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Orange Juice Prices Primed For Breakout After Forecast Warns Brazil Set For Worst Harvest In Decades

May 19, 2024

Orange Juice Prices Primed For Breakout After Forecast Warns Brazil Set For Worst Harvest In Decades

Breakfast lovers are in for another jolt as orange juice prices surge to near-record levels. A new report released on Friday indicates that Brazil, the leading global exporter of OJ, is facing its worst harvest in over three decades. This alarming development compounds existing issues in Florida’s citrus groves, which have been plagued by disease and are experiencing collapsing production levels to the lowest in decades.

Fundecitrus wrote in a note that Brazil will produce 232.4 million boxes—each weighing about 90 pounds—for the growing season this year. That’s a 24% collapse from a year earlier and the lowest production levels in 36 years.

“Excessive heat brought stress to orange trees during a crucial period of flowering and early fruit formation between September and November last year. Further hurting output is an increase in citrus greening, a disease that causes fruit to prematurely drop from trees,” Bloomberg wrote, commenting on the report.

The report sparked additional fears about a worsening global OJ shortage.

In markets, prices of concentrated OJ futures in New York surged as much as 5% on Friday, closing up about 3% to $394 and only 8% off the record high of $425.

Sliding production in Brazil could soon impact US retail prices at the supermarket, considering Florida has yet to stage a significant comeback in production.

In the last year, the US has ramped up imports of OJ from Brazil to mitigate losses in Florida.

Don’t worry. Federal Reserve Chair Jerome Powell has everything under control on the food inflation front, as the prices of OJ, coffee, eggs, and cocoa have hyperinflated.

Watch OJ futs in NY into the new week.

Oops! U.S. oil and gas exports fuel domestic price rise

June 30, 2022

Oops! U.S. oil and gas exports fuel domestic price rise

The U.S. oil and natural gas industry long fought for and in the last decade finally won release from federal restrictions that limited exports. The ostensible reason was that because of the so-called “shale revolution” in the country’s oil and gas fields, the United States would have plenty of oil and gas to spare for export.

The real reason behind the push was that the oil and gas industry wanted what almost every other industry in American already had: The right to sell their products to the highest bidders no matter where they lived on the globe.

This made it almost certain that as U.S. prices rose to match world prices, U.S. consumers would feel the pain. And, since energy prices affect everyone who votes, they are always politically consequential.

So, it is unsurprising that with U.S. regular gasoline prices over $5 per gallon President Joe Biden lashed out at U.S. oil companies—which are having one of their best years ever—saying they need to increase production of refined oil products. The companies have responded that their refineries are running at close to maximum capacity and so there is not much they can do in the short run.

What is left unsaid is that it has long been the policy of the United States to allow the export of refined (as opposed to crude) petroleum products such as gasoline, diesel and heating oil. The country has refinery capacity significantly in excess of domestic needs and so exports a considerable volume of refined products including about 1 million barrels per day (mbpd) of gasoline and 1.4 mbpd of diesel and heating oil (for the week ending June 10)…

…click on the above link to read the rest of the article…

Oops! U.S. oil and gas exports fuel domestic price rise

June 20, 2022

Oops! U.S. oil and gas exports fuel domestic price rise

…click on the above link to read the rest of the article…

World War III is here, but it’s not what we expected

March 20, 2022

World War III is here, but it’s not what we expected

Movies and books have often portrayed World War III as either the final chapter of the human epoch or as a new but primitive restart for those who survive the nuclear conflagration. We cannot know if such prophesies will ultimately come true. For now World War III appears to have started with Russia’s attack on Ukraine, but without nuclear missiles so far.

Make no mistake. The battlefield for this war is worldwide; it’s just that it is primarily an economic battlefield. When Russia attacked Ukraine, the other great powers did not send soldiers and tanks. Instead, they orchestrated one of the most comprehensive economic warfare schemes ever devised.

Measures included cutting Russia out of the international payments system called SWIFT, blocking Russian exports (except most commodities) and discouraging commerce of many kinds with Russia. Many countries froze accounts owned by Russia’s central bank and also accounts owned by prominent wealthy Russians. Wealthy Russians targeted by sanctions also saw yachts moored outside Russian territory seized. The value of the yachts runs into the billions of dollars.

In the wake of these unprecedented sanctions, many non-Russian companies have reduced, suspended or eliminated operations in Russia. Here is a list of over 400. Not all were forced to take action because of the sanctions. But companies expected that doing business inside Russia would become extraordinarily difficult and also did not want to get on the bad side of governments around the world participating in the sanctions.

Russia has responded with an export ban covering more than 200 products. Notably, Russia did NOT include its major exports, energy and other minerals in the ban. It did curtail wheat and sugar exports temporarily…

…click on the above link to read the rest of the article…

Japan’s Economy Is Again Struggling

March 29, 2021

Japan’s Economy Is Again Struggling

Japan. the world’s third-largest economy is highly dependent on exports and the reality it is still struggling even after a great deal of America’s stimulus money leaked into buying imported goods speaks volumes. While it feels a bit like ancient history, Japan’s GDP contracted at an annualized rate of 28.8 percent in Q2 of 2020, the biggest decline on record. Even after bouncing back 21.4 percent quarter-on-quarter in Q3 and 12.7 percent in Q4 Japanese national accounts are still lagging behind mid-2019 levels. For all of 2020, spending by households with at least two people fell 5.3% due to the hit from the pandemic. It was down 6.5% for all households, the worst drop since comparable data became available in 2001.

https://cdn.statcdn.com/Infographic/images/normal/22583.jpeg

All in all, this means the country is still playing catch up, partly because Japan also experienced two additional quarters of negative growth in Q1 of 2020 and Q4 of 2019. Adding to the problem is Japan’s household spending fell for the first time in three months in December, in a sign consumer sentiment was weakening even before the government called a state of emergency to control a new wave of the coronavirus. Lower demand for services such as travel tours also weighed, as the pandemic forced the cancellation of domestic tourism promotions. Last year, spending on accommodations fell 43.7%, while overseas and domestic tour travel expenditure slumped 85.8% and 61.9%, respectively.Not only is Japan again struggling to stay out of recession, but it also faces a wall of debt that can only be addressed by printing more money and debasing its currency. This means they will be paying off their debt with worthless yen where possible and in many cases defaulting on the promises they have made. Japan currently has a debt/GDP ratio of about 240% which is the highest in the industrialized world. With the government financing almost 40 percent of its annual budget through debt it becomes easy to draw comparisons between Greece and Japan.

…click on the above link to read the rest of the article…

japan, bruce wilds, advancing time blog, exports, recession, currency debasement, debt,

Globalization Just Peaked

August 26, 2019

Globalization Just Peaked

In Jackson Hole on Friday, Bank of England’s outgoing governor Mark Carney talked about a Synthetic Hegemonic Currency (SHC) that the world ‘must’ create, and I thought: that sounds as creepy as anything Halloween. Now, Carney is a central banker as well as a former Giant Squid partner, hence a certified cultist, but still.

He even mentioned Facebook’s Libra ‘currency’ as some sort of example for something that should replace the US dollar internationally. And that replacement is allegedly needed because countries are hoarding dollars. And/or “protecting themselves by racking up enormous piles of dollar-denominated debt.” Whichever comes first, I guess?!

I’ve read quite a few comments on Carney’s speech, but far as I’ve seen they all ignore one aspect of it: the current shape and form of globalization. See, Carney can see only one thing: more centralization, more things moving more in the same direction. Remember, he’s the man who with Michael Bloomberg in 2016 wrote “How To Make A Profit From Defeating Climate Change”. Aka things are worth doing only if they make you richer.

It’s a state of mind that works fine when you’re inside a system and an echo chamber, when you’re a central banker or a corporate banker. But there’s nothing that indicates it’s a useful state of mind when the system you’re serving must undergo change. What is as true when it comes to climate change as it is for changing the entire global economy. Carney’s got blinders on.

World Needs To End Risky Reliance On US Dollar: BoE’s Carney

Carney [..] said the problems in the financial system were encouraging protectionist and populist policies. [..] Carney warned that very low equilibrium interest rates had in the past coincided with wars, financial crises and abrupt changes in the banking system.

…click on the above link to read the rest of the article…

These New Numbers Are Telling Us That The Global Economic Slowdown Is Far More Advanced Than We Thought

January 15, 2019

These New Numbers Are Telling Us That The Global Economic Slowdown Is Far More Advanced Than We Thought

We continue to get more confirmation that the global economy is slowing down substantially. On Monday, it was China’s turn to surprise analysts, and the numbers that they just released are absolutely stunning. When Chinese imports and exports are both expanding, that is a clear sign that the global economy is running on all cylinders, but when both of them are contracting that is an indication that huge trouble is ahead. And the experts were certainly anticipating substantial increases in both categories in December, but instead there were huge declines. There is no possible way to spin these numbers to make them look good…

Data from China showed imports fell 7.6 percent year-on-year in December while analysts had predicted a 5-percent rise. Exports dropped 4.4 percent, confounding expectations for a 3-percent gain.

China now accounts for more total global trade than the United States does, and the fact that the numbers for the global economy’s number one trade hub are falling this dramatically is a major warning sign.

And of course it isn’t just China that is experiencing trouble. In fact, we just witnessed the worst industrial output numbers in Europe “in nearly three years”…

Adding to the gloom were weak industrial output numbers from the euro zone, which showed the largest fall in nearly three years.

Softening demand has been felt around the world, with sales of goods ranging from iPhones to automobiles slowing, prompting profit warnings from Apple among others.

If we were headed for a major global recession, these are exactly the types of news stories that we would expect to see.

…click on the above link to read the rest of the article…

China Won’t Be Taking Over

January 10, 2019

China Won’t Be Taking Over

Pablo Picasso Massacre in Korea 1951

In the New Year, after a close to the old one that was sort of terrible for our zombie markets, do prepare for a whole lot of stories about China (on top of Brexit and Yellow Vests and many more windmills fighting the Donald). And don’t count on too many positive ones that don’t originate in the country itself. Beijing will especially be full of feel-good tales about a month from now, around Chinese New Year 2019, which is February 5.

And we won’t get an easy and coherent true story, it’ll be bits and pieces stitched together. What will remain is that China did the same we did, just on steroids. It took us 100 years to build our manufacturing capacity, they did it in under 20 (and made ours obsolete). It took us 100 years to borrow enough to get a debt-to-GDP ratio of 300%, they did it in 10.

In the process they also accumulated 10 times more non-productive assets than us, idle factories, bridges to nowhere and empty cities, but they thought that would be alright, that demand would catch up with supply. And if you look at how much unproductive stuff we ourselves have gathered around us, who can blame them for thinking that? Perhaps their biggest mistake has been misreading our actual wealth situation; they didn’t see how poorly off we really are.

Xiang Songzuo, “a relatively obscure economics professor at Renmin University in Beijing”, expressed some dire warnings about the Chinese economy in a December 15 speech. He didn’t get much attention, not even in the West. Not overly surprising, since both Beijing and Wall Street have a vested interest in the continuing China growth story.

…click on the above link to read the rest of the article…

Global Economic Slump Imminent As Korean Exports ‘Canary’ Crashes

January 2, 2019

Global Economic Slump Imminent As Korean Exports ‘Canary’ Crashes

In the latest sign that the slowdown in China and the global trade war is weighing on global commerce, South Korea’s exports fell in December. The 1.2% YoY decline was dramatically below the +2.5% YoY expected and missed even the most pessimistic forecast (which was still a rise).

Korean exports were hit by falling memory-chip and oil prices and cooling demand from China and imports also disappointed, rising 0.9% YoY.

“The (annual) decline came about a month earlier than I thought, but I expect Korean exports to be weak throughout the first half of this year, posting low single-digit growth at best,” said Lee Seung-hoon, an economist at Meritz Securities.

Exports to China dropped 13.9% in December over a year earlier, as trade friction with the United States weighed on demand from the largest buyer of South Korean goods.

South Korea is the first major exporter to report trade data each month, so provides an early reading of global trade; and as the world’s leading exporter of computer chips, ships, cars and petroleum products, December’s data is a major red flag for the global economy.

As the chart below shows, Global equity market earnings growth (and contraction) is extremely tightly correlated to Korean export growth (or contraction)…

So maybe global stocks are on to something with their recent collapse as they increasingly price in an earnings recession.

Trump’s Hand-Picked Winners and Losers: China vs Canada, NAFTA Threats, and P&G

September 22, 2018

Trump’s Hand-Picked Winners and Losers: China vs Canada, NAFTA Threats, and P&G

As a single country, China is the US’s largest trading partner but Canada is the largest export partner.

As Trump struggles to get a NAFTA deal going on account of Canada, the above chart puts things into perspective.

Canada is the US’s largest export partner. Moreover, when it comes to goods (as opposed to goods and services), the US consistently runs a trade surplus with Canada.

The US has had a goods surplus with Canada every month since 1985. Nonetheless, Trump is incredibly annoyed at Canada and threatens to put tariffs on Canadian cars.

Here’s the broad picture.

US Balance of Trade 2011-2017

I created the above chart from downloads of these three Census Department files.

Notes

Hong Kong, Singapore, and Taiwan were added in 2015.
The format of the reports changed in 2014, but that link has annual totals that date back to 2011.
Prior to 2014 there was no Exhibit 20 (selected countries).

2018 Subtotals

Mid-year 2018, the US is still running an overall trade surplus with Canada, so this will likely be the fourth year the US records a trade surplus with Canada (total the first two highlighted columns).

Nonetheless, Trump is moaning. And the global chart shows it’s over very insignificant totals.

This is the true nature of the “worst trade deal in history” where Canada is now more important than Mexico.

NAFTA negotiations are at an impasse.

As President Trump threatens to ink a deal with Mexico by Sept. 30 and leave Canada behind, the New York Times asks Can Nafta Be Saved? These Two Negotiators Are Trying.

…click on the above link to read the rest of the article…

“Trump Won’t Back Down”: Bannon Warns Trade-War Will Be “Unbearably Painful” For China

September 21, 2018

“Trump Won’t Back Down”: Bannon Warns Trade-War Will Be “Unbearably Painful” For China

Steve Bannon – who claims to have helped President Trump draft the battle plan for the ongoing trade war, says that Trump’s strategy is to make the conflict “unprecedentedly large” and “unbearably painful” for Beijing, according to an exclusive interview with the South China Morning Post.

The ultimate goal, says Bannon – is not just to force China to give up its “unfair trade practices,” but to “re-industrialize America” since manufacturing used to be the core of the nation’s power. Bannon also criticized the “Made in China 2025” plan for Beijing to catch up with the West in 10 key tech sectors – saying that Chinese firms were relying in generous government support to reduce future technological reliance on the West.

Bannon, who claimed to have helped Trump draw up the trade war plan, said that in the past, tariffs had been limited to imports of between roughly US$10 billion and US$30 billion but the sheer magnitude of the more than US$500 billion in question this time had “caught Beijing off guard”.

“It’s not just any tariff. It’s tariffs on a scale and depth that is previously inconceivable in US history,” Bannon said.

He said Beijing had relied on “round after round of talks” to take the momentum out of the US punitive measures, but the delaying tactics would not work.

“They always want to have a strategic dialogue to tap things along. They never envisioned that somebody would actually do this.” –SCMP

Bannon says he and Trump were convinced that the US would win a trade war, and that Chinese elites were worried about the same, with “so many senior Chinese officials exhausting all channels” in order to move their money out of China and snap up West Coast and New York real estate.

…click on the above link to read the rest of the article…

Ex-PBOC Head Warns China’s Exporters Could Soon Ditch The US

September 21, 2018

Ex-PBOC Head Warns China’s Exporters Could Soon Ditch The US

Former Chinese central bank governor Zhou Xiaochuan suggested on Wednesday that the direct impact on China of the trade war with the US “appears limited,” though it could quickly prompt China’s top exporters to pivot away from US markets. Xiaochuan, who left the bank in March after 15 years at the helm, told Reuters that China’s economy would be stable in 2018, with an expected growth rate of 6.5%, but needed to shift away from an economic model based on “urbanization,” or constructing ghost cities.

However, the main risk to the global economy is protectionism according to the ex-PBOC head. The costs of protectionism could hit the US the hardest, as Chinese firms are expected to withdraw from US markets and expand into other global economies:“I think it will force China to look at many other markets. So it’s not necessarily a good thing for the United States,” he said.

“I think the speed of (geographical) diversification can be relatively fast and beyond many people’s expectations.”

Reuters said Xiaochuan downplayed the idea that protectionism will severely affect economic growth in China, which he said had been estimated at 0.2-0.8% of GDP, but added that trade wars are creating uncertainties and could hurt business confidence.

Xiaochuan is right, in the latest US Economic Outlook via Barclays, US Economist Michael Gapen revealed that global growth momentum is already slowing.

Gapen also showed that global trade volume as a share of world GDP has likely reached a turning point into a protectionist era.

As a result of the peak in “hyper-globalization”, China is being forced to change its growth strategy after many decades. The economic driver of supplying Western markets with cheap goods and constructing ghost cities in China are over. “Whether this is reaching the peak or has peaked and maybe going down, we need to find some new economic growth driver,” said Xiaochuan.

…click on the above link to read the rest of the article…

Currency Wars Erupt, We Have Reached the Point of No Return

April 7, 2018

Currency Wars Erupt, We Have Reached the Point of No Return

It is happening, and it cannot be stopped.

The Currency Wars that have been discussed at length by many precious metals experts for years are here, and there is now no turning back.

As I have previously discussed, these wars have been ongoing for much of the last decade, if not longer. However, it has remained largely a “gentleman’s” war, with neither side wishing to expose their hand too much.

Now, with the increased rhetoric coming from the Trump administration, things have turned red hot. Shots are being fired back and forth on an almost daily basis.

President Trump has imposed numerous tariffs on Chinese goods entering the United States. The first was $50 billion worth of tariffs, to which China swiftly responded in kind, imposing $50 billion worth of their own tariffs on American imports such as soybeans and small aircrafts.

As expected, President Trump would not let this stand, and he is now discussing an additional $100 billion worth of tariffs on Chinese goods. This action would, of course, be answered with a likewise response from China.

As we can already see, these actions will have a ripple effect through not only the Chinese and US economies, but the entirety of the West, as these countries are two of the largest importers / exporters in the world.

These increased hostilities show no sign of abating and are likely to increase from this point out. Neither side is willing to back down and show weakness. As a result, stock markets have corrected sharply, proving that they too prescribe to my assumption.

…click on the above link to read the rest of the article…

Trading away our future?

January 22, 2018

Trading away our future?

Early trade was about ecological adaptation, transporting essential food or other essential goods to a places where they were lacking. Very little in present international trade is based on that. Instead, trade in itself creates shortages. Today, Sweden only produces half the beef it consumes. This is not because there is no land or resources available in Sweden. On the contrary, the country has let a million hectares of meadows revert to forest and a lot of arable land is idle – or grazed by horses that people keep for a hobby. International trade can be a safety valve for food shocks by moving food from one part of the world to the other. Yet it has dramatically reduced each region’s self-sufficiency and made all of us dependent on global supply chains for our daily food. Some of the trade is really difficult to understand or justify. More or less identical products are exported and imported by the same countries. As the ecological economist Herman Daly points out: “Americans import Danish sugar cookies and Danes imports American sugar cookies. Exchanging recipes would surely be more efficient”.[1]

It is a mistake to conclude that there is a linear process driving farmers into increased levels of commercialization. In times of collapsing markets, natural disasters, unrest or war, self-sufficiency and non-market exchange is bound to play a bigger role. The Roman peri-urban sprawl with agricultural estates, villas, engaged in intensive commercial production went the same way as the Empire. At the fall of Rome the area fell into neglect and finally reverted to extensive pastoralism.[2] The pastoral beauty of this Roman Campagna inspired the painters who flocked into Rome in the 18^th and 19^th centuries, when it was the most painted landscape in Europe.[3]

…click on the above link to read the rest of the article…

Canada’s Goods Producing Sector Caves

December 24, 2016

Canada’s Goods Producing Sector Caves

Exports get blamed, despite the crushed loonie.

Many countries, including the US, report GDP on a quarterly basis. Canada reports on a monthly basis. So today Statistics Canada reported GDP for October. What’s disconcerting isn’t so much that GDP fell 0.3% on a monthly basis – these things happen – though it disappointed economists along the way…

The “results were surprisingly bad,” wrote Krishen Rangasamy, senior economist at Economics and Strategy, National Bank of Canada.

“The GDP report is an ugly snowball of reality to the face of the economy to end the year after a nice run earlier in the fall,” said Douglas Porter, chief economist BMO .

But what was disconcerting was just how much the goods producing sectors are getting hammered across the board.

This chart by NBF Economics and Strategy shows the decline in October (blue bars, left scale), and it also shows that this type of monthly decline, during our mediocre economic era, is not rare. The red line (right scale) shows the annualized rate for the last three months, which is still positive, but careening lower:

Output of the overall goods producing industries caved 1.3% from September. It was broad-based, with manufacturing, mining, quarrying, and oil & gas extraction, construction, utilities, agriculture, and forestry all declining. It more than wiped out the gains of the goods producing sectors in September.

Manufacturing, which contributes about 10% to GDP, has taken a big beating, despite the loonie that the Bank of Canada has successfully devalued over the past few years to make exports more competitive, particularly in the US. But manufacturing output fell 2% on a monthly basis, the largest monthly decline since December 2013. It has gone nowhere since February 2014 (red line):

Both durable and non-durable manufacturing fell. StatCan:

…click on the above link to read the rest of the article…

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