10/06/2011 World Business Report


10/06/2011

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teams objected when the race were scheduled to October. -- Formula

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:00:13.:00:17.

One teams. Welcome to the programme. A look at

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all the latest in the world of business and money. The Catalans:

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Food prices set to climb even higher as droughts -- drought in

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Europe and floods in the US raised the threat of poor harvest.

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In Asia, tackling inflation. The South Korean central bank surprises

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the market with a rate hike. Latest evidence that the global economy is

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losing momentum. For consumers in the developed

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world, already squeezed between rising living costs and stagnate

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salaries, higher food prices are the last thing that is needed. For

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millions in poorer countries, the higher cost of food is much more

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serious because the picture in developing global agriculture is

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particularly worrying. Corm prices hit an all-time record in Chicago.

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That is after a spring's Keady rain forced to the US Department of

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Agriculture to slash its top forecast. In Europe, it is an

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opposite problem. It is drought. America has taken a battering in

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recent weeks, first came the brains and flutter along the Mississippi,

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and then the tornadoes in the Midwest. That has hit commodity

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production, corn futures are trading at all-time highs, the

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price of many other staples are also soaring. On the back of the

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world recession recovery, it remain tight, and as long as the weather

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continues to play havoc with America, there will be upward price

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pressure. Global food prices are rising, caused by higher demand and

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not enough supply. The World Bank says its food price index is 36%

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higher than last year. There have been large rises in the price of

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basics such as maize and wheat. He pushed an extra 44 million people

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into poverty. The outlook is not promising. Drought in France and

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elsewhere in Europe mean lower harvests. President Sarkozy has

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offered a aid package to farmers with hundreds of millions of euros.

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The only good news comes from Russia. The government is expected

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to lift its ban on grain exports next month. But in Moscow, they may

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impose limits to control inflation at home. For food prices, the only

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way is up. As we saw, this is not a double

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whammy. This is a lot of whammies, tornadoes, droughts, floods,

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cyclones. On top of that, we are seeing a surge in demand from China

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for the foodstuffs that the typically West eat. It is very

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serious because it is coming on top of two years were basically

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supplies have not been able to catch up with demand. As a result,

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stocks as a proportion of global consumption are quite low in a

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historical context. We be without becoming more extreme, -- with the

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weather becoming more extreme, it has created habit. You mention the

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drought in China, the drought in parts of the southern US, in Europe,

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these are causing major problems. What we are really concerned about

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his corn and global maze. It is critically tight. Wheat is also

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looking quite risky. We are worried about some harvests in the European

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Union and maybe Canada. There is no relief in the mind of consumers

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that we are going to see a big decline in prices, when you have so

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much supply-side concerns, it is reflected in prices. There is not a

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lot of slack in this supply chain. All of this has a knock on effect.

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You mention the wheat and corn prices that have shot up overnight,

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but it is not only the products, but it goes across the whole chain.

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There is food for meat and dairy. Absolutely. Crane is one of the

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biggest concerns for the feed costs for the livestock industry. Food

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inflation has been rising. It is a concern in developing countries.

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But even in Europe, we are also feeding higher food inflation. The

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UK is a net importer of foods so we do suffer here.

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Inflation has prompted a surprise rise in interest rates in South

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Korea. Yesterday we were talking about higher oil prices, today it

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is higher food prices, all of which feed into a global picture of high

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inflation. It has a lot of governments very worried. Inflation

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is a huge concern in a shout. It is not a South Korea, but all the

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Asian central banks have been having this dilemma, because

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inflation has the economies, they want to tackle it by raising

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interest rates, but he also had slow economic growth in the US and

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Europe, which as still Asia's main trading partners. China in India

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are trying to pool their economies because they do not want to -- I

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tried to cool the economy is because they do not want them to

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overheat. Analysts were a bit surprised with today's interest

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rate hike. Last week, we saw the Thailand's central bank raising

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interest rates. We saw Australia, New Zealand and Indonesian central

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banks keeping their rates on hold because they are keen to keep are

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boosting their economy. More evidence in the last hour that

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the global economy is losing its momentum. China's export growth has

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slowed in made to an annual rate of 90%, it was almost 30% in April. We

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are going straight to Beijing. Two parts to these numbers. One is

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telling us what the global economy is doing, and one is telling us

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about the domestic economy. These are still numbers that many would

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give their right arm for, but are they suggesting a global slowdown?

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We have to be careful reading too much into the monthly figures,

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because they can be very volatile. China is seeing a slowdown in its

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exports because demand in Europe and America, absolutely key markets

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for China, the demand is slowing down, and the main reason for that

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is there is concern in that part of the world over the health of their

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economies. Beijing has been working hard over the last few years to

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rebalance the economy. Less reliant on exports, more of a boost for

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consumer, domestic consumers. Does it suggest that what Beijing is

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doing is working? It is difficult to tell on monthly figures, but

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there are higher import figures which would suggest that China is

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consuming more. That will be some been welcomed by other countries

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around the world. They want to see China consume more in order to draw

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growth from around the world. It is worth pointing out that in terms of

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exports, the cost of doing business in China is increasing. We have

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seen inflationary pressures on salaries, deep appreciation of

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China's currency, and that is making exports more expensive.

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We are taking a look at the markets in Asia. They are kind of light

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yesterday, a mixed bag. Facia has climbed, they snapped a six-day

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Investors were closely awaiting a watching for these Chinese numbers

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that they have now seen. Not a great reaction. Monthly numbers

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