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.”
is that all you got to say...
of wait -— it’s up ?
Maybe NOW would be a good moment - hu ?
I already spelled out your market ignorance upthread.
lol um yeah but my market ignorance keeps me afloat quite well :)
As they say in a large country inhabited by big mouthed guys with bizar hats:
If it’s a stupid idea - but it works - it ain’t stupid.
Buying futures for delivery is different than your original claim that the option traders were making all the money.
yes it is - you are welcome !
But it’s not a contradiction - is it ?
It has nothing to do with your claim that futures trading is not zero sum.
What kind of trade IS zero sum ?
It’s against the whole idea of trade.
Trades on a futures exchange. A seller writes a contract and the buyer buys it from him.
The profit made by one side is matched by the loss on the other side. They both pay commissions and fees, so it's actually a negative sum trade.
but if you enlarge the hull it’s not.
and I wasn’t even the one who started on future trading ... I was talking about derivatives - options don’t have to be symmetric.
Option trades are just like futures. Whatever the seller/writer makes/loses is matched by what the buyer loses/makes.
So my point is that the trade of derivatives increases the prices of the underlying values.
Wich is yours ?
but the initial seller (the issuer) will sell with a fee called spread.33
but the initial seller (the issuer) will sell with a fee called spread.
My point is you don’t understand derivatives.
A spread is not a fee.
If the market for an option is 3/4 - 1 1/4, the buyer will pay 1 1/4. Now that he has established his position, whatever he makes will be offset by the seller's loss. Whatever the buyer loses will be offset by the seller's gain.
Think of it as a poker game with only 2 players. One loses, the other gains. And the house takes a little bit off the table anytime the players trade.
And don’t forget the steep rise in corn prices that all of this biofuel craziness is causing.
You guess ?
Well I guess that if you are right that I am in good company - maybe there’s much less to understand as most people dealing with them always thought.
In fact I don’t think that people dealing with derivatives think much about what they are really doing.
So - say you don’t want to make a real comment with a meaning do you ?
Think of it as a poker game with only 2 players. One loses, the other gains. And the house takes a little bit off the table anytime the players trade.
yeah - ok - You know that and I know that. It’s a zero sum game until it comes to fees and spreads. The house earns money - that’s why it’s not a zero sum game.
What’s the point of using your brain and creativity for making up misunderstandings ?
You shouldn’t be embarassed when the gold lovers are right at the moment - if plan A fails - you know - plan b is next.
No. It's clear that you don't understand derivatives.
Then what did this comment mean?
It’s not the 2 dollar back and forth - it’s the interests on captial - the spreads - and all that.
And why are you so confused about spreads?
thank you - you are a great help.
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