Points from the news today:

  • Economy
    • ADP employment came in strong, although its value as a predictor of non-farm payrolls is questionable.
    • Beige book showed continued labour-market improvement.
    • South Korean IP expanded strongly in January (13.7% yoy).
    • Optimism over UK house prices raised by yesterday’s Nationwide house price survey was somewhat reversed by Hometrack saying that house prices fell in January, although demand and supply both increased (14.7% and 25% respectively).
    • German retail sales grew strongly.
  • Oil
    • Arab league considering a “multinational mediation commission” for Libya proposed by Hugo Chavez. 
    • Some Libyan opposition forces asking for a no-fly zone (which would necessitate the destruction of air defences) but China and Russia are opposed.
    • With Colonel Qaddafi in control of Tripoli, civil war looks increasingly likely.
    • Arab League considering concrete action.
    • In the West, rising oil prices would mean slower growth. But for China, they would mean faster inflation as the boom continues.
  • Sugar
    • Brazilian production may move the market closer to balance but it remains tight and stocks remain low. 
    • Czarnikow expects a deficit this year.
  • Cotton
    • 80% of the Australian harvest has been purchased, compared to 50-60% at this stage normally. Production has been hurt by the Queensland floods. Australian analyst says that the US has “sold out” of cotton.
    • Backwardation points to short-term supply squeeze.
    • A different analyst says that a supply void is likely in the spring after Australian and South African harvests are complete and before Northern Hemisphere harvest begins.
    • International Cotton Advisory Committee expects production to be up 11% in the year from August 2011.
    • China January imports +11% yoy
    • US inventories have fallen 68% this year.
  • Corn
    • International Grains Council says corn stocks to decline further from their June 2010 level (119 million tons).
    • Strong ethanol demand; US Environmental Protection Agency increased max fuel ethanol content from 10% to 15% in Jan.
  • Wheat
    • Analyst says surge possible if Russia maintains its export ban and China becomes an importer. Neither has yet happened.
    • USDA reports Russian pre-harvest stockpiles at 3.87 million tons compared to 11.87 million tons a year before.
  • Gold
    • Benefiting from China investment demand (Related to inflation? That would make sense). Chinese demand reportedly greater than US or Germany in 2010.
    • Chinese gold jewellery demand also “at a record”.
    • Another result of the Chinese boom — stay long until it ends.
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