Data highlights:
In August, no major changes were seen in international grain prices;
international sugar prices rose for the second straight month, up 31%
MoM; Malaysian palm oil prices rebounded by a further 7%; Australian
barley prices dropped for their second month in a row and are now down
by a total of 20%+.
Domestic grain prices, with the exception of early indica paddy
continued to edge up MoM. In August, domestic sugar prices followed
international price movements, but merely rose slightly. So far, the
State Reserve Bureau (SRB) has not yet unveiled plans to unload its
sugar and wheat reserves. In August, the Bureau only sold 30,000t of
soybeans, less than 2% of what it planned to unload in auctions; rice
sold accounted for 52% of the Bureau's planned auctions, down from the
74% seen in July; cotton sold was largely flat MoM while corn sold
increased, as a percentage of the respective planned auctions.
Recommendation:
Investment opportunities implied in the uptrend/expected rise of
domestic agricultural product prices: Uncertainties remain in market
expectations for a recovery of the US economy in 4Q09 and hence a rise
of oil and grain prices. this means that in the short run, we should
continue to keep an eye on investment opportunities implied in the
uptrend/expected rise of domestic agricultural product prices.
Agricultural products already demonstrating a price uptrend mainly
include sugar and pigs (due to decreased supplies) and choice sea
products (due to consumption recovery, mainly sea cucumber), while those
with prices expected to rise mainly include cotton and apple juice
concentrate.
Risks:
Agricultural product prices are subject to change from time to time.