Yes, Coffee Outlook 2007 looks good. We have people from all over the world there to talk prices, understand what Vietnam brings to the coffee industry table and to get a feel for the issues on hand.
I sense that roasters are getting worried, its becoming a supplier's world where those with physical supply will rule the roost.
On one hand - since 2002 lows, we are very happy for the farmers, but on the other hand you can't help but feel for the roasters whose margins are slowly being eroded. I wonder how brand value measures up in this scenario.
There is some pressure for sustainable development (so as to avoid the "crisis in a cup" scenario as painted by Oxfam in the early 2000s), but lots of pressure for producers to produce more!
Fact is - labour, fertilizers, land and more are rising costs...expect the bottom line levels to rise. This suggests prices will not see 2002 levels ever again.
But...are there deals in the background to pre-finance new crops and also develop a dedicated supply as conditions to such arangements...should buyers start behaving the same way as steel, iron ore and other industrial commodities where there is a lot of emphasis on maintaining a strategic interest and hence supply and availability?
We have heard all this before...and given the US Dollar's depreciation in the last year or so.
Is coffee also a victim of the energy age?
- fertiliser costs up
- coffee is not the best crop to plant - there are others
- the property boom in ASia means higher land costs and possibly higher labour costs
Should we look at Africa again? Does Africa want coffee?
Lets see what they say at Coffee Outlook 2007...and also pay attention to some of the banter duing breaks, during the parties and during the less formal meetings we have during the week.
Saturday, December 1, 2007
SeaTrans - we're proud of it!!
Just back from Shanghai and am very pleased with the way everything went! We felt that everyone enjoyed it...was nice to see rooms full at the end of the conference and during the afternoons...all in all we are happy and now look forward to crafting the next event for 2008, perhaps even take the idea and build other similar platforms for exchange in commodities and in shipping.
My thoughts now move to coffee...must get ready for Vietnam.
My thoughts now move to coffee...must get ready for Vietnam.
Sunday, November 25, 2007
SeaTrans - Experiment in Shanghai - Freight Markets, Bunkers, Ports and the China Connection
Yes, I'm still at work...now in shanghai where we enter tomorrow (26 Nov 07), the world of SeaTrans 2007. We essentially decided to consolidate three events to create one larger event that offers both common streams and issues, focused content and the chance to network.
This time we have Bunkering, Dry Bulk and the container port and shipping sectors in view...all important from a china perspective and all offering a nice mix of content and exposure that everyone should enjoy.
I do hope we can build this up...at a time when everyone is jumping on the shipping conference bandwagon - we need to stay ahead and I hope the people like it..better still give me new ideas n additions and adjustments we can make so that we can deliver a better event off the base we now have.
In short 2007's agenda is about:
- rising cost of bunkers and what this means to you (I guess in short, Dry Bulk guys remain happy, tanker operators are crying and container shipping is also on their knees with the impact of higher bunker costs representing something like 40-60% of operating cost...perhaps we should move away from the residual fuel model...but then that too would open up new issues
- Dry Bulk shipping has been the darlings of the business, with rates as historic highs...then the issues here are more about fatigue, overuse and the care needed to ensure these working assets are able to maximise income at a time all owners descrive as well beyond most imagination - my own feel...the secret lies in port congestion and the possibility that new ships coming on stream
could be left crewless...and hence unable to add badly needed tonnage to the market
- Ports and the Container industry...China is factory to the world..so the Asia-Europe and US Trades are booming..but that story has been about for a long time already...the new part is China's growth, Asia rise and the demand for ports and shipping on the back haul - as Asians demand for more luxury and quality products.
On thing is for sure, China is and will be an important feature, in trade and since some 98% of world trade is via ships...shipping will take on a strong Chinese (Asian) influence.
Once this week is done...my thoughts will move to coffee..another commodity on price acendancy, and yet another product that has its future in Asia...and maybe the Middle East and Russian Far East. Anyway we will be in Vietnam...Asia's largest coffee exporter and the world No.2...so numbers from there will shape price and markets. Lets see.
This time we have Bunkering, Dry Bulk and the container port and shipping sectors in view...all important from a china perspective and all offering a nice mix of content and exposure that everyone should enjoy.
I do hope we can build this up...at a time when everyone is jumping on the shipping conference bandwagon - we need to stay ahead and I hope the people like it..better still give me new ideas n additions and adjustments we can make so that we can deliver a better event off the base we now have.
In short 2007's agenda is about:
- rising cost of bunkers and what this means to you (I guess in short, Dry Bulk guys remain happy, tanker operators are crying and container shipping is also on their knees with the impact of higher bunker costs representing something like 40-60% of operating cost...perhaps we should move away from the residual fuel model...but then that too would open up new issues
- Dry Bulk shipping has been the darlings of the business, with rates as historic highs...then the issues here are more about fatigue, overuse and the care needed to ensure these working assets are able to maximise income at a time all owners descrive as well beyond most imagination - my own feel...the secret lies in port congestion and the possibility that new ships coming on stream
could be left crewless...and hence unable to add badly needed tonnage to the market
- Ports and the Container industry...China is factory to the world..so the Asia-Europe and US Trades are booming..but that story has been about for a long time already...the new part is China's growth, Asia rise and the demand for ports and shipping on the back haul - as Asians demand for more luxury and quality products.
On thing is for sure, China is and will be an important feature, in trade and since some 98% of world trade is via ships...shipping will take on a strong Chinese (Asian) influence.
Once this week is done...my thoughts will move to coffee..another commodity on price acendancy, and yet another product that has its future in Asia...and maybe the Middle East and Russian Far East. Anyway we will be in Vietnam...Asia's largest coffee exporter and the world No.2...so numbers from there will shape price and markets. Lets see.
Sunday, November 4, 2007
Next Up- Lloyd's List Shipping Leaders Summit 2007
In two weeks I'm changing focus, from rice to shipping...better still with the elites in shipping. So if you are wondering why dry bulk markets fell last week, or how oil prices will affect global shipping (tankers, bunker costs or to put it simply costs overall) and want to understand the fundamentals in shipping and what CEOs are thinking (better still what they are doing)...this is it. 15th November 2007 at the Kowloon Shangri-La Hotel in Hong Kong.
Bonus - if you are a networker like me, you will also enjoy the evening cocktails the the Lloyd's List Asia Awards that takes place immediately after the seminar.
What will we look at?
firstly the seminar is done on a dialogue style - so less emphasis on powerpoint presentation and more emphasis on off -the-cuff (albeit most is prepared) discussions and the chance for audience interaction.
The issues:
- shipping cycles and if they are still relevant
- increased use of capital markets as vessel prices rise
- cargo is moved by people - human resources needed to fuel shipping (tons of issues as the global fleet grows and grows and companies struggle to fine seafarere and senior officers to work these vessels)
- free trade and ports will also be in focus as it appears that growth in the ship population alone ends up only with congestion - so port developments and the logistics infrastructure is also key
Shipping is now 40% or more Asian owned and certainly fueled by Asian demand - so I am quite excited at the prospect of meeting and discussing the industry concerns with people who have not just risen to gain from the current boom, I would say these are the guys who have been consistent - they survived the lows of shipping and have a proven record of not just survival, but excellence.
One more item not to be missed - the new generation of shipowners...and we have Sabrina Chao on board to give us a peek of what's in store.
The world is seemingly complex but when we anlyse the success stories, the simplicity of the reasoning implies that "vision" is the trick, vision that helps simplify the situation to allow clarity in looking at the opportunities on the road ahead.
I'm excited and quite looking forward to the trip....also because shipping was an area of concern at our rice event last week.
Bonus - if you are a networker like me, you will also enjoy the evening cocktails the the Lloyd's List Asia Awards that takes place immediately after the seminar.
What will we look at?
firstly the seminar is done on a dialogue style - so less emphasis on powerpoint presentation and more emphasis on off -the-cuff (albeit most is prepared) discussions and the chance for audience interaction.
The issues:
- shipping cycles and if they are still relevant
- increased use of capital markets as vessel prices rise
- cargo is moved by people - human resources needed to fuel shipping (tons of issues as the global fleet grows and grows and companies struggle to fine seafarere and senior officers to work these vessels)
- free trade and ports will also be in focus as it appears that growth in the ship population alone ends up only with congestion - so port developments and the logistics infrastructure is also key
Shipping is now 40% or more Asian owned and certainly fueled by Asian demand - so I am quite excited at the prospect of meeting and discussing the industry concerns with people who have not just risen to gain from the current boom, I would say these are the guys who have been consistent - they survived the lows of shipping and have a proven record of not just survival, but excellence.
One more item not to be missed - the new generation of shipowners...and we have Sabrina Chao on board to give us a peek of what's in store.
The world is seemingly complex but when we anlyse the success stories, the simplicity of the reasoning implies that "vision" is the trick, vision that helps simplify the situation to allow clarity in looking at the opportunities on the road ahead.
I'm excited and quite looking forward to the trip....also because shipping was an area of concern at our rice event last week.
Saturday, November 3, 2007
Scarcity & Choice - two rules, especially in rice
Just back from Bali. Expected a sweet journey, but ended up with a lot of news, and with business also taking its tol. The event also revealed the achilles heel of the rice industry by exposing the "denial" that the industry was going through as falling stocks and challenges in keeping supply up finally impacted on price.
Also interesting were :
- Rice as a comparison against other cereals (wheat especially since it rose 2-3 times its price)
- the Falling US Dollar and its impact
- Freight markets at historice highs (add the ageing handysize fleet, the lack on newbuildings in handies and the problem is elevated further)
- Price movements in the more niche markets of basmati and japonica offering a more dramatic price impact compared to the broader markets
- reluctance by exporters to committ to new trades (they weren't sure of price to offer rice at or simply decided to hold on to stocks for future price gains!)
October 9, 2007 was a landmark date in the global rice industry when everyone sitting with low stocks and some blindingly obvious signs suggesting isssues in supply availability.
Australia - almost obliterated from markets as a supplier (and possibly facing longer term issues if they are to return
China -also see the stock situation and food security creep into the system. Is their 220,000 capacity par boil plant the solution for African buyers concerned about future availability
Brokens - we hear they are as expensive as 5%..certainly close
Basmati - at 1200 $ per tonne, is double on the back onf EU and Middle East demand
USA - not any different, falling acreage, water issues in California = not a likely canditate to take up any short supply in the market
I did however hear of more land in Africa going into grains (rice) production, but even then, what this is likeyt to do is to minimise Africa's import growth rather than stall or reduce imports.
The fear is...can demand remain inelastic to price? Are the poor people of Asia and Africa able to afford rice? So far the problem seems that rice is the cheaper amogst cereals..but I suspect that there is a limit to how far further rice can rise - politics in the form of food security will or at least should place a cap on price rises.
But...if every government were to "panic" as India did (to me India had no choice - either buy more expensive imported wheat or place this ban and hope that consumers switch to rice..just a thought)....imagine what would happen.
the fact is - wheat has become 3x more expensive this year (well..at least twice) - rice has only been slowly rising in price (some folks in the EU may not even notice the difference once you take the falling dollar into account), and the Oct 9th incident has only reinforced the industry's concern or I would say the industry's refusal to accept facts has finally been challenged.
The result - rice prices will be higher but also more volatile.
Suddenly you have all exporters "dreaming" of what price they can get...but be warned, when you go in search of peaks and looking to time your decisions, things can go wrong..exporters may perhaps prefer to be in control of theie supply chain, manage freight and concentrate on their role as a supplier of choice, once who can be counted on (ie minimize, better still - no defaults), and work on making this opportunity and occasion to build business, even brand both in trade and at consumer levels and the foundations for the long terms where the controlling factor will be value.
On that note let me check out.. there are some serious concerns that I will keep watching while I complete the rest of the year where I will look more at shipping and then end the year with our annual coffee conference.
Also interesting were :
- Rice as a comparison against other cereals (wheat especially since it rose 2-3 times its price)
- the Falling US Dollar and its impact
- Freight markets at historice highs (add the ageing handysize fleet, the lack on newbuildings in handies and the problem is elevated further)
- Price movements in the more niche markets of basmati and japonica offering a more dramatic price impact compared to the broader markets
- reluctance by exporters to committ to new trades (they weren't sure of price to offer rice at or simply decided to hold on to stocks for future price gains!)
October 9, 2007 was a landmark date in the global rice industry when everyone sitting with low stocks and some blindingly obvious signs suggesting isssues in supply availability.
Australia - almost obliterated from markets as a supplier (and possibly facing longer term issues if they are to return
China -also see the stock situation and food security creep into the system. Is their 220,000 capacity par boil plant the solution for African buyers concerned about future availability
Brokens - we hear they are as expensive as 5%..certainly close
Basmati - at 1200 $ per tonne, is double on the back onf EU and Middle East demand
USA - not any different, falling acreage, water issues in California = not a likely canditate to take up any short supply in the market
I did however hear of more land in Africa going into grains (rice) production, but even then, what this is likeyt to do is to minimise Africa's import growth rather than stall or reduce imports.
The fear is...can demand remain inelastic to price? Are the poor people of Asia and Africa able to afford rice? So far the problem seems that rice is the cheaper amogst cereals..but I suspect that there is a limit to how far further rice can rise - politics in the form of food security will or at least should place a cap on price rises.
But...if every government were to "panic" as India did (to me India had no choice - either buy more expensive imported wheat or place this ban and hope that consumers switch to rice..just a thought)....imagine what would happen.
the fact is - wheat has become 3x more expensive this year (well..at least twice) - rice has only been slowly rising in price (some folks in the EU may not even notice the difference once you take the falling dollar into account), and the Oct 9th incident has only reinforced the industry's concern or I would say the industry's refusal to accept facts has finally been challenged.
The result - rice prices will be higher but also more volatile.
Suddenly you have all exporters "dreaming" of what price they can get...but be warned, when you go in search of peaks and looking to time your decisions, things can go wrong..exporters may perhaps prefer to be in control of theie supply chain, manage freight and concentrate on their role as a supplier of choice, once who can be counted on (ie minimize, better still - no defaults), and work on making this opportunity and occasion to build business, even brand both in trade and at consumer levels and the foundations for the long terms where the controlling factor will be value.
On that note let me check out.. there are some serious concerns that I will keep watching while I complete the rest of the year where I will look more at shipping and then end the year with our annual coffee conference.
Sunday, October 28, 2007
World Rice...in touble of not being able to produce enought?
Bali, tomorrow...I'm off for the next World Rice Commerce 2007..even more exciting since e saw India ban any non-basmati rice exoports. This is news, and if we read between the lines, we see energy, food and the concept of basic necessities challenged. As it is:
-water is short
- land is increasingly hard to find...worse still anyone who wants to get into the business of producing .. agriculture is less attractive
- there is a genuine choice for farmers in energy crops
But these are old problems...only made worse in the energy age. Add new features:
- freight rates that are both volatile and on historic highs
- a falling US Dollar
- the new reality that production may actually not be enough to meet growing demand
We have amelting pot of issues... research and businesses must start working together.
Food needs to be forced up the political and commercial ladder.
Yes farmers will get more...but they deserve more...we in the industrial world will not find the price rises exorbitent compared to the costs of modern living. Look a little further down...there are millions who are stuck in poverty, will not (may not have been in the first place) be able to afford or obtain food crucial to survival = this is serious
we need
- change in the way we think
- does biotech offer a solution? I'm really not sure...the weather and mother earth are not that easy to conquer
- is there a choice? Yes - I beleive so, but noone wants to admit it
Then again, are we simply being alarmist...ie nothning will happen to the food industry as we know it.
this could be important...not only for business concerns that will make opportunity from change, but on a more broader social and humanitarian level = with millions of lives at stake.
where will the solutions come from?
I feel that we will need to take biotechnology seriously..but
we also need to look at Africa, S.America and the pockets of resources in Asia that can be utilised to offer a sustainable and long term future. Rice is crucial...not only to Asia...its a global issue.
Next up...Food V Energy Security...is there a choice? Both are important...solution is found in sustailability and the ability for some of the most "advanced" nations in the world to forgo some of their more selfish endeavours...perhaps even forcing the WTO forward.
-water is short
- land is increasingly hard to find...worse still anyone who wants to get into the business of producing .. agriculture is less attractive
- there is a genuine choice for farmers in energy crops
But these are old problems...only made worse in the energy age. Add new features:
- freight rates that are both volatile and on historic highs
- a falling US Dollar
- the new reality that production may actually not be enough to meet growing demand
We have amelting pot of issues... research and businesses must start working together.
Food needs to be forced up the political and commercial ladder.
Yes farmers will get more...but they deserve more...we in the industrial world will not find the price rises exorbitent compared to the costs of modern living. Look a little further down...there are millions who are stuck in poverty, will not (may not have been in the first place) be able to afford or obtain food crucial to survival = this is serious
we need
- change in the way we think
- does biotech offer a solution? I'm really not sure...the weather and mother earth are not that easy to conquer
- is there a choice? Yes - I beleive so, but noone wants to admit it
Then again, are we simply being alarmist...ie nothning will happen to the food industry as we know it.
this could be important...not only for business concerns that will make opportunity from change, but on a more broader social and humanitarian level = with millions of lives at stake.
where will the solutions come from?
I feel that we will need to take biotechnology seriously..but
we also need to look at Africa, S.America and the pockets of resources in Asia that can be utilised to offer a sustainable and long term future. Rice is crucial...not only to Asia...its a global issue.
Next up...Food V Energy Security...is there a choice? Both are important...solution is found in sustailability and the ability for some of the most "advanced" nations in the world to forgo some of their more selfish endeavours...perhaps even forcing the WTO forward.
Tuesday, June 5, 2007
Ethanol and Asian Energy Demand
its been some time since I last checked in - been busy and from all my past experience in the sector...more than 13 years...I have never seen one issue play such a significant role in shaping the world trade of agricultural products. Ethanol...has changes the landscape..be it oil palm, soybeans, sugar or even wheat. My only worry is, while farmers are finally beginning to be rewarded (and they deserve more than any banker I know)...it is somewhat worrying that the impact of this renewable sector has had a major role in limiting the availability of food...be it meats (feed is needed for the meat producers), food (wheat in EU is used now as biofuels), rice (China is looking at it) or soy (protein, vegetable oils...u get my drift) - all of these food or certainly food related crops that have a role in sending calorific values across the globe - are being used for fuel.
Could food security be an issue if ythis continues to track oil prices in the coming years?
Or are there new non food crops and alternatives being invested upon? Jatropha is one I can name...
fact is - food - the way it is traded, its opportunity cost as food(should this be the main cost?) and manipulate - has taken on a new form..."transformed" by the combination of capital markets, combined with the wild imaginations of economists to become a completely new animal that needs care, and more understanding.
Traders struggle
Farmers earn (I like this)
Consumers pay more
Bankers dream and manipulate minds and markets
where do we go in the new future.
China, India and the fact that 2 billion people want to live the "America dream" is real. Does mother earth have enought to feed their stomachs, and ambitions...that is the question.
I'm still doing events:
Sugar, Coffee, Rice, Soy, Grain & Feeds all in the next half a year - and all of these offer nice new promise of content, exchange and stimulation.
visit my office website www.ibc-asia.com for details
I hope to write weekly so I can get myself accustomed to this new media. Still plan to keep it private till I build some confidence on my writing skills, communication and views.
Could food security be an issue if ythis continues to track oil prices in the coming years?
Or are there new non food crops and alternatives being invested upon? Jatropha is one I can name...
fact is - food - the way it is traded, its opportunity cost as food(should this be the main cost?) and manipulate - has taken on a new form..."transformed" by the combination of capital markets, combined with the wild imaginations of economists to become a completely new animal that needs care, and more understanding.
Traders struggle
Farmers earn (I like this)
Consumers pay more
Bankers dream and manipulate minds and markets
where do we go in the new future.
China, India and the fact that 2 billion people want to live the "America dream" is real. Does mother earth have enought to feed their stomachs, and ambitions...that is the question.
I'm still doing events:
Sugar, Coffee, Rice, Soy, Grain & Feeds all in the next half a year - and all of these offer nice new promise of content, exchange and stimulation.
visit my office website www.ibc-asia.com for details
I hope to write weekly so I can get myself accustomed to this new media. Still plan to keep it private till I build some confidence on my writing skills, communication and views.
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