Food Inflation, Riots Spark Worries for World Leaders

IMF, World Bank Push for Solutions; Turmoil in Haiti
By BOB DAVIS and DOUGLAS BELKIN

April 14, 2008; Page A1

WASHINGTON -- Finance ministers gathered this weekend to grapple with the global financial crisis also struggled with a problem that has plagued the world periodically since before the time of the Pharaohs: food shortages.

Surging commodity prices have pushed up global food prices 83% in the past three years, according to the World Bank -- putting huge stress on some of the world's poorest nations. Even as the ministers met, Haiti's Prime Minister Jacques Edouard Alexis was resigning after a week in which that tiny country's capital was racked by rioting over higher prices for staples like rice and beans.

More here

83% over the past three years? Not sure how the low single digit inflation values that are put out by government agencies jive with this.

IMF Approves Selling 400 Tons Of Gold

April 8, 2008 8:28 a.m. EST

Benjie Telleron - AHN News Writer

Washington (AHN) - The executive board of the International Monetary Fund has approved the sale of some 440.3 tons of its gold supplies in a wide-ranging financial overhaul and to replenish its depleting coffers.

Dominique Strauss-Kahn, IMF managing director, welcomed the board's move on Monday, the action seen as a buffer to the expected $400 million budget deficit the Washington-based lending institution could experience in the next few years.

The board is projecting to generate at least $11 billion from the sale of at least 12 percent of its gold reserve. The money to be generated from the sales would fund the reorganization of the IMF and finance lending to needing countries.

Strauss-Kahn said it will also shore up diverse investments to generate income.

However, the IMF still needs congressional approval and legislative action of the 184 member-nations of the IMF.

The IMF is facing the challenge of cutting costs and trimming its bureaucracy, after a downturn in lending as some countries refuse to borrow money due to IMF's strict conditions.

The lending firm has a projected budget deficit of at least $140 million for the fiscal year 2008 which will end on April 30.

However, the IMF said the sale of the gold will be carried out in several transactions over several years so as not to affect the international gold market.

Global price of gold reached an all-time high of over $1,000 an ounce.

http://www.allheadlinenews.com/articles/7010571641

The World Food Crisis

Published: April 10, 2008

Most Americans take food for granted. Even the poorest fifth of households in the United States spend only 16 percent of their budget on food. In many other countries, it is less of a given. Nigerian families spend 73 percent of their budgets to eat, Vietnamese 65 percent, Indonesians half. They are in trouble.

Last year, the food import bill of developing countries rose by 25 percent as food prices rose to levels not seen in a generation. Corn doubled in price over the last two years. Wheat reached its highest price in 28 years. The increases are already sparking unrest from Haiti to Egypt. Many countries have imposed price controls on food or taxes on agricultural exports.

Last week, the president of the World Bank, Robert Zoellick, warned that 33 nations are at risk of social unrest because of the rising prices of food. “For countries where food comprises from half to three-quarters of consumption, there is no margin for survival,” he said.

Whole article here

From the "What are the Odds" file......

Hmmm. What are the odds of having your house hit five times be meteorites?

I'm not sure about buying into the alien explanation; but if this is really true it certainly begs some real explanation!

Man 'targeted by aliens'

A Bosnian man whose home has been hit an incredible five times by meteorites believes he is being targeted by aliens.

Experts at Belgrade University have confirmed that all the rocks Radivoje Lajic has handed over were meteorites.

They are now investigating local magnetic fields to try and work out what makes the property so attractive to the heavenly bodies.

But Mr Lajic, who has had a steel girder reinforced roof put on the house he owns in the northern village of Gornja Lamovite, has an alternative explanation.

He said: "I am obviously being targeted by extraterrestrials. I don't know what I have done to annoy them but there is no other explanation that makes sense. The chance of being hit by a meteorite is so small that getting hit five times has to be deliberate."

The first meteorite fell on his house in November last year and since then a further four have smashed into his home. The strikes always happen when it is raining heavily, never when there are clear skies.

He said: "I did not know what the strange-looking stones were at first but I have since had them all confirmed as meteorites by experts at Belgrade University.

"I am being targeted by aliens. They are playing games with me. I don't know why they are doing this. When it rains I can't sleep for worrying about another strike."

Short-term supplies of natural gas

Good article. Note the growth of natural gas use in the US. Looks like prices going up?

http://www.theoildrum.com/node/3785#more

Here's a real hint that North American gas prices will be going up. Look at what Japan is paying to lock up LNG supply. Doesn't look like cheap LNG will knock our gas markets down. Doesn't this article simply play into todays theme of inflation postings??

Indonesian term LNG deal sets new Asian benchmark

By Annika Breidthardt

SINGAPORE, March 31 (Reuters) - Indonesia's deal to raise liquefied natural gas (LNG) prices to Japan sets a new benchmark for Asian term contracts and ups the heat on other gas deals currently under negotiation, analysts said on Monday.

Analysts said the agreed price based on crude oil levels -- around $16 a million British thermal unit -- was the highest they had seen for firmly guarded term LNG deals.

whole article is here

Concentrating Solar Power

Good Article and links therein:

http://anz.theoildrum.com/node/3791#more

Good Articles on Energy Return on Investment (EROI)

Part 1

http://www.theoildrum.com/node/3786

Part 2
http://www.theoildrum.com/node/3810#more

Oil Hits $115/bbl in Singapore

http://anz.theoildrum.com/node/3814

IMF: Financial Losses May Approach $1 Trillion

Read it below and weep:

http://calculatedrisk.blogspot.com/2008/04/imf-financial-losses-may-approach-1.html

The Import Slowdown: Los Angeles Area Ports

Great article; links to the rail car articles being parked and has some good links and graphs.

http://calculatedrisk.blogspot.com/2008/04/import-slowdown-los-angeles-area-ports.html

Railcars idle as economy falters

By SUSAN GALLAGHER - Associated Press- 04/04/08

CRAIG — BNSF Railway Co., the nation’s top hauler of container rail freight, is parking miles of railcars in Montana and elsewhere because there isn’t enough freight to keep them rolling.

Cars that often carry 40-foot containers of goods shipped from Asia stand like an iron fence between the Missouri River and this Montana burg known for world-class fly fishing. They stretch as far as Sandee Cardinal can see when she stands outside her home on the river’s west bank between Helena and Great Falls.

‘‘What is that but a symbol of how America is down in the dumps right now?’’ Cardinal asked as she gazed at the cars that haven’t moved for about three months.

The cars parked are the type that haul cargo from ships on the coast to points inland, mainly imported goods — an area that’s starting to slow down due to the weak economy. Analysts say transportation usually is among the first sectors to show signs of a downturn in the economy and with Americans feeling pinched — employers eliminated 63,000 jobs last month amid declining consumer confidence — it could be a while before the idle cars move.

‘‘If you take a look at transportation, both trucking and rail, you will see that things started softening last summer,’’ said Arnold Maltz, associate professor of supply-chain management at Arizona State University. ‘‘The reason you are seeing all those cars parked is that the consumer economy translates into slower imports.’’

Texas-based BNSF Railway, a division of Burlington Northern Santa Fe Corp., has parked upward of 1,000 cars in Montana alone, spokesman Gus Melonas said. More are parked in other parts of the company’s 32,000-mile system, which operates in 28 states and two Canadian provinces.

‘‘There’s been a downturn in international business and therefore this equipment is not necessary at this point,’’ Melonas said.

The cars standing between Helena and Great Falls constitute 5 percent of the BNSF fleet, Melonas said. He declined to say what percentage of the fleet is parked elsewhere, citing confidentiality issues.

Seasonal car storage is common, he said, but the number of cars now idle is exceptional.

Most of the parked cars are designed for intermodal transportation, when containers filled with imported goods are taken off vessels at U.S. ports and then transported by train, truck or both to distribution centers around the country.

For the first two months of 2008, the volume of intermodal rail freight in the United States was down 3.4 percent compared to the same period last year, according to the Association of American Railroads, an industry group based in Washington, D.C. Last year, intermodal traffic was flat as railroads began to feel the effects of slowing retail orders and the dollar’s decline.

While shipments of store-ready consumer goods such as clothing have dipped, movement of coal, grain and ore have risen, according to the association. The latter are less sensitive to swings in the economy and help balance out the bottom line.

Excluding intermodal traffic, rail freight rose 1.7 percent for the first two months of 2008 compared to the same period a year earlier. Coal was out in front last month with 576,012 carloads, or an increase of 5.7 percent.

‘‘The railroads have actually performed relatively well when you look at their entire portfolio,’’ said transportation analyst Todd Fowler of KeyBanc Capital Markets in Cleveland.

For 2007, BNSF Railway’s parent company, Burlington Northern Santa Fe Corp., reported about $15.4 billion in total freight revenues, compared to about $14.6 billion the previous year. That growth was carried largely by coal and agricultural segments.

The annual revenue generated from hauling domestic freight was down about 1 percent from 2006, while international traffic was up 2 percent. Meanwhile, coal and agricultural revenue each grew about 12 percent.

Union Pacific Railroad spokesman James Barnes said the Nebraska-based company’s intermodal business is ‘‘just a little down, but that’s not unusual for this time of year.’’ The company’s total commodity revenue was $15.5 billion in 2007, compared to about $14.9 billion in 2006. The agricultural segment posted an 8 percent increase over 2006.

Another major rail company, CSX Corp. in Florida, said its car storage is not out of the ordinary. The company’s total revenue from surface transportation was up 5 percent, from about $9.6 billion to $10 billion in 2007.

One of the nation’s leading trucking companies, Schneider National in Green Bay, Wis., says it believes a freight recession began about 20 months ago, well before signs of a downturn closed in on consumers.

‘‘We have been in a freight recession longer than people have been expressing deep concern about the economy,’’ said Bill Matheson, Schneider’s president for intermodal transportation.

Trucking companies are in a unique position. They often compete with railroads for long haul contracts, while also carrying rail freight from the nearest railhead to its final destination.

Schneider is not parking trucks, but neither is it buying new ones to the usual extent, Matheson said.

In Long Beach, Calif., home of the nation’s busiest port complex with Los Angeles, the movement of goods has been somewhat stagnant. About 7.3 million containers passed through the Port of Long Beach in 2007, the same as in 2006, port spokesman John Pope said.

‘‘That was a big decline from the growth we’d seen in the past decade or so,’’ Pope said. ‘‘Typically, there had been double-digit growth from year to year.’’

In January, Long Beach posted a decrease of about 12 percent in overall volume compared to January 2007. The situation was less extreme last month, with a 2 percent drop in overall volume compared to a year earlier.

While retailers have imported less goods to be hauled by rail or truck nationwide, exports leaving Long Beach rose as the weak dollar strengthened overseas purchases of U.S. goods, Pope said. Rising export volume — including grain and wheat shipped by rail — helped balance falling container imports for most of last year.

‘‘It’s a barometer of the economy,’’ Pope said. ‘‘We’re going to see the ebb and flow that mirrors what happens in the rest of the nation.’’

Haiti Food Inflation Riots

The real consequences of massive inflation are only starting. Here is one example of many that are happening.

Protests over food prices paralyze Haitian capital

Tue Apr 8, 2008 5:39pm EDT

By Joseph Guyler Delva

PORT-AU-PRINCE (Reuters) - Haitians erected fiery barricades and tried to storm the National Palace on Tuesday as protests against rising food prices, which have killed five people, paralyzed the impoverished nation's capital.

whole article here

Batten Down the Hatches

I chuckled when the author is talking about inflation at two percent and maybe going higher. Of course it is going higher and probably already much higher than 2%.

Batten down the hatches: this is the big one

The Bank has to change its low inflation mentality to address economic reality

* Ashley Seager, economics correspondent
* The Guardian,
* Monday April 7 2008

This article appeared in the Guardian on Monday April 07 2008 on p26 of the Financial section. It was last updated at 08:58 on April 07 2008.

"Whole cities of pain. A continent of pain," said the great, if eccentric, Wall Street money dealer Jim Cramer recently. He was talking about the economic pain spreading across the United States, of course.

Until recently, the pain of the US housing market had not spread to our own fair land. Much of the economic data here has been, if anything, surprisingly healthy. But such figures are generally backward-looking and often look fine until suddenly they don't.

Last week we saw a dramatic escalation in pain levels as one mortgage lender after another either withdrew home loans or raised the interest rates. The chart shows the growing divergence between the Bank of England's official rate and interbank Libor rates that explains this.

This is the most concrete evidence to date that the esoteric "credit crunch" has moved out of the so-called "interbank money markets" and into the consciousness and pockets of the British people.

The Co-op Bank and First Direct said they had to shut their doors to new business because house buyers were deluging them with requests for favourable mortgage terms. Many who bought a two-bed flat in a city centre anywhere in Britain are now finding they can't afford the mortgage repayments and the value of the property is dropping fast.

Perhaps Cramer should take a trip across the Atlantic to see more cities groaning under the pain.

Britons are also carrying record levels of debt. Figures last week showed a surprise jump in unsecured lending in February, mostly overdrafts.

A sign of continued consumer confidence, you might say. But it looks more as if consumers faced with greater difficulty in raising mortgage finance have simply let their overdrafts take the strain: it is a sure sign of consumers under stress.

That makes sense when survey after survey has been showing consumer confidence is very weak and people's intentions of making a major purchase are vanishing. No wonder private car sales are dropping. Ernst & Young, the consultants, have warned that dealerships face a year of struggle.

The Bank of England's credit conditions survey last week showed banks expect lending conditions to get worse, signalling more trouble ahead.

The economy has sailed resiliently through many shocks over the past 15 years, from the Asian crisis in the late-1990s to the dotcom bust of the early noughties. But it has not been hit by anything like this credit calamity for a very long time, if ever. This is the big one.

The idea that we can escape the impact of what is happening in America is just wishful thinking. There was some optimism in financial markets last week that the worst of the credit crunch might be over. These are the same markets that failed to predict the credit crunch and are the root cause of this misery, so their opinion, frankly, is not worth much.

Housing bubble

The reality is that the economy has been pumped up and up in the past decade by the cheap and easy availability of credit. Now it is neither cheap nor plentiful and the fallout is hurting.

For one thing the housing market bubble - in a way we knew all along it was a bubble - has been pricked and is starting to deflate rapidly.

House prices are not going to drift quietly sideways over the next few years while average earnings catch up. They are going to fall sharply. I would be surprised if they don't fall by a quarter or more over the next two years.

It is not just about the supply of credit, it is about mentality - the fear and greed syndrome. Who would buy a property, even if they could get a mortgage, if they thought they could wait another year and pay, say, 10% less?

Estate agents report they have stacks of properties for sale but simply can't shift them. So supply is plentiful and demand has dried up. In most markets, that means prices fall. Why should the housing market be different?

Already, the construction sector has nose-dived, as witnessed by two surveys of the sector that came out last week. The much bigger services sector, too, looks as if it is running into trouble, according to a survey by the Chartered Institute of Purchasing and Supply last week.

The service sector is about two-thirds of the economy and has looked robust until now. Financial services employment has fallen sharply. The data is turning down.

All of which brings us to the policy response. What can the Bank of England do about interest rates? The growing risks to growth would normally call for sharp cuts in interest rates, following the Federal Reserve in the United States. The Fed has cut from 5.25% last autumn to just 2.25% now.

The Bank of England has been much more cautious, cutting from 5.75% to 5.25%. Part of the reason is that, until now at least, the British economy had held up well. But the other key element, as the Bank's executive director, Paul Tucker, said last week, is that the monetary policy committee is not prepared to let the "inflationary genie" out of the bottle.

He hinted that slow, gradual rate cuts were in the committee's mind rather than Fed-style emergency cuts.

Inflation

Inflation has been pushed up to 2.5% - above its 2% target - by rising food and energy prices and is likely to rise quite a bit further.

Tucker acknowledged that a sharp slowdown in the economy would also put the brakes on inflation but it was not clear by how much.

But these are strange times for the MPC. In the face of such a shock to the economy as this credit crunch, it has to be wondered whether any of its forecasting models are of any use.

Models often use past performance to predict what might happen. But the past 15 years have been so stable for British growth and inflation that most models are likely to forecast that it will simply carry on. That is very unlikely, which means in turn that interest rates could be left too high for too long, just as happened in the US.

The rate cuts implemented by the Bank of England have probably already been cancelled out by the rising market interest rates that have pushed mortgage costs up. So interest rates are likely to be slowing the economy down, rather than boosting it.

The MPC is also conscious that for years, inflation was steady around the 2% target as high domestic inflation was offset by very low foreign inflation thanks to the strong pound and cheap Chinese imports. But now, rising world food and energy prices, combined with a falling pound, mean imported inflation has risen.

The implication of that is that domestic inflation will have to be much lower in the coming years than in the past decade. In turn, that means the economy will have to be run more slowly to keep domestic inflation in check. That's why Tucker said last week that the MPC wanted to see some slack develop in the economy.

But the risk is that the economy might slow much more sharply than the MPC is expecting, possibly even follow the US into a recession.

In the face of such downside risks, which look to be much bigger than the upside risks to inflation, rates need to be cut, and fast, starting this week. There may not be much time. The pain is real, it is time to get the aspirin out.

Serious Inflation in the Works #2

Coking coal up 200%, rice up 100%, oil up a mere 50% in the last year......

Serious inflation in real good is happening before our eyes. All this inflation, yet the prime interest rate in the US is in low single digits. This may mean that the real interest rate is actually negative.

Price of rice set to soar

Shortages in exporting countries push up the wholesale cost, force local supermarkets to raise theirs

Joanne Lee-Young, Vancouver Sun; with files from Reuters

Published: Thursday, April 03, 2008

Food-price inflation is about to hit one of the main staples for local shoppers at Asian supermarkets: rice.

At T&T Supermarket, executives have been watching wholesale prices rise more than 100 per cent during the past year.

"Prices have basically more than doubled," said Herman Poon, T&T's marketing manager. "If we take a specific example, like rice from Thailand [the world's biggest exporter], there is still a lot of upward movement. It has gone up 30 per cent in the last month."

At Jia Jia, an Asian market in Richmond, owner Raymond Lin said that starting next week, he will raise retail prices by 20 per cent.

With rumours swirling day to day as to when exactly this might happen, some customers are already picking up some extra 10- and 20-pound bags of rice, said Lin.

"Instead of one bag, they are picking up two or three."

T&T has managed so far to shield its customers from large price hikes, Poon said, because with eight stores across Metro Vancouver it has a "bigger buffer" than other retailers in the form of larger inventory stocks.

"But this is going to change real soon," Poon said. "We are just hanging in there for the next 30 days" in terms of price changes that would impact consumers.

Sean Hwang, the manager of H-Mart, a Korean supermarket with three stores in Metro Vancouver, said he is struggling with the idea that he might have to do what other retailers are already doing. As much as possible, he would like to avoid raising rice prices.

"[Rice] is a very sensitive item. For Koreans, it is a main food. We usually don't make money on it [anyway], so it is very hard for us to change the price."

Most countries that export rice face supply shortages, the Food and Agriculture Organization said Wednesday.

And those nations are curbing overseas sales to contain food prices at home, the Rome-based United Nations organization said in an e-mailed report, adding that China, India, Egypt, Vietnam and Cambodia have imposed curbs on shipments, including minimum export prices and quotas.

"The international rice market is currently facing a particularly difficult situation with demand outstripping supply and substantial price increases," said Concepcion Calpe, a senior economist at the FAO.

On Monday, India imposed a ban on non-basmati rice exports to ensure the country had enough rice to feed its more than one billion people.

And Indonesia, the world's third-largest rice producer, may also curb exports as declining inventories threaten to spark unrest around Asia.

Indonesia's rice production may exceed domestic consumption by about two million tonnes this year, insufficient to allow for exports, Agriculture Minister Anton Apriyantono said Wednesday. The United Nations warned in February that 36 countries, including China, face food emergencies this year.

Rising populations and higher incomes across Asia are leading to increased consumption of rice. Global production will rise to a record of about 423 million tonnes, and consumption is expected to increase to nearly the same amount, according to the U.S. Department of Agriculture.

Higher fuel prices and hoarding by suppliers anticipating higher prices are also being blamed for inflation in rice prices.

Serious Inflation in the Works

This is a sign that serious inflation is going through the world economy. 200% - carumba!

Record coal contract has producers salivating

South Korean steel maker agrees to pay three times as much as it did last year, setting 'astronomical' new benchmark

ANDY HOFFMAN

MINING REPORTER

April 8, 2008

Coal producers are rejoicing after a South Korean steel maker agreed to an unprecedented 200-per-cent increase in the price it will pay for coking coal, setting a benchmark for other yearly contract negotiations between miners and steel makers.

However, the record contract will likely add to inflationary pressures, as the price increase is expected to boost the cost of producing everything from automobiles to building materials.

Posco, Asia's third-largest steel maker, said it will pay Australian coal producers more than triple what it did last year or as much as $305 (U.S.) a tonne for coking coal, a key component in making steel.

"What appears to be coming to fruition in coal contracts are numbers that we've never seen. These are astronomical numbers in [metallurgical] coal," John Hughes, an analyst at Desjardins Securities, said in an interview.

Coal producers annually negotiate contract prices with steel makers for the coal year, which begins April 1. The Posco contract marks the first major met coal contract signed for the 2008 coal year and is likely to set a precedent for other negotiations.

The seaborne met coal market, which annually supplies roughly 180 million tonnes of coal to steel makers, has been sideswiped by an extraordinary string of disruptions over the last few months that has constricted the coal supply amid strong demand for steel.

Extraordinary rains caused flooding at coal mining operations in Australia and is believed to have reduced production by as much as 15 million tonnes.

In China, where a booming economy has driven higher demand for steel, the worst snowstorms in 50 years hindered production. Attempts by coal producers to increase supply in response to the anticipated higher prices have been constrained by logistics including a lack of rail and port capacity.

"You could say that $305 a tonne for met coal is almost panic-buying levels. Which means somebody is desperate enough to want to keep their blast furnaces running and will pay that price for the coal," said Tony Robson an analyst at BMO Nesbitt Burns.

Shares of Canadian coking coal producers, including Fording Canadian Coal Trust, Teck Cominco Ltd., and Western Canadian Coal Corp. gained in anticipation that they will win similar increases.

Fording units surged to a record, rising as much as 11 per cent before settling back for a 6-per-cent rise.

Company spokesman Colin Petryk said Fording will negotiate "accordingly" in its talks with steel makers, which are continuing.

"It's definitely showing us where the price is going. That's good news for Fording," he said.

The Calgary company, which supplies coal to Posco, among others, and hopes to produce roughly 23 million tonnes of coal this year, has seen its unit price increase more 60 per cent so far this year, pushing its market value above $9-billion (Canadian).

Fording, which owns 60 per cent of the Elk Valley Coal Partnership, put itself up for sale in December. Teck, which already owns about 20 per cent of Fording and has a 40-per-cent stake in the Elk Valley operations, giving it a 52-per-cent interest in the overall partnership, has been widely seen as the most logical buyer.

However, Fording's price tag has risen so much that Teck may not be willing to bid.

"I think the message from Teck Cominco has been that they don't want to overpay for Fording. And the higher that the unit [price] goes, the more difficult it is, if you want to buy Fording, to substantiate you are not overpaying," Mr. Hughes said.

Yet the Posco contract likely means steel customers and consumers will have little choice but to pay more.

Global steel prices hit a record last month. Posco recently said it was planning another steel price increase after raising prices by 11 per cent in February.

"Safety" in Commodities Futures......

"On Wall Street and elsewhere, skittish investors are continuing to flee to the safety of gold and oil futures, and away from the U.S. dollar amid widespread concern that the United States has slipped into recession."

Whole article is here

Rolling on the floor laughing here! Fleeing to the safety of the commodities future market? I've never heard of the volatile commodities futures markets as being considered "safe" investments before. Bizarro world change is in full progress. WTF indeed.

Bear Stearns Liquidated at $2/share, Down From $30/share Close on Friday

The fecal material is hitting the fan. Investment bank icon Bear Stearns basically worthless..... I'm pretty sure that JP Morgan would only be taking them out to avoid issues with counterparty liabilities. Very bad stuff......

Asian stock markets went into a freefall after Bear Stearns, trading at $30 by Friday's close, announced a deal to be sold to JP Morgan for $2/share in a stock-swap transaction. Bear Stearns' price peaked at $170 in 2007. "The price is indicative that there were bigger problems at Bear than clients and the public realized," said Ron Geffner at Sadis & Goldberg.

Whole article is here

New 'super-spike' might mean $200 a barrel oil

Goldman's projections foretell persistent turbulence in energy prices

By Steve Gelsi, MarketWatch

Last update: 1:42 p.m. EST March 7, 2008

NEW YORK (MarketWatch) -- With $100-a-barrel here for now, Goldman Sachs says $200 a barrel could be a reality in the not-too-distant future in the case of a "major disruption."

Goldman on Friday also boosted by $10 the low end of its 2008-2012 projected range for crude to $60 a barrel -- significantly lower than current prices, to be sure, but a possible mark for oil if "normalized" trends return to the marketplace.
With the dollar's fall continuing and financial markets roiled by the credit crunch, commodities like oil have been drawing the fancy of increasing numbers of investors. Accordingly, Wall Street firms have been eager to adjust forecasts to incorporate fresh data on the global economy and energy supplies.

Goldman analysts Arjun Murti, Kevin Koh and Michele della Vigna said prices have advanced more quickly than Goldman had forecast back in 2005, when it predicted a range of $50 to $105 a barrel as part of its "super-spike" oil theory.
"We characterized the upper end of the band as more likely to be driven by geopolitical turmoil and that recession was a key risk to our view," the analysts said. "In fact, oil prices have reached $100 a barrel without extraordinary turmoil, and the U.S. currently appears to be in recession."

Tacking on $15 a barrel to all of its oil estimates, Goldman now sees average selling prices of $95 a barrel for 2008, $105 a barrel for 2009 and $110 a barrel for 2010. The high end of its range is now $135 a barrel -- but Goldman hinted that prices could be headed even higher.

"As the lack of supply growth and price-insulated non-OECD demand suggest a future rebound in U.S. gross domestic product growth or a major oil supply disruption could lead to $150-$200 a barrel oil prices," Goldman said.

While saying it has a bullish long-term outlook, Goldman acknowledged that oil prices could correct from recent highs.

Favorite picks among energy stocks include Frontier Oil, Cabot Oil & Gas in the U.S. as well as Eni, Repsol, and Gazprom overseas.

Goldman also reiterated its view that oil prices could fall as normal market conditions return over the next four years.

"The core of our 'super-spike' view is that oil prices will keep rising until demand declines globally on a multiyear basis, resulting in the return of excess capacity and a lower cost structure," Goldman's analysts said. "Given this view, once excess capacity returns, we think prices can move sharply lower."

The analysts reiterated their "attractive" view on the European energy sector, but kept a neutral view on the Russian sector due to costs. It upgraded Transneft and Sibir Energy to neutral from sell after underperformance, and cut Imperial Energy to sell from neutral on capital-spending requirements.

Broccoli compound boost for immune health

By Stephen Daniells

07-Mar-2008 - A compound found in broccoli, previously linked to anti-cancer benefits, may also counter the decline in the body's immune system associated with age, says a new study from UCLA.
The compound sulforaphane was found to activate a set of antioxidant genes and enzymes in specific immune cells, which then combat the detrimental effects of free radicals that can damage cells and lead to disease, reports the study in the Journal of Allergy and Clinical Immunology.

"Our defence against oxidative stress damage may determine at what rate we age, how it will manifest and how to interfere in those processes," explained lead researcher Andre Nel from the University of California, Los Angeles (UCLA).

"In particular, our study shows that a chemical present in broccoli is capable of stimulating a wide range of antioxidant defence pathways and may be able to interfere with the age-related decline in immune function."

more here

Already we have riots, hoarding, panic: the sign of things to come?

From The Times

March 7, 2008

Carl Mortished, World Business Editor

The spectre of food shortages is casting a shadow across the globe, causing riots in Africa, consumer protests in Europe and panic in food-importing countries. In a world of increasing affluence, the hoarding of rice and wheat has begun. The President of the Philippines made an unprecedented call last week to the Vietnamese Prime Minister, requesting that he promise to supply a quantity of rice.

The personal appeal by Gloria Arroyo to Nguyen Tan Dung for a guarantee was a highly unusual intervention and highlighted the Philippines’ dependence on food imports, rice in particular.

“This is a wake-up call,” said Robert Zeigler, who heads the International Rice Research Institute. “We have a crisis brewing in rice supply.” Half of the planet depends on rice but stocks are at their lowest since the mid1970s when Bangladesh suffered a terrible famine. Rice production will fall this year below the global consumption level of 430 million tonnes.

Street protests and rioting in West Africa towards the end of last year were a harbinger of bigger problems, the World Food Programme said. The global information and early warning system of the Food and Agricultural Organisation (FAO) has monitored outbreaks of rioting in Mexico, Morocco, Uzbekistan, Yemen, Guinea, Mauritania and Senegal. There have also been protests in Jakarta, the Indonesian capital, over government price increases.Population pressure and increased wealth are mainly to blame for the resurgence of food insecurity. More people are eating meat and dairy products in Asia, which increases the demand on the animal-feed industry. Milk powder prices rose from $2,000 to $4,800 per tonne last year as rising consumption of milk products in Asia coincided with shortages in the Western world. Drought in Australia has worsened the problem as have government policies in Europe and America to increase the use of biofuels.

Mounting concern about rice has prompted the Indian Government to restrict exports of certain varieties. The measure triggered a surge in global rice prices, which have risen 50 per cent in a year, according to the FAO. The rice shortage is even felt in Britain where the price of basmati, the biggest-selling variety, is rising rapidly.

Wheat is suffering even greater pressures, with prices up 115 per cent in a year. A succession of droughts in Australia has put upward pressure on the cost of a food commodity that is already in short supply. Stocks are at a 40-year low and exports are being restricted from Beijing to Buenos Aires. Ukraine started closing its door to grain exports in June and Russia set a 40 per cent export tariff on wheat in January.

Argentina has delayed the reopening of its wheat export registry until April to protect domestic supplies, and China, a net exporter of corn, rice and wheat last year, has imposed export quotas on grain in order to stem runaway food price inflation. A surge in its inflation index in December was blamed entirely on rising food prices, notably pork, which rose 48 per cent.

Farmers worldwide are worried about feed costs. In Europe pig and poultry breeders are threatening to cut production unless they are paid higher prices.