PHILIPPINES TRIES TO REPAIR MINING REPUTATION: Issue 27 Mar 25, 2013

By Rene Pastor

The Philippine government is trying to repair the damage done to the rising reputation it is hostile to mining, although more aggressive action is needed to completely dispel the image that Manila wants to score cheap points by pandering to anti-mining groups.

With little fanfare, the Mines and Geosciences Bureau lifted the moratorium on accepting applications for exploration permits or technical agreements that allow companies to explore the country. Combine that with the approval of an environmental clearance certificate to the Tampakan project in Mindanao, the resumption of operations by Philex and the budding development of a rare earth mineral site by Sumitomo – and the perception is that the Philippine government has belatedly come to its senses in understanding that mining is vital for the country’s sustained development.

Industry group Chamber of Mines said “that government is responding to the mining industry’s call for a stable policy and investment environment needed by investors.”

“Exploration activities are essential in establishing our country’s mineral resource, and are considered the lifeblood of mining operations,” the Chamber said in a statement, adding mining “helps attract foreign investors and entice companies to provide the capital and modern technologies for large-scale mining projects that can manage environmental protection measures and social development programs in the mining communities.”

“The Chamber is hopeful that these developments will encourage more direct investments that would ensure the growth of the mining industry for the benefit of the whole country. We will continue to be a partner of the government in developing the mining industry,” the Chamber concluded.

The problems have not all been cleared up.

Manila should really take more aggressive action against provincial laws such as the one involving Tampakan and the ban on open pit mining. There is a mining law in place and a provincial law should not trump that. It looks like the government of President Benigno Aquino will wait until after the May mid-term elections before tackling that politically sensitive issue.

For all the good work on the economy the Philippine government has done, it would even be better if mining is going full tilt. Mining can provide a lift in jobs for Filipinos. The money and the jobs are likely the final critical argument which prompted the government to shelve a budding anti-mining stance.

In a way, the recent announcement by Sumitomo that the Philippines will become a key rare earth mineral producer provided the final impetus for mining.

The Philippines will become a producer of a rare earth metals early next year, joining a small group of countries producing materials that are critical to the running of gadgets like cell phones and night vision goggles.

RICE DEMAND PICKS UP IN ASIA, U.S. RICE TO IRAN AND VENEZUELA
By Jack Scoville, The Price Futures Group

Rice has seen stronger demand than anticipated in Asia, and there is good demand for U.S. rice in the Middle East and Latin America.

The U.S. has been selling even to our very best friends like Iran and Venezuela in recent weeks, and this trend should continue.

India has been selling some rice too, mostly into China but also maybe into Africa. The sales from India will hurt Thailand and Vietnam more than anyone. Those two sellers will need to find other buyers.

Vietnam at least has what is available from Southeast Asian countries like the Philippines and Indonesia and Malaysia to sell into and to compete against the likes of Cambodia and Myanmar.

Vietnam can sell into China very easily across the border, just like India and Pakistan.

Thailand, however, has bought a lot of rice from its farmers at high prices and needs to sell into the world market at high prices too. Thailand can keep selling into the domestic market if it wants to, but it can’t find many buyers in the world market. Traders expect them to sell sooner or later, but so far there is no real movement to push the rice out just yet.

Meanwhile, the market has rice, but the disappearance seems to be a lot stronger than expected by the FAO and the like. This implies that the world might not have such comfortable stocks as the world bodies would like to have us believe down the road.

That also means keep the supplies in hand at comfortable levels and do not go hand-to-mouth. Keep an adequate supply coming at these rather cheap prices. It does not seem that rice prices need to go lower than they already are.

Wheat markets are now watching mostly India and China. India has chosen to export wheat to relieve its storage problems. It has produced too much grain and needs to sell some. Pretty hard to believe as India keeps sucking the water out of the ground and then selling the subsidized production into the world market at cheap prices, but that is its business. It is hurting U.S. prices a bit but the demand for U.S. wheat has been good anyway. India will help keep prices reasonable for buyers for the next few months, then the northern crop harvest will be underway.

For now, the world crop situation is a bit hard to see. There are still production problems here, although the situation in the Great Plains is a little better, and some extreme weather has been noted in Europe and Russia too.

So, what is available this summer is still up in the air.

Corn and soybeans are continuing to focus on the South American situation and increasingly on what is setting up for production and demand here in the U.S.

Soybeans started to hit the export channels in Brazil last week, and there were reports that boats are leaving harbors with soybean shipments now. The stevedores and the government reached agreement in Brazil, so that impediment to the smooth flow of soybeans has been removed.

There are still a lot of logistical problems in Brazil to be worked out. Simply put, the country is not equipped with the infrastructure to handle record exports of corn and soybeans as it is trying to do this year. The roads are not good enough, there are not enough railroads for the volume, and the ports are not set for this type of volume either.

But at least the soybeans are starting to flow and the corn is still flowing. The wait to load at ports is still about two months and not likely to improve anytime soon, but now that things are moving it is hoped that the situation will slowly improve over time.

The same cannot be said for Argentina. The country is starting to harvest now, and production is all that bad considering the bad weather they had during the growing season.

Production estimates seem to be averaging near 25 million tons for corn and somewhere near 50 million tons for soybeans. Not a record, but no worse than what has been factored into supply and demand tables already. The problem is that farmers are not willing to sell except when they really need some money. They do not trust the government or the economic policies of the government, and with reason.

The government has looked upon agricultural producers as a cash cow, and to a certain extent it is as it is the one industry that can compete in the world market. Almost no other industry can compete down there. But the government interference in what farmers can produce and how they can sell, plus some pretty extreme taxes for some of the goods, keeps the producers quiet.

Something will have to give, and it will be the government or the producer. The government is not looking good and is losing support so maybe it will be forced to compromise.

We will see how it goes, but the problems there will help keep prices for both corn and soybeans a little higher in world markets than they probably should be as we move through the next few months.

Other than that, though, prices should continue to work lower over time, but not much lower until we know we have a crop here in the U.S.

Production potential and supplies here in the U.S. will be the big topic of conversation this week as traders wait for the USDA quarterly stocks report that should show very tight supplies for corn and soybeans and the USDA Planting Intentions report that should show that farmers will plant as many acres of corn and soybeans as they possibly can.

The reports should help keep the market in a bull spread mode, with the nearby delivery months at higher levels than deferred and with nearby months losing some of the spread over time as the exports from the south improve and as farmers start to plant in the north.

It is still too cold and wet for farmers to work here in the U.S., the direct opposite of last year when the spring was very warm and farmers got off to a record early start. Not this year.

PALM OIL OUTLOOK: PRICES MOVE SIDEWAYS, BUT DEMAND IMPROVES
By Jack Scoville, The Price Futures Group

Palm oil prices are trading in a sideways band right now. The demand side is showing some improvement this month, and is getting helped by soybean oil and canola.

Soybean oil prices have held pretty strong as the biofuels demand has been good and as Argentina, the world’s largest exporter of soybean oil, has not entered the market yet and might not for quite a while unless the producers and the government there can get together and get a deal going that would allow for exports to flow.

Canola and canola oil prices remain strong. So strong that China has now allowed its private industry to import from Australia instead of just Canada.

The Canadian production was poor last year, and the industry there is worried about running out just like we are here for corn and soybeans.

The demand shifts to palm oil should help keep a floor under prices even with more than enough production and supplies in both Malaysia and Indonesia.

On the other hand, it is that big production in Southeast Asia that should keep prices from moving very high.

We look for the palm oil market to trade in a range for now and quite possibly the next several months.

PHILIPPINES TRIES HAND AT ONION EXPORTS

The Philippines has exported a trial shipment of 20 metric tons of yellow onions to Japan as it tries to open an export market for the bulb used in everything from soup to salads.

“If the initial shipment conforms to the quality standards and (is) accepted by the Japanese market, it would pave the way to further boosting our onion and providing our farmers assured market and income,” said Agriculture Secretary Proceso Alcala.

The Philippines produced a total of 124,830 tons of onions in 2012. Yellow onions made up 15 percent of the total, 55 percent are red onions and the rest are shallots.
Philippine onion exports shriveled in the 1990s due to increased competition and smuggling of the bulk into the country.

The top onion producer is China at 20.5 million tons. They are followed by India with 13.3 million and the United States with 3.3 million tons. The Philippines is taking aim at the Japanese market because it is a prime market for vegetables in the region.

WEEKLY WEATHER OUTLOOK THROUGH MARCH 30 IN THE KEY RICE-GROWING REGIONS (FROM PAG-ASA WEATHER BUREAU)

Cagayan Valley, the provinces of Aurora and Quezon provinces, the Bicol area of southern Luzon and down through the Eastern Visayas region all the way to Davao on Mindanao island will see cloudy skies with light/moderate showers or thunderstorms.

Monday night may see light rains over northern Luzon island, and then moderate showers are likely over the east/northern half of Mindanao island and the Davao city region.

Generally fair weather will be seen over Luzon and the islands of the Visayas the rest of the week. Mindanao island should continue to see light to moderate rain the rest of the week.

Rice is grown mainly on Luzon, Mindanao, and a few islands in the Visayas region.

USDA WEEKLY GRAINS REPORT IN PORTLAND, OREGON – MARCH 22
Japan keeps buying wheat, others quiet

There were nine grain vessels in Columbia River ports on Thursday, March 21, with four docked compared to 13 last Thursday with five docked. Confirmed new export sales were limited to Japan.

Japan purchased the following wheat in metric tons (mt): 23,020 of hard red winter wheat and 30,148 of dark northern spring wheat for April 21 to May 20 shipment, as well as 23,680 of western white wheat for arrival by June 30.

Outstanding U.S. white wheat export sales as of March 14, 2013 for the marketing year beginning June 1, 2012 and ending May 31, 2013, totaled 753.8 thousand MT compared to 782.0 thousand MT on March 7, 2012, and 1404.8 thousand MT one year ago.

Outstanding white wheat export sales for the 2012-2013 marketing year were to the following countries in 1000 MT:

Japan 140.8
South Korea 107.8
Philippines 103.0
Yemen 100.00
Egypt 55.0
Thailand 38.0
Nigeria 19.2
Taiwan 10.0
Burma 2.0
Canada 1.5
Malaysia 1.0
Vietnam 1.0
Total unknown 174.5

Accumulated white wheat export shipments as of March 14, 2013, in 1000 MT for the 2012-2013 marketing year, totaled 3725.2 compared to 4275.0 one year ago.

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