commodities
terça-feira, fevereiro 24, 2004
wsp 24feb04
China to Certify Safety Of Soybeans From U.S.
By Peter S. Goodman
Washington Post Foreign Service
Tuesday, February 24, 2004; Page E01
SHANGHAI, Feb. 23 -- China agreed on Monday to certify as safe imported shipments of genetically modified soybeans, removing a crucial obstacle to trade in a commodity valued at $4.8 billion last year, while cooling a high-profile spat with the United States.
China's decision, announced without fanfare in a statement posted on the Web site of the Ministry of Agriculture, means that multinational agribusiness giants such as Cargill Inc. and Bunge Ltd. will soon be able to freely import soybeans without first having to obtain permits attesting to the safety of individual cargo loads.
The United States is the largest source of China's imported soybeans, followed by Brazil and Argentina. More than 80 percent of soybeans grown in the United States are genetically modified to resist herbicides, making it easier for farmers to control weeds.
The frequent expiration of temporary food safety permits and uncertainty over their terms of renewal has left importers vulnerable to a bureaucratic quagmire. Last summer, Chinese authorities forced dozens of tankers to idle near ports, sometimes for weeks at a time, while shippers waited for new permits. The ensuing shortage of soybeans -- which are ground into animal feed and cooking oil -- contributed to a spike in the price of meat throughout China.
Monday's decision to scrap the interim permits and adopt a permanent system handed a victory to U.S. officials and agribusiness concerns, which have lobbied strenuously for the certification, elevating the issue into one of the most contested in the increasingly tense trade relations between Washington and Beijing.
"This announcement is good news for American farmers," Agriculture Secretary Ann M. Veneman and U.S. Trade Representative Robert B. Zoellick said in a joint statement, adding that China's action was "another positive step for trade between our two countries and demonstrates the Chinese government's commitment to the WTO principle of using sound science to determine such issues."
China has maintained that it could not properly issue food safety permits without testing genetically modified crops. The Bush administration and U.S. agribusiness companies countered that the safety of genetically modified soybeans has already been proved around the world. They accused Beijing of employing bogus concerns as a guise for protectionism, blocking imports of foreign soybeans to protect the incomes of China's farmers.
Not coincidentally, they asserted, last summer's stalemate at China's ports followed the release of Chinese statistics showing a dramatic surge in soybean imports to more than 20 million tons for the year -- a leap of more than 80 percent from 2002.
During two visits to China, President Bush pressed its leaders to scrap food safety barriers to soybean imports. Last fall, Commerce Secretary Donald L. Evans and Zoellick advanced the issue as well, portraying China's stance as a key test of the country's compliance with the market-opening pledges that accompanied its entry to the World Trade Organization.
The lobbying over soybeans heated up at the same time that overall trade relations between China and the United States were growing tense. China's trade surplus with the United States ballooned beyond $120 billion last year, and members of Congress blamed the flow of goods for the loss of millions of American jobs. The Commerce Department slapped punitive tariffs on such Chinese goods as textiles and furniture, and the Bush administration pressed China to increase the value of its currency, arguing that its allegedly low price made its exports unfairly cheap. China has dismissed such accusations, asserting that it was being made the scapegoat for the erosion of American manufacturing.
Against that backdrop, Monday's announcement, which also included approval of two corn and two cotton products, seemed likely to ease some of the tension.
"We're certainly happy that this is happening," said Phillip Laney, China director for the American Soybean Association. "It's going to eliminate some of the periodic disruptions to trade that have occurred. That's going to benefit us, and it's going to benefit our customer."
Under the directive from the Agriculture Ministry, the old temporary food safety regulatory system will be allowed to expire on April 20, while importers can immediately apply for new safety permits that will be governed by permanent rules.
Still, the new rules do not eliminate the possibility of a fresh battle over soybeans. Many of the ships caught in last summer's stalemate were held at sea because they lacked another required piece of paper: a certificate needed to get a required inspection to determine whether the shipments were contaminated by fungus or other threats to crops.
If authorities want to pinch imports and raise the price of domestic soybeans, that lever remains available, Laney said. Still, he said, "it's really great to have this one resolved."
segunda-feira, fevereiro 23, 2004
gold not so good as store of value (price may overshoot),
Philip Coggan: A touch of gold
By Philip Coggan
Published: February 20 2004 11:40 | Last Updated: February 20 2004 11:40
Gold is shining again. Having broken above $400 an ounce last year, the bullion price wobbled a bit in early this year, but is now at about $415 an ounce. Those of my columns that mention gold tend to attract significant reader response, matched only by those that feature technical analysis. In both cases, there seems to be a quasi- religious undertone to some reactions. One reader said that I had "embraced the dark side" after my last golden (or should that be leaden?) effort.
My difficulty with the argument of some gold bugs is that it has several interlinking strands. While I am happy to agree with some of their points, it is harder to buy into the whole philosophy.
The first strand is that gold is the only real source of value, a commodity that is limited in supply and has traditionally been accepted as money. Western economies went wrong when they ceased to use gold as an anchor for their monetary systems; our current paper money system is doomed to collapse. Gold bugs go on to argue that the yellow metal is the only true "store of value". All too often, they add, there has been a conspiracy to keep the gold price down, usually involving the central banks.
This is where the argument becomes rather difficult to accept. Over the very long term, gold has been a store of value, but not over the past 25 years; gold is worth less than half of its peak value. In a way, that is unfortunate for gold lovers. Had the bullion price moved smoothly up from $35 an ounce in the early 1970s to $400 today, the store-of-value case would be much stronger. But the $800-plus peak did occur and is clearly a sign that speculative and other forces can drive gold above its "true" value. Thus investors need to consider whether they might be overpaying for gold at any given time - a sign that it may not be the perfect store-of-value after all.
The bugs' second strand is that there has been a conspiracy in financial markets, but it has been a conspiracy to force the price of gold up. Central banks have agreed to limit their bullion sales to avoid flooding the market. But again, there seems to be a problem with the store-of-value argument if a major holder has to limit its sales to protect the price.
Where it is far easier to agree with the gold camp is that, in a world of paper money, inflation must always be a potential threat. True, the peaks in consumer price inflation have gradually declined over the past 30 years. But the inflation has simply moved into asset prices, notably of equities, property and bonds.
There has been an explosion in credit growth, which is debt that appears to be validated by the corresponding rise in asset prices; borrowers have collateral for their loans. But of course, these developments are two sides of the same coin. Without the credit growth, asset prices would not be as high as they are.
Eventually, this debt will have to be dealt with, either by widespread default or by inflating the debt away. Gold might conceivably be a hedge against either event. If defaults were sufficiently large, the banking system would come under threat and investors might prefer gold to cash. If inflation rose sufficiently, investors would seek it out as a hedge against the deteriorating value of paper money, as they did in the 1970s.
Either of these outcomes is possible, though it might be many years before the debt burden turns into a debt crunch. It would clearly take some catalyst (sharply higher interest rates or unemployment) for it to do so.
But it is worth remembering that other commodities can also act as a hedge against inflation and may have the additional attraction of being direct beneficiaries of rapid Chinese economic growth. Copper, for example, has recently reached an eight-year high on the back of Chinese demand.
In contrast, gold is more of an investment than an industrial commodity. Annual demand for gold actually fell by 5 per cent last year. In total, the world's central banks hold about 28,553 tonnes of bullion, according to the World Gold Council. At $400 an ounce, that works out at slightly less than $3,700bn - the equivalent of seven years' worth of global demand.
This helps to explain why, in spite of the lavish attention paid to gold, it has been outshone by many other metals including silver in recent times. Indeed, gold's recent surge is really noteworthy only in dollar terms. In euros, the price is 1.4 per cent lower than at the start of 2003; in sterling terms, it is just 2 per cent higher.
Nevertheless, those concerned about a further decline in the dollar might, on recent evidence, be interested in adding gold to their portfolios. This highlights the strongest case for gold - that it is an efficient diversifier of portfolios. Gold has traditionally had about zero correlation with equities and virtually no correlation with bonds or property.
Exposure to gold can be achieved through mining shares. But this is not a "pure" play; many mining companies diversify across several metals and some hedge their exposure to the gold price. In all cases, investors run the "management risk" that the company may be badly run.
Those who wanted to own gold directly use to face heavy mark-up costs on gold coins and the like. But it is now easy to own gold directly at minimal cost via Gold Bullion Securities, a security listed on the London Stock Exchange (there is a similar security in Australia). GBS is a sort of index-tracker for gold, with each share representing one-tenth of an ounce of bullion. Management fees are 0.3 per cent a year.
Until the short-term threat from inflation becomes clearer, investors will not want to devote too much of their portfolios to gold. After all, it has seen several false dawns over the past 20 years and it pays no income. Perhaps gold, other commodities and index-linked bonds, should make up an "inflation hedge" of between 5 per cent and 10 per cent of investors' portfolios. But such a suggestion is still good news for the gold bugs; many investors will have much smaller exposures than that.
