Soybean Slump Ending as Record Global Demand Overwhelms Farms

The biggest rout in soybean prices in more than two years may be ending as farmers from Iowa to Brazil fail to keep pace with record demand for cooking oil and livestock feed.

The U.S., the world’s largest grower and exporter, will harvest 7.3 percent less this year, leading the first decline in global output since 2009, the U.S. Department of Agriculture estimates. Morgan Stanley expects soybeans to average $14.25 a bushel in the 12 months ending Aug. 31, the most ever and 21 percent more than yesterday’s closing price of $11.775.

The use of soybeans expanded at almost four times the pace of the world population in the past decade, led by China, government data show. While prices began tumbling last month on investors’ mounting concern that slowing growth will weaken demand for raw materials, global consumption of cooking oils hasn’t fallen during a recession in the past three decades, USDA data show.

“People still need food, even if they aren’t buying new cars, refrigerators or other durable goods,” said Steven Nicholson, a commodity procurement specialist for International Food Products Corp., a distributor and adviser on food ingredients in Fenton, Missouri. Prices may jump 19 percent by April because “production is not keeping up with rapidly expanding demand growth from developing nations,” he said.

Stock Watch: Tata Steel, JSW Steel, MRF, M&M

Tata Steel is investing 2 million pounds in its Hartlepool tube works and has forged a supply deal with German steel tube producer Eisenbau Kramer (EBK) to increase its product and service offering to the offshore renewable energy sector. According to Tatas, growing activity in the renewable sector will require large volumes of jacket fabrications for wind tower structures. The Hartlepool development will establish a central supply base for steel tubular sections to be used in the fabrication of wind turbine steel foundation structures, known as jacket foundations. Work on the site is scheduled to begin in October and to be complete by Spring next year. Components will be manufactured from tubulars at the new facility and prepared for welding into the finished structures, shortening throughput times and improving cost efficiency for customers, who will be able to source all steel components from a single supplier.

Maruti Suzuki, HUL and ONGC may witness some action today

Operations at India’s largest carmaker edged closer to a standstill as labour unrest at Maruti Suzuki India’s production units in Manesar choked component supplies to its sole functioning facility in Gurgaon. The company finds itself in its toughest spot in more than a decade, with no end in sight to the strikes, and a potential loss of sales during the upcoming festival season, when car sales soar. The company has lost revenues of Rs 1,215 crore due to the strikes so far. Yesterday, the company’s Gurgaon plant produced only 1,800 cars, 1,000 less than usual, as strikes at Suzuki Powertrain India (SPIL) since Friday disrupted the supply of diesel engines and transmissions. The production will dip further if the strikes continue.

US markets surge as France and Germany pledge to support Europe’s banks

The US markets surged on Monday, delivering their best one-day performance in over six weeks, as France and Germany pledged to do everything necessary to support Europe’s banks. The French and German comments gave investors hope that European officials may take bigger steps deemed necessary to control the region’s sovereign-debt crisis. German Chancellor Angela Merkel and French President Nicolas Sarkozy stated that they will deliver a plan to recapitalize European banks and address the Greek debt crisis by November 3. Also, Belgium stated that it will buy part of Dexia SA and provide security for depositors as part of a plan to rescue the lender.