Posted on 01/17/2008 11:35:09 PM PST by TigerLikesRooster
Soaring soyabean price stirs anger among poor
By Raphael Minder in Hong Kong, John Aglionby in Jakarta and Jung-a Song in Seoul
Published: January 18 2008 02:29 | Last updated: January 18 2008 02:29
During the ancient Zhou dynasty, soyabeans were among China’s five sacred grains.
Thousands of years later soyabeans maintain their importance to the Chinese and most other Asians, but they have recently triggered much more down-to-earth preoccupations.
On Monday, 10,000 Indonesians demonstrated outside the presidential palace in Jakarta after soyabean prices soared more than 50 per cent in the past month and 125 per cent over the past year, leaving huge shortages in markets. And while the social unrest has not yet spread to other Asian nations, consumer frustrations are mounting.
From tofu in China to miso, or soyabean paste, in Japan, soya products are an essential ingredient in Asian cuisine as well as staple food for the region’s poor.
For many Indonesians, a piece of tempeh, or fermented soyabean cake, is often their only source of protein, and last year soya products accounted for 22 per cent of Indonesians’ protein intake, excluding rice, according to government data.
“It’s probably double that for poor people, who make up almost half the population, because it’s the cheapest protein source,” says Harbrinderjit Dillon, an agriculture analyst.
“The crisis shows how low the government has sunk. The public’s attitude is that if it can’t even take care of [soyabean products] then what can it do?”
World soyabean prices climbed to a record this week, partly because farmers in the US and Asia have instead been growing corn, palm oil and other crops to supply the biofuel industry. Bad harvests in Latin America and rising Chinese demand have added to the price pressure.
“It’s finally a trade-off between filling stomachs and filling diesel tanks in cars and trucks,” says Ashok Gulati, director at the International Food Policy Research Institute.
The Indonesian government is now taking tentative steps to address the price surge, but their impact could prove limited. Mustafa Abubakar, the head of Indonesia’s government logistics agency, said on Thursday that Jakarta would import lower-quality soyabeans than previously from the US to help contain the price surge.
Authorities in other countries are also starting to act. In South Korea, the national agency handling imports, Korea Agro-Fisheries Trade Corporation, is poised to increase soyabean imports to contain prices, while the Korean agricultural ministry has formed a taskforce to deal with the worries over price.
Meanwhile, food producers have been quick to pass on higher costs to consumers. In Japan, miso companies recently announced rises of 10 to 15 per cent.
In South Korea, soyabean prices increased by 10.7 per cent in December alone, translating this month into retail price rises of up to 30 per cent for soya milk, snacks and some other soya goods.
In Hong Kong, tofu sellers at the city’s Graham Street market have raised prices for the first time in at least 10 years.
“Our costs have gone up because the tofu factories have increased their prices twice since last October,” says Ng Chou, 73, whose family’s To Kei tofu store has been in existence since 1949.
A slab of tofu from Mr Ng that cost HK$4 (50 US cents) last October now costs HK$5.
An essential problem for Asia is its dependency on imports.
Japan imports 95 per cent of the roughly 4m tonnes of soyabeans consumed there each year, with three-quarters of the total coming from the US. Casting its ever larger shadow over world prices is China, already the world’s largest importer.
Chinese demand has been surging, particularly for soyabeans used as feedstock as a more affluent society raises its meat consumption. Chinese pork prices have climbed about 80 per cent over the past year – a much bigger source of popular frustration.
In the coming decade Chinese import demand is set to “dwarf all other countries” and account for more than three-quarters of the projected gain in world soyabean trade by fiscal 2017, according to the US Department of Agriculture.
“China is the biggest swing factor for the soyabean market. Period.’’ says Dong Tao, a regional economist at Credit Suisse in Hong Kong.
“Chinese soyabean imports are very volatile, as imports supplement domestic production, and the swings can be hard to explain.”
How does an option buyer make money? Who does he buy the option from?
From an institution that is usually not in the possesion of the underlying good.
It’s all on a piece of paper. As money is.
enlighten me ... once in your life :)
So the buyer makes $2 when the underlying goes from $10 to $12 and the seller loses $2.
Ummm no ?! There’s usually a leverage and a spread - isn’t there ?
By selling back and forth the banks ‘earn’ a lot of money.
So the buyer makes maybe 2$ times 4 minus 20% spread.... and because the buyer (as the seller) is most probably an institution that doesn’t work with it’s own capital it’s minus some more percent for interests.
It’s not the 2 dollar back and forth - it’s the interests on captial - the spreads - and all that.
There’s so much capital in these markets that doesn’t really produce a benefit. It’s like the housing bubble - so much economy around a guy that cannot pay for his house. It’s excessively printed money at work.
Watch it collaps as gold goes to 2k$
Don't change the subject.
So the buyer makes maybe 2$ times 4 minus 20% spread.... and because the buyer (as the seller) is most probably an institution that doesn’t work with it’s own capital it’s minus some more percent for interests.
You're funny! $12-$10=$2, $10-$12= -$2.
It’s not the 2 dollar back and forth
LOL!
We're not talking about the banks or the brokers, we're talking about the buyers and sellers of options.
So that’s what you want tot talk about ?
What’s up with them ?
What?
What’s up with them ?
Them?
yup
Try asking your questions again, in English.
There’s nothing wrong with “oil dependency” - why do you think it’s on the planet in the first place? (for us to USE)
The problem is that the enviros won’t let us use our OWN oil, and are basically Luddites who want everyone (except themselves) to have a reduced lifestyle.
lol yeah that’s correct - and they don’t want nuclear energy either.
But isn’t it a good strategy to suck the middle east dry and THEN go to domestic resources ?
Or safe them for the chemical industry - if economically feasable ?
I understood that taking the oil out of the sand in saudi arabia is much cheaper as it was with US domestic resources.
Tell me again how people make money trading options, that was funny!
This is a good point. Is that the strategy? Maybe, and good. We ARE enriching the Islamists by doing this, though. But, like any stupid businessmen (dot com bubble anyone?), they aren't protecting their cashflow. Once the oil is gone, so is their wealth - back to wandering the desert on camels. Seriously, the Islamists are the biggest threat to civilization. They want their "peace", which consists of a Global Islamist caliphate in which all people are either Muslim, Dhimmi, or DEAD.
Oh for crying out loud - you know all that.
If you are in desperate need of soy beans - you would like to buy some. You can buy the beans - the transport of the beans, the packaging of the beans, the handling of the beans, fees for this and that inbetween - but you are not finished with that - you also have to purchase a certain amount of options in advance - because if you don’t maybe the chineese come along and buy them on the day you need them for a really ridiculous high price - that’s because they got to get rid of their greenback (see the actions of the fed today to know why)
So you have to buy options because you do want to tell those who give you the money to opperate your business how you manage your risks - otherwise they go elsewhere.
So these options are ment as an insurance. Only this insurance is traded on high volume in a highly inflational way by hedgefonds and institutions who don’t need the beans as such nor do they need a beanpriceinsurance (please forgive me my german tendcy to merge words)
So each and everyone in the soy bean dealing business is certianly not dealing with your 2 dollars back and forth - to purchase beans you got to pay more then the beans.
Of course your national monkey for calculating a fake but accurate rate of inflation will only account for the price of soy as such. But that’s not relevant anymore for business. It’s the TOC of the bean that matters :)
But hey - you DO know that. How’s your BOA stocks today ?
(Sorry I was in that mood)
ahh for pete’s sake the TCO not the TOC - but hey I am taking away your fun - so you go on...
In the moment they are helping to hold up your banks.
Their money works in the US since always. It’s like in the old times of slave trade - they sell out their assets (like african chiefs sold their own people) and you (like the portuguese then) take the future benefits.
And certainly you protect them from each other (no they are not all the same). Protection is quite expensive if it has to come from the outside (classical italian business)
How’s your BOA stocks today ?
It's up.
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