Mills can purchase raw sugar abroad provided they export a similar quantity after processing within two years, Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories Ltd., said in a phone interview in Mumbai.

Purchases by the South Asian country may help support a rally that’s made sugar the second-best performing agricultural commodity this year. Prices in New York climbed to more than a three-month high on Jan. 26 on speculation that India will buy the sweetener for the first time since 2006.

“India is a key driver of the price for the global season 2008-09 as a result of the drop in production,” said Leonardo Bichara Rocha, an economist with the London-based International Sugar Organization, or ISO, said in a phone interview yesterday.

Raw-sugar futures for March delivery climbed 0.4 percent to 12.64 cents a pound in after-hours trading on ICE Futures U.S., ending a three-day decline. The most-active contract gained 16 percent in the five weeks ended Jan. 23.

“We have to ensure our food security,” Trade Minister Kamal Nath said in an interview at Davos, Switzerland. There will be no restrictions on the amount that can be imported, he said.

The trade ministry may notify the changes in the rules in a day or two, federation’s Kumar said.

India’s sugar output may total 18 million metric tons in the year to Sept. 30, down from 20 million tons forecast in December, Farm Minister Sharad Pawar said last week. Production last year was 26.4 million tons.

Global Estimate

The ISO will next month revise its estimate of global sugar output for the year ending Sept. 30 to account for the drop in India’s production, Rocha said.

World production will decline 3.8 percent to 162.26 million tons this year, the first since 2004-05, the ISO said on Nov. 11. That leaves a deficit of 3.6 million tons, the agency said.

Currently, duty-free imports of raw sugar are allowed into India only if the same cargo is refined and sold overseas again. Sweetener bought for sale locally attracts a 60 percent duty.

Under new rules, there’ll be no restriction on the quantity mills can buy abroad under the so-called advance license scheme. Importers who fail to re-export within two years will need to pay the tax. Mills will be allowed to buy from producers close to the ports to reduce costs of shipments.

Import Forecast

India may import between 1 million and 1.5 million tons for sale locally and abroad after refining, said S.L. Jain, director general of the Indian Sugar Mills Association.

Indian officials discussed the proposal at a meeting on Jan. 28 and no decision was made, government spokesman Umakant Mishra said at a briefing in New Delhi yesterday. That led to raw-sugar futures for March delivery falling 2.2 percent to 12.59 cents a pound yesterday, the most since Jan. 12.

________
Source:
Thomas Kutty Abraham and Edward Evans

The won, Asia’s worst performer of 2008, weakened as foreign investors sold more Korean shares than they bought for the first time in seven days. The rupiah fell, snapping a three- day gain, as global equities declined following a private report that showed U.S. job losses increased in December. The ringgit slid to a three-week low before a report that will probably show slumping Malaysian manufacturing.

“Risk aversion is picking up again,” said Nizam Idris, a currency strategist in Singapore at UBS AG, the world’s second- largest currency trader. “The market is concerned about the economy again. Under this sort of environment, Asian currencies will weaken.”

The won, which lost 26 percent last year, fell 3 percent to 1,333 per dollar as of the 3 p.m. local close, according to Seoul Money Brokerage Services Ltd. The rupiah dropped 1.5 percent to 10,960, Malaysia’s ringgit declined 1 percent to 3.5375 per dollar, and Taiwan’s dollar slid 0.4 percent to NT$33.115.

“People are waking up to reality,” said Lee Myung Hoon, a currency dealer with Industrial Bank of Korea in Seoul. “Sentiment had been buoyed by expectations the new year would be different.”

Growth Forecasts

South Korea’s economy may shrink in the first half of 2009 amid a slowdown in exports, rising unemployment and frail consumption, President Lee Myung Bak said last month. It probably contracted in the last quarter of 2008 for the first time in five years, the central bank said.

The won will slide to 1,425 per dollar this quarter, according to the median forecast of analysts surveyed by Bloomberg News. The rupiah will drop to 12,500, a separate survey shows.

Overseas investors sold more Indonesian shares than they bought yesterday for the first time this week, according to stock exchange data.

The yen advanced for a second day against the dollar after rockets fired from Lebanon struck northern Israel, prompting investors to seek the perceived safety of Japanese assets. The Japanese currency rose to 91.67 per dollar in London from 92.65 late yesterday in New York. Against the euro, it strengthened to 124.26 from 126.42. The euro was at $1.3576 from $1.3644.

Asian Outlook

The MSCI Asia Pacific Index of regional stocks declined 3 percent after ADP Employer Services said U.S. payrolls shrank by 693,000 jobs in December, the most since records began in 2001. Satyam Computer Services Ltd., India’s fourth-largest software- services provider, slumped 78 percent yesterday after Chairman Ramalinga Raju said he had falsified earnings over several years.

“Asia’s macroeconomic and currency outlook is a bit negative in the short term because we still expect bad U.S. payrolls to continue,” said Hideki Hayashi, chief economist in Tokyo at Shinko Securities Co. “India’s stock scandal will hamper any recovery in overseas investor confidence.”

Malaysia’s industrial production fell 6.5 percent in November from a year earlier, according to a Bloomberg News survey of economists before a government report tomorrow. That would be the biggest loss since December 2004. Exports slumped 4.9 percent in November, according to data released yesterday.

The Taiwan dollar weakened after the government reported exports dropped the most on record in December and the central bank cut interest rates for the sixth time since September.

Overseas sales, equivalent to about three-quarters of Taiwan’s economy, tumbled 42 percent in December from a year earlier. Following the release, the Central Bank of the Republic of China (Taiwan) lowered the discount rate on 10-day loans to banks to 1.5 percent from 2 percent.

“The export numbers were shockingly weak,” said Mitul Kotecha, Hong Kong-based head of global currency strategy at Calyon, the investment-banking unit of French bank Credit Agricole SA. “In an environment where exports are under significant pressure, the authorities will be content to see some depreciation, as long as it’s not a rapid fall.”

Elsewhere, the Singapore dollar dropped 0.8 percent to S$1.4840. The Thai baht fell 0.4 percent to 34.95 and the Vietnamese dong was at 17,474.50 from 17,480.00 yesterday.

–Bloomberg

Cuba’s trade deficit soared by nearly 70 percent, or an estimated $5 billion, in 2008 due mainly to rising prices for imports such as food and oil and falling prices for nickel, its main export, official media said on Friday.

Foreign Trade Minister Raul de la Nuez said in a speech to parliament deputies on Thursday that imports surged 43.8 percent while exports grew just 2.1 percent, said the Communist party daily, Granma.

The news follows reports that Cuba, battered by three hurricanes and the global financial crisis, is facing a cash crunch that is forcing it to seek debt restructuring with various countries and companies and delay cash transfers for payments abroad.

“Dealing with the trade balance is a strategic issue for the country’s economic survival,” Ricardo Cabrisas, vice president of the Council of Ministers in charge of international economic relations, told the meeting.

Granma gave no figures for 2008, but estimates based on the numbers from de la Nuez and data for 2007 would place imports at $16.1 billion and exports at $4.4 billion, leaving a deficit of $11.7 billion.

That would be an increase of $4.8 billion, or 69.5 percent, over official figures for 2007, that showed a deficit of $6.9 billion, with exports totaling $4.3 billion and imports $11.2 billon.

The government reports foreign exchange data in the convertible peso which it pegs at $1.08.

President Raul Castro, who formally replaced older brother Fidel Castro as president in February, has been warning for several months Cuba would have to tighten its belt due to rising international prices for food and fuel that had pushed up the cost of imports.

The global financial crisis has made it difficult for Cuba to get credit to purchase imports, which include 60 percent of its food.

Over the last few years Cuba has helped pay for its trade deficit, which is a measure of goods bought and sold, through revenue from tourism and service exports, mainly for health and education to oil-rich ally Venezuela.

Three hurricanes struck the island starting in late August, causing an estimated $10 billion in damages.

Nickel prices have plummeted worldwide amid rising production and falling demand to between $10,000 and $15,000 per tonne from a high of around $50,000 in 2007.

Cuba reported a debt of $17.8 billion and current account balance of payments surplus of $527 million in 2007, based on $9 billion in service exports.

But tourism revenues were expected to increase by just a few hundred million dollars this year and there was no mention by the media on Friday of a significant increase in other service exports, all but ensuring a big deficit in this year’s current account balance of payments.

Early on Friday, U.S. analysts said the bans were likely because of Mexico’s opposition to a recently enacted meat labeling law. The law, commonly called Country-of-Origin Labeling or COOL, requires that meat packages in U.S. supermarkets carry labels stating the countries where the meat animals were raised.

Mexico and the U.S. Agriculture Department both denied the retaliation charge.

“Countries would go through dispute settlement under either (the North American Free Trade Agreement) or (World Trade Organization) — not use the action of plant-by-plant delistment,” said Amanda Eamich of USDA Food Safety and Inspection Service.

USDA listed the affected plants on its website on Friday, but the suspensions became effective on Tuesday. The listed plants produce beef, lamb, pork, and poultry and can be found here.

Mexico is a leading buyer of U.S. meat and said that purchases from the affected plants could resume as early as Monday.

“If everything goes well, the plants could be re-listed next Monday,” Mexico’s agriculture ministry said on Friday.

The ministry said the affected plants fell short on standards like packaging, labeling, and some transport conditions.

USDA said it is working with Mexico and the meat companies to resolve the issues.

CANADA, MEXICO OPPOSED LAW

U.S. consumer and farm groups say the labeling rules will distinguish U.S.-grown food from imports on the grocery shelf and fulfill the shopper’s right to know about products.

Canadian and Mexican officials have opposed the law arguing that it will have U.S. meat plants and consumers discriminating against non-U.S. animals and meat. Both countries ship livestock into the United States.

“It appears they (Mexican officials) are using this to send a signal to our government that they don’t like COOL,” Don Roose, analyst at U.S. Commodities, said earlier on Friday.

Earlier this year, Mexico had warned many U.S. meat plants of alleged “point of entry violations” and Friday’s suspensions may have been related to that, Jim Herlihy, spokesman for the U.S. Meat Export Federation, said early on Friday.

Point of entry violations could be a number of things including incorrect paperwork or labeling issues, he said.

BANS MAY BE LIFTED SOON

Prior to Mexico saying shipments could resume on Monday, Roose had predicted the bans would be short, because Mexico needs the meat for its population.

“You have to feed the masses,” he said.

News of the bans prompted selling in U.S. cattle and hog markets at the Chicago Mercantile Exchange on Friday, with cattle prices dropping 2 to 2.5 percent and hog prices dropping about 3 percent.

“That is bad news,” Jim Clarkson, Chicago-based analyst at A&A Trading said of Mexico’s action. “They (Mexico) are fighting COOL.”

After Mexico denied it was retaliating for COOL, Clarkson still predicted the labeling law may have helped prompt the bans.

_______
Source: Reuters

The WTO appeals panel recommended in a ruling released Monday that China be asked to bring its import tariffs for foreign auto parts into compliance with international trade rules.

U.S. and European trade officials welcomed the decision.

“Especially in light of the current problems faced by the U.S. auto industry, I expect China to comply promptly with its WTO obligations by removing an unlawful and unfair trade barrier that is harming U.S. workers and manufacturers,” said U.S. Trade Representative Susan Schwab.

Her European counterpart, EU Trade Commissioner Catherine Ashton, said, “China should now put an end to the discrimination and ensure a level playing field in its automotive sector.”

Officials at China’s mission to the WTO could not immediately be reached for comment.

Beijing had appealed the original ruling made in July, arguing that the taxes were needed to stop whole cars being imported in large chunks, allowing companies to avoid the higher tariff rates for finished cars. It was the first time China lost a case before the world trade body.

Under the import rules, cars made in China must contain at least 40 percent Chinese-made parts or they are taxed at the rate of imported finished cars.

The U.S., the 27-nation EU and Canada argued that the tariffs made it cheaper for car parts companies to shift production to China, costing Americans, Canadians and Europeans their jobs.

China now has a “reasonable period of time” to make legislative changes, after which a separate WTO panel has to determine whether Beijing has come into compliance or is still breaking the rules, in which case sanctions can be imposed.

Copyright © 2008 The Associated Press. All rights reserved.

The new policy marks a distinct reversal from actions taken last year. Until July 1, 2007, the VAT rebate was 8 to 17 percent on most exports. After that date, the rebates were dropped on 553 products deemed to be “resource- and energy-intensive and highly polluting,” such as fertilizers, leather and cement. The government also lowered the rebates on 2,268 products that “easily cause trade frictions,” including toys, apparel, furniture, paper and plastics. The new rebates on those products ranged from 5 to 11 percent.

Last year’s actions were designed in part to slow China’s blistering economic growth, which totaled about 12 percent in 2007. Rapid growth is seen as a prime cause of inflation. Growth this year is expected to fall to about 7 percent — not enough to provide employment for the millions of workers seeking jobs. Beijing fears that massive unemployment could lead to increased civil unrest. More information is available at http://www.export.gov/china/chinapulse/.

_______
Source: Shippingdigest

Exporters are asking the government not to intervene with the exchange rate and allow the peso seek to its true level of 55 to 56 to a dollar.

In an interview, Philippine Exporters Confederation (Philexport) president Sergio Ortiz-Luis said that the government should allow the peso to move freely in order to help exporters cope with the slowdown in global demand.

Ortiz-Luis said the worst is not yet over for exporters as they expect more retrenchment. “The exchange rate has always been a problem for us,” he explained.

He said the demand for electronics, the country’s largest export, is expected to contract further so the focus must shift to other products like garments, wiring harness, automotive and furniture.

Ortiz-Luis said exports for next year are projected to grow by only five to eight percent, a far cry from the double digit growth seen in the last couple of years.

He noted that the major problem of the country is the value of the peso and the shrinking client base.

The biggest market of exporters are the United States and Europe, both of which were hit by the global economic meltdown.

In fact, he said semiconductors export, the largest component of local sales overseas, will remain in the red.

“It (electronics export) has been negative for the last several months. It is okay as long as it will not go beyond negative five percent,” Ortiz-Luis explained.

The bulk of the growth for exports next year is expected to come from the merchandise sector with a projected three to five percent while total exports including services is expected to expand by five to eight percent.

In spite of the slowdown, Ortiz-Luis said that the industry will bit the three to five percent full year export target as first 10 months data already showed a growth of more than four percent.

Earlier, the Philippine Chamber of Commerce and Industry (PCCI) said the local economy will only grow by three to 4.2 percent next year.

“The country will grow by no less than three percent. That is expected given the economic situation worldwide,” Ortiz-Luis, who is also the chairman of PCCI said.

According to Ortiz-Luis, the Philippine economy will fare better than our neighboring countries because the government is looking at increasing public spending.

The government and the private sector are readying a P100 billion fund that will spur spending in the country’s infrastructure in a bid to further insulate the Philippines from the effects of the global financial crisis.

Copyright © Philstar. All Rights Reserved