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US housing confidence up; huge corn crop; China housing confidence down; EU adds food subsidies; PwC fined; UST 10yr yield 2.38%; NZ$1 = US$0.848, TWI = 79.5

US housing confidence up; huge corn crop; China housing confidence down; EU adds food subsidies; PwC fined; UST 10yr yield 2.38%; NZ$1 = US$0.848, TWI = 79.5

Here's my summary of the key news overnight in 90 seconds at 9 am, including news of new food commodity volatility.

But firstly in the US, confidence in the newly built, single-family home market rose for the third consecutive month to its highest level since January. This result was above expectations.

This was a small piece of data that helped propel the Wall Street stock indexes sharply higher on the day, boosted by the easing of geopolitical tensions. Risk on again.

Months of good weather have fueled expectations for a corn crop so large that mountains of it will be a common sight across the US Midwest after the harvest, which starts next month. This will become cheap feed for beef and dairy operations in America, and cause ripples worldwide.

China however has the opposite issues. Confidence is down in their new-home market and food security issues are rising.

In Europe, they are scrambling over the impacts of Russia's sanctions of their fresh food exports. In the traditional EU way, subsidies and compensation will be paid to farmers for sales they can't make. Expect the usual rorts, waste and distortion.

In New York, auditing firm PwC has been fined US$25 million for sanitising the audit reports of a Japanese bank over its involvement in sanction-breaking and money laundering.

And closer to home, hard on the heals of strong warnings by regulators about the risks of such products - especially to retail investors - CBA is launching a huge A$2 billion bank hybrid tier 1 capital offer. Don't get tempted.

UST 10yr benchmark bond yields rose slightly today from Friday's very low level and are now at 2.38% - but still unusually low.

The US oil price fell and is now at US$96.50/barrel. Brent is down as well and now under US$102/barrel. Gold also fell - about another US$7/oz - and is now at US$1,298/oz. Commodities are taking a pounding and that does not auger well for tomorrow's dairy auction.

We start today with our currency marginally lower at 84.8 USc, 90.9 AUc, and the TWI is at 79.5. 

If you want to catch up with all the changes yesterday we have an update here.

The easiest place to stay up with today's event risk is by following our Economic Calendar here »

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17 Comments

The essentials of life for many e.g. food becomes harder to obtain and more expensive.

While the luxuries of life e.g. Audis etc become easier for a minority to obtain.

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Sounds like you'll be voting Mana this year MB?

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Re Corn Crop surplus , at least there is plenty raw material for biodiesel production

 

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Buy corn instead of palm kernel.

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Corn is primarily used to produce ethanol not biodiesel. Given that it has to be distrilled it is an energy intensive exercise that some believe is a net energy loss. They do it simply because transport fuels are in demand.

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They do it because of huge subsidies. Unsubsidised, corn ethanol is not a viable transport fuel at present.

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Probably never will be viable, but that won't stop it being used by stealing the energy imput from another source.

 

Have to say, to you and Steven, that my last sentence wasn't worded stronger because I wasn't completely sure of my position on that.

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Indeed, however consider that the minimum EROEI is 6 to 1 (maybe 8 to 1) to run our modern energy intensive society/economy. That the ethanol conversion EROEI is (probably) 0.8 to 1 or at best 1.3 to 1 and you can see that it has no hope in ever getting to 6 to 1, ergo it will never be viable unless robbing peter to pay paul is possible. I for one am not sure how that can be achieved.

regardw

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what kind of society could be bought for EROEI of 5 (or 6) to 1,   instead of our 8+ to 1?

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Actually I think the US (good old Bushie) did it purely to buy votes of the mid west farmers or in Obama's case not lose any. Nothing to do with its needed at all as its not, especially as US petrol demand is I think down and on a downward (ish)  trend (have not looked in a while though).

Hmm,

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mgfupus1&f=a

seems a mixed picture,

http://www.zerohedge.com/news/2014-05-30/us-gasoline-consumption-plumme…

http://www.ft.com/cms/s/0/ed0d08ca-8356-11e3-86c9-00144feab7de.html#axz…

 

regards

 

 

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Transport fuel aside ethanol is pretty useful stuff. I'm particuarly fond of Marlborough Sauvignon ethanol. Available for about $15 per 750mls from any supermarket. (EROEI about 0.2/1 but after a couple of bottles you dont really give a damn about that.)  

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LMAO. I have a regular supply of my own here that I make from malt, task this afternoon to bottle 4 crates of it.

 

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Not biodeisel, ethanol, oh and the mexicans eat corn, high prices means they starve. This of course igrnoes that it probably costs more on fossil fuel to produce ethanol than the energy in ethanol, ergo its pointless and one huge scam.

regards

 

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Months of good weather have fueled expectations for a corn crop so large that mountains of it will be a common sight across the US Midwest after the harvest, which starts next month. This will become cheap feed for beef and dairy operations in America, and cause ripples worldwide.

 

Significant logistics delays in the rail networks mostly due to increased oilshipments,and underinvestment will have a dampening effect on prices,

http://www.joc.com/rail-intermodal/bulk-transport/us-senators-pressure-cp-bnsf-fix-grain-rail-delays-ahead-harvest_20140812.html
 

 

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Assuming there are no adverse events elsewhere.

regards.

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In previous years we had shortages,

http://www.theguardian.com/global-development/2012/oct/14/un-global-foo…

"With food consumption exceeding the amount grown for six of the past 11 years, countries have run down reserves from an average of 107 days of consumption 10 years ago to under 74 days recently."

So maybe the grain reserves will recover this year...kind of, so what?

regards

 

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Sinophiles take note: check the Aussie papers today  and see what Clive Palmer is saying about the Communist Chinee.

EP 

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