SPH Reit IPO - successful!

I tried for SPH Reit IPO lots and got some successfully :) Should be holding it long term for dividend, like the rest of my REITs :)

List of my REITS:
1. Mapletree Commercial Trust (IPO + open market)
2. Sabana (open market)
3. Saizen (open market)
4. MGCCT (IPO)
5. SPH Reit (IPO)


Disclaimer: The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.

Jump in oil prices - encourage biodiesel demand hence increase Crude Palm Oil (CPO) prices?

Due to my holdings in Indoagri, I have been keeping a look out on the Crude Palm Oil (CPO) prices and associated news that may affect it. Oil prices have been showing an increase due to improvement in economy. Coupled with tension in the Middle East, this triggered fears of supply crunch in oil. As an oil alternative for fuel, this may mean good news for CPO producers since this may encourage biodiesel demand.  

On the flip side, I have holdings in Food Empire as well, which is a direct user of CPO. However, I have read that coffee and sugar prices continued to be depressed, so I will monitor this for now.

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Excerpt of article from Reuters on Friday 5 July 2013

UPDATE 9-Oil jumps $2 on Egypt, US data, biggest weekly gain in a year

NEW YORK, July 5 (Reuters) - Oil prices jumped nearly $2 a barrel on Friday to notch their biggest weekly gain in a year, boosted by concerns over rising tensions in Egypt and better-than-expected U.S. economic data.

Prompt U.S. oil prices initially lagged gains but rallied later in the day, extending this week's abrupt gains in spreads on speculation that U.S. Midwest oil supplies are poised to tighten. The September versus October U.S. West Texas Intermediate spread <CLU3-V3> rose 26 cents to close at a contract high of $1.31 a barrel.

......

U.S. crude oil prices extended their string of 14-month highs. Front-month U.S. crude oil futures settled $1.98 per barrel higher, or 1.96 percent, at $103.22, after touching a high of $103.32. Trading volume was thin due to the Independence Day holiday on July 4.

U.S. oil gained 6.7 percent for the week, the largest weekly percentage gain since October 2011.

Brent crude oil for August delivery traded at a three-month high and ended $2.18 per barrel higher, or up 2.07 percent, at $107.72 after hitting a high of $107.88.

Brent gained more than 5 percent on the week and showed its highest weekly percentage rise since last June.

Oil prices vacillated earlier in the day after data showed that U.S. employers added 195,000 new jobs to their payrolls last month, more than expected.

......

But for oil markets, the potential upside from increased economic activity outweighed risks from the rising dollar and possible policy tightening, said Matt Smith, commodity analyst at Schneider Electric in Louisville, Kentucky.

SUPPLY TIGHTENS, MIDEAST TENSIONS WEIGH

Crude oil extended gains late afternoon after the leader of Egypt's Muslim Brotherhood, Mohamed Badie, told a protest rally that ousted president Mohamed Mursi must be reinstated following his removal by the army - "otherwise its our lives".

......

Other factors are also tightening European oil supplies. Maintenance on the North Sea Forties crude oil field in August will reduce the amount of benchmark oil that underpins the Brent contract.

Libya's largest export terminal was shut late on Thursday. Port guards locked the gate over salary complaints, preventing workers from continuing operations.

The closely watched spread between global benchmark Brent crude oil and U.S. West Texas Intermediate had widened to $5.17 per barrel and settled at $4.50.

......

If you are reading this, you may be interested in:-

Partial divestment in Second Chance - Hello Indoagri!

Disclaimer: The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.

Higher margins due to lower coffee price for Food Empire?

Report from Bloomberg today...

Coffee Crushed as Slumping Real Spurs Brazil Sales

The weakest Brazilian real in four years is accelerating coffee shipments from the biggest growing nation, adding to a glut that is cutting costs for Starbucks Corp. (SBUX) and Kraft Foods Group Inc.

First-half shipments were 20 percent higher than a year earlier at 13.385 million bags, or 803,000 metric tons, the Brazilian Trade Ministry said July 1. The real’s 9.4 percent retreat in the second quarter, the most among 24 major emerging-market currencies, increased revenue from dollar-denominated coffee sales and encouraged exporters to tap stockpiles that are the biggest since 2007.

Brazil is increasing competition among coffee sellers as farmers unload beans to clear storage space for the next harvest, judging that losses will be limited by translating dollar revenues into weaker reals. With global output exceeding demand for a fourth year, accelerating sales will drive prices down 11 percent to $1.08 a pound by Dec. 31, according to the median of 18 analyst estimates compiled by Bloomberg.

“The lower real will most certainly help exports, making Brazil a much more aggressive seller,” said Rasmus Wolthers, a trader at Wolthers & Associates, a brokerage in Santos, Brazil. “There’s a lot of coffee in Brazil, and there isn’t enough space to store it all, so producers will have to sell. I expect to see much more aggressive sales offers.”

Profit Margins
Colombia, the second-biggest grower of arabica beans, increased exports by 32 percent in the first five months of the year after the peso weakened 7.1 percent against the dollar, according to the nation’s Federation of Coffee Growers. Sales from Peru, the third-largest producer in South America, fell 31 percent in the period as buyers turn to supplies from Brazil.

Arabica, the most-consumed coffee, tumbled 61 percent on ICE Futures U.S. in New York since reaching a 14-year high in May 2011. Cheaper beans prompted J.M. Smucker Co. (SJM) to cut prices in February for Folgers, the top-selling U.S. brand, and widened second-quarter profit margins at Starbucks coffee houses.

This year’s 16 percent drop in futures to $1.214 compares with a 2.7 percent retreat in the Standard & Poor’s GSCI gauge of 24 commodities. The MSCI All-Country World Index of equities rose 5.4 percent, and the U.S. Dollar Index advanced 5.1 percent against a basket of six currencies. Treasuries lost 2.5 percent, a Bank of America Corp. (BAC) index shows.

Starbucks, the largest coffee-shop chain, will report a 21 percent gain in profit for its fiscal third-quarter that ended June 30, according to the mean of 13 analyst estimates compiled by Bloomberg. Shares of the Seattle-based company rose 25 percent in New York trading this year.

Biennial Cycle
Brazilian exports of green, or unroasted, coffee will expand 5.8 percent to 29 million bags in the 2013-2014 crop year that started July 1, the second-highest total on record, according to Cecafe, the exporters’ council in Sao Paulo. Each bag weighs 60 kilograms (132 pounds)

While production will decline this crop year as trees enter the lower-yielding phase of a biennial cycle, shipments will keep rising as exporters tap inventories from last year’s record crop of 56.1 million bags, the U.S. Department of Agriculture estimates. This season’s projected harvest of 53.7 million bags will be the third-largest ever and expand stockpiles 22 percent to 8.23 million bags, the USDA predicts.
The real will weaken to an average of 2.3 per dollar in the fourth quarter, compared with 2.25 today, according to Barclays Plc, the most-accurate forecaster of Latin American currencies tracked by Bloomberg in the four quarters ended March 31.

Subsidy Boost
Government intervention may curb the surge in exports and halt the slump in coffee prices, said Jack Scoville, a vice president at Price Futures Group Inc., a broker in Chicago. The government approved a record 3.16 billion reais ($1.4 billion) of subsidies last month to expand storage, buy beans and invest in plantations. It is also considering a proposal to compensate growers when prices drop below a certain level.

Heavier-than-average rainfall may reduce the quality of beans and limit the appeal of Brazilian exports, said Francisco Ourique, a manager at Cooparaiso, a growers’ cooperative in Sao Sebastiao do Paraiso in Minas Gerais, the largest arabica-producing state. Storms can knock cherries off trees and diminish the taste of beans dried outdoors.

Minas Gerais
Parts of the coffee-growing states of Parana, Sao Paulo and Minas Gerais got rainfall that was as much as three times the 30-year average from May 1 to June 25, according to Randy Karst, a meteorologist at World Weather Inc. in Overland Park, Kansas.

Lower coffee prices and a weaker real may mean a financial squeeze on Brazilian growers, forcing some to cut spending on products such as fertilizers that they buy in dollars, according to Ourique, whose cooperative produces about 3.2 million bags a year. That would curb output from the 2014-15 season.

Exporting coffee rather than stockpiling may be the best option for growers, according to Kona Haque, a London-based analyst at Macquarie Group Ltd. The average cost of production dropped to $1.15 a pound from $1.35 at the start of the year as the real weakened, the bank estimates.

The real may weaken a further 20 percent as Latin America’s largest economy slows and the government budget deficit widens, Themistoklis Fiotakis, an analyst at Goldman Sachs Group Inc. in London, wrote in a June 20 report. More than a million people took to the streets in the past month to demonstrate against inflation, government corruption and public services.

During the last major devaluation of the real, a 30 percent drop in 2008, green-coffee exports rose 5 percent to a then-record 26.033 million bags even as the harvest declined 16 percent, Cecafe and USDA data show. Brazil also exports robusta, the second-most-consumed coffee variety.

Million Bags
Global coffee production, including robusta that accounts for 41 percent of supply, will exceed demand by 4.46 million bags in 2013-2014, from a 10 million-bag surplus a year earlier, according to the USDA. Inventories will reach a five-year high of 30.53 million bags, the USDA predicts.

J.M. Smucker, which sells Folgers and Dunkin’ Donuts brand coffees, announced price cuts averaging 6 percent in February. The Orrville, Ohio-based company reported a 25 percent gain in fourth-quarter net income to $130.3 million. Kraft (KRFT), based in Northfield, Illinois, said May 3 it would cut the price of 12-ounce cans of Gevalia coffee by 6 percent.

Starbucks said April 25 that its operating profit margin in the quarter ended March 31 widened to 15.3 percent from 13.5 percent a year earlier, partly because of cheaper beans. The company cut its packaged-coffee prices by 10 percent that month.

Hedge funds and other large speculators are almost the most bearish they’ve ever been, with a net-short position of 27,560 futures and options, according to U.S. Commodity Futures Trading Commission data that begins in 2006.

“Continued bearish fundamentals and the weaker real could take coffee down to $1,” said Ashmead Pringle, the president of Atlanta-based GreenHaven Commodity Services, whose $460 million GreenHaven Continuous Commodity Index Fund tracks a basket of commodities. “I wouldn’t buy it right now.”

To contact the reporters on this story: Marvin G. Perez in New York at mperez71@bloomberg.net; Isis Almeida in London at ialmeida3@bloomberg.net
To contact the editors responsible for this story: Steve Stroth at sstroth@bloomberg.net; Claudia Carpenter at ccarpenter2@bloomberg.net

Find out more about Bloomberg for iPhone: http://m.bloomberg.com/iphone/

Partial divestment in Second Chance... Hello Indoagri!

Today was a good day for shares in the Singapore stock market. I made use of this chance to partially divest a small portion of my Second Chance Properties, which closed at 0.445 today.

I took up a small position in Indoagri today. Of the commodities stocks, I like Indoagri because of its discount to NAV. Indoagri opened at 0.975 and closed at 0.985, which is at a premium to its book value of $1.242(PB ratio 0.79). Outlook wise, I like that it has a diversified exposure in oil palm, rubber and sugar. Furthermore, it has recently announced an acquisition of 50% shares in CMAA, a sugar refinery in Brazil.

I believe that with world economy recovering, the long term view for commodities looks bright and it is a good time to buy when prices are still low. 

If you are reading this, you may be interested in:-
Jump in oil prices - encourage biodiesel demand hence increase Crude Palm Oil (CPO) prices?


Disclaimer: The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.