Here's my summary of the key news overnight in 90 seconds at 9 am, including news Fonterra is starting an ambitious China expansion.
But first, in the wake of a rate hike by New Zealand’s central bank last week and the flagging of one by the Bank of England, the US Fed’s latest policy meeting on Thursday NZ time is even in greater focus. The US is moving to raise rates in 2015, less than a year away now.
In China, home sales fell 11% in May from a year earlier amid slowing demand even after the central bank ordered easing of mortgage lending. This data comes after the official stats were released for electricity consumption, a metric some watch more closely than Chinese GDP. Power consumption rose 5.3% over the same month a year ago.
Fonterra announced plans to build four to six farming hubs in China by 2020 that will produce 1 billion litres of milk a year to meet rising demand for dairy products in the country. They have five giant farms at its first hub in Hebei province and is building a second hub of five farms in Shanxi province.
Henk Bles, the newly appointed managing director of international farming ventures at Fonterra, said at a trade conference in China over the weekend that the location of farms is critical, because these facilities must meet standards for soil and water quality, climatic conditions and sufficient feed for cows. These are plans that will produce the equivalent of about 5% of New Zealand's current domestic output.
The price of Brent crude spiked on Friday after rising this week over concerns about the ongoing insurgency in Iraq.
That comes as the US oil production reached a key milestone; US oil production has now risen above its previous peak in 1970 as a result of the country’s shale oil boom. Four decades of decline in US oil output have been reversed in just half a decade of growth.
The benchmark UST 10 year yields fell a little on Friday in New York and are now at 2.61%. Credit spreads are now at a post-Lehman low. Gold ended the week at US$1,274/oz and New York equities rose at the end of trading on Friday.
Through the recent global political and risk turmoil, the Aussie dollar hasn't fallen even though it is a commodity currency and supposedly vulnerable to these types of uncertainty. More traders are regarding it as a 'haven' currency it seems, and the kiwi dollar is probably getting a halo effect. This is despite officials at the RBNZ thinking markets have got the pricing of the kiwi dollar wrong because they should still regard it as a 'risk' currency.
On the exchange rate the NZD starts the week much higher at about a cent and a half above the same point a week ago. It starts at 86.6 USc, at 92.4 AUc and the TWI is at 80.8.
If you want to catch up with all the changes from 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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13 Comments
The US produced pumped just under 9mbpd of crude oil back in mid 1985/early 1986. They are now producing just under 8.5mbpd. All the data freely available from the official arbiter of such things:
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W
You'll have to talk me through the maths of how 8.5 is a bigger number than 9.
The downslope on that 'shale revolution' upslope is going to be something to see. Don't worry though, some of us will be here to point it out to you......
Calm down whiner, David just forgot to add in NGLs into his 90 sec summary. Read the link before you rant?
"Four decades of decline in US oil output have been reversed in just five years of growth.Petroleum production, including crude oil and related liquids, known as condensate, and natural gas liquids (NGLs) such as ethane, was 11.27m barrels per day in April, almost equalling the peak of 11.3m b/d reached as an average for 1970. Recent growth rates suggest that it has now exceeded that figure."
Other than the fact that ethane is not remotely crude oil - chemistry clearly not your strength, is it? Ethane is a gas at standard pressures and temperatures.........
Adding in natural gas liquids is laughable, and shows how desperate the disinformation has become....
a) I put up a limk earlier that questioned the economics even at present gas prices let alone higher.
http://peakoil.com/consumption/economics-of-natural-gas-dont-always-add…
So Ngas fleets are more expensive, so much so they are marginal even with cheap gas.
b) condensates are not very useful in terms of petrol, this is documented.
regards
One to blow you away,
"If Iraq’s oil supply goes offline, crude prices could hit $150-$200 a barrel, T. Boone Pickens, founder of BP Capital Management, told CNBC on Friday."
http://peakoil.com/consumption/pickens-without-iraqs-oil-prices-could-h….
ouch.....
So despite the US producing more significantly more oil the price has continued to climb / stay high.
http://oil-price.net/ (clock on interactive charts to change time scales).
Of course we now have 2 new big buyers we didnt have in the 1970s,
http://peakoil.com/consumption/chinas-energy-consumption-unrivaled
Oh and one for profile,
http://fuelfix.com/blog/2014/06/12/economics-of-natural-gas-dont-always…
and Ngas is only going to get more expensive.
Oh and TBP talks about a north american alliance on energy, seems the idea is the USA gets all of the Canadian and Mexican oil so would be OK and the rest of the world? well it can go and take a running jump.
Now quite why Mexico would agree to see the USA its oil rather than on the open market to maximise profit mystifies me.
regards
RYI without reading the links. Two countries that have turned from net exporters to net importers of oil in the last 5 years, Egypt and Syria. In the next 2 years is Mexico. Great Britain was 10 years ago and would be screwed if London was not a centre of finance.
Ive not read it in detail but my understanding is its a free trade agreement in that there can be no tarriffs/barriers. So Mexico can sell oil anywhere and cant stop the US buying mexician oil doesnt have to be exclusively sold to the US and canada.
Hence when TB Pickens says this sort of thing I wonder on just how much strong arming is implied.
Mind you I just talked to someone who thinks we should nuke iraq, because well its there, I suppose, it wasnt very rational.
regards
"That comes as the US oil production reached a key milestone; US oil production has now risen above its previous peak in 1970 as a result of the country’s shale oil boom. Four decades of decline in US oil output have been reversed in just half a decade of growth."
Production? I don't think that word means what you think it means. Extraction might be a better word.
Anyone out there still have Allied Farmers shares? Someone actually wants them;
Zero Commission NZ Limited - Unsolicited Offer
10:11am, 16 Jun 2014 |
GENERAL 16 June 2014 ZERO COMMISSION NZ LIMITED – UNSOLICITED OFFER
Allied Farmers Limited (“Allied”) advises that Zero Commission has advised that it will be writing to a number of Allied shareholders holding smaller parcels of shares with an offer to buy their Allied shares for $0.042 per share.
The Board of Allied advises that it does not endorse this offer. The market price for Allied shares was $0.049 per share as at close of trading on 13 June 2014.
Allied recommends that shareholders who receive an offer from Zero Commission:
• read the Zero Commission disclosure document and terms of offer carefully and thoroughly;
• seek independent financial and/or legal advice if they are uncertain about this matter or are contemplating selling their Allied shares; and
• check the most recent market price for Allied shares (www.nzx.com/companies/ALF).
Shareholders are under no obligation to accept any offer or to take any action in respect of it. Unsolicited share offers are now subject to The Securities Market (Unsolicited Offers) Regulations 2012. Under these regulations, shareholders have the right to cancel any acceptance of the offer up to 10 working days after the date of the acceptance.
Shareholders accepting Zero Commission’s offer should be aware that they are likely to be in the position of being an unsecured creditor of Zero Commission during the period between their shares being transferred to Zero Commission and receiving full payment from Zero Commission.
Garry Bluett Chairman
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