we’re surrounded by the sea, I strongly felt fishery was the best business to get into.

Mr Cheng focuses on groupers – a fish he says offers the best returns – importing them as babies from Indonesia and Malaysia for just over a dollar each.

He then grows them for 12 to 18 months before selling them for $15 per kg – about the weight of one fish”.

“The growth rate of groupers is slower than the rest, which means you have to invest a lot more, so most farmers choose not to grow them,” he says.

“The fish is high in demand, but there is less supply, so the prices will always be high. In 2008, it reached almost $20 per kilogram.

“I reckon the price will go higher because as Asians, as Chinese, we always believe that grouper is a lucky fish.”

Singapore currently produces less than 5% of the food it consumes.

… the government wants to encourage entrepreneurs … to venture into farming so that the country can be more self-sufficient.

Goals set out by the Agri-Food and Veterinary Authority of Singapore include raising local production of fish to meet 15% of domestic demand from the current 4%.

Eggs and leafy vegetables are among other foods on its target list for production growth.

To meet these goals, the government launched a $3.5m Food Fund initiative in December, aimed “at strengthening our strategies of food diversification and local farming to ensure a resilient supply for food for Singapore”.

BBC Online report.

Follow

Get every new post delivered to your Inbox.

Join 221 other followers