Daily Digest 8/1 - Corn Prices Hit Record, Drought Looms Large In India
The U.S. Postal Service affirmed it won’t make a required $5.5 billion payment due tomorrow to the U.S. Treasury for future retirees’ health care, an obligation the agency said must end for it to become financially viable. The service has said for months it couldn’t afford the payment, which was initially due last September, nor a $5.6 billion payment required by Sept. 30 for this year.
The study said current corn stocks from the 2011 harvest are insufficient to offset the expected loss in 2012. On the assumption that sharply higher corn prices will force large reductions in exports and livestock feed, the ethanol industry must reduce production for 2012 by roughly 2 billion gal (a production ceiling of 12 billion gal total for 2012) in order to balance the remaining corn supply with demand. This will result in a shortfall of 1.2 billion gal compared with the 2012 Renewable Fuel Standard’s volume requirement.
The company faces massive compensation demands from those forced to evacuate and whose land and products were contaminated by radiation leaks following the crisis that began March 11 last year when Japan's northeast was hit by a massive earthquake and tsunami.
TEPCO must also shoulder the enormous costs of decommissioning three reactors with melted cores and putting nuclear fuel rods from a fourth reactor into safe storage.
Spain has ordered its banks to clean up their balance sheets once and for all to ease market pressure that has also driven up the government's cost of borrowing to a level near where other eurozone countries were forced to seek international aid.
The total amount of new provisions expected to be taken by Spanish banks has been estimated at more than 80 billion euros and BBVA said it had set aside 1.43 billion euros in provisions, about a third of the 4.64 billion euros which the bank needs to meet the government's new regulations.
New data showed capital fleeing Spanish banks at a growing rate. Spain has come dangerously close to losing affordable access to financial markets, raising the prospect of a bailout that would swamp the euro zone's hastily erected defences. If Spain goes, Italy, with an economy twice the size, could follow.
Euro zone leaders have spent the past week issuing statements promising to take whatever steps are necessary to rescue the currency, but none have raised expectations as much as Mario Draghi, head of the European Central Bank.
Catalonia, Spain's most indebted region, said Tuesday it could not pay subsidies in July to hospitals, old age homes and other social services already reeling from sharp budget cuts.
France's parliament has passed a budget amendment that raises a slew of new taxes on businesses and the wealthy while barely cutting spending...........The government has promised the 2013 budget will include spending cuts, but economists worry the new leaders don't understood how urgently France needs to reduce costs. Ballooning debt has forced other European countries to seek bailouts.
Budget Minister Cristobal Montoro will urge Spain’s regions to extend budget cuts today during a meeting Catalonia plans to boycott, as efforts to prevent them defaulting deepen the central government’s own deficit. Representatives of Spain’s 17 semi-autonomous regional governments are scheduled to convene in Madrid at 4:30 p.m. for a budget checkup. Data released today showed the central government exceeded its target for the 2012 budget shortfall with half the year still to go.
Portugal's weak first-half tax collection means this year's revenue target is all but unreachable, posing further risks to a 2012 deficit goal agreed under an EU/IMF bailout, a parliament body that monitors budget execution warned. It had already said earlier this month that Portugal, hit by a steep recession and unemployment, is likely to miss the 2012 budget deficit target unless the nation sees a hefty improvement in indirect tax revenues soon.
Spain is suffering a 24% jobless rate—the highest in Europe—money is tight and many Spaniards, who account for half of hotel stays, are opting to cancel their domestic and foreign vacation plans and stay home, or are cutting back on the number of overnight stays.
According to a survey by the Confederation of Spanish Hotels and Tourist Accommodations of its member hotel associations representing 14,000 establishments, reservations by Spaniards for the summer are expected to drop by an overall average of 30%.
The midday weather model suggested a slightly wetter pattern for the U.S. Midwest where corn and soybean crops have withered under an extensive drought, but rainfall will be only scattered and light, agricultural meteorologists forecast Tuesday.
"There's going to be rain, but it's just not going to be heavy enough to dramatically improve the situation in very many areas. There's no general soaking over the next two weeks," said Andy Karst of World Weather Inc.
The average wheat yield reached 2.46 metric tons a hectare (2.47 acres) as of July 26, down from 3.44 tons a hectare a year earlier, according to Agriculture Ministry data. Russia, which was the world’s third-biggest wheat exporter last season, has 16 regions affected by drought this marketing year. The country may ship 12 million tons and drop to fifth place among exporters of the grain, according to the U.S. Department of Agriculture.
The milk price outlook has changed dramatically from last month. Days of high summer temperatures along with high humidity over much of the U.S. has put milk cows under stress reducing both the level of milk production and butterfat tests.
Lower butterfat tests also reduce the yield of dairy products per 100 pounds of milk. In addition, drought conditions over about 58 percent of the U.S. has reduced the yield of hay per acre and deteriorated the condition of both corn and soybeans. Dairy farmers are concerned about not only the cost of hay, other forages and grain and concentrate prices this fall and winter, but also having enough feed supplies to maintain their cow numbers.
The spectre of drought looms large over major parts of northern and western India following a poor monsoon that has already hit sowing of kharif (monsoon) crops and left farmers and livestock in distress, media reports said. Shortage of drinking water and an adverse impact on the prices of fruits, vegetables, pulses, sugar has been felt in several areas. Livestock has been hit by fodder shortage
Corn prices surged to a new record high Tuesday, as the worst drought in more than 50 years continues to plague more than half the country.
Almost 90% of the United States' corn crops are in drought ravaged areas, according to the U.S. Department of Agriculture, and nearly 40% are situated in the hardest hit spots
Senate and House leaders on Tuesday struck a deal to fund the government for six months, Senate Democratic Leader Harry Reid said. Government funding is due to expire when the current fiscal year ends on Sept. 30, and an agreement averts a government shutdown. The deal "provides stability for the coming months, when we will have to resolve critical issues that directly affect middle class families," Reid said in a statement.
Inside every wind turbine, inside computers, phones and other high-tech equipment from medical scanners to electric cars, are materials known as "rare earths". This small group of 17 elements are in extraordinary demand – but their supply is limited, and most of the existing sources have already been snapped up by China in its quest for ever more rapid economic growth.
Last month China – which controls more than 90% of the reserves of these essential elements – warned that its supplies were diminishing, despite quotas to limit exports. Beijing's top officials said in a memo: "After more than 50 years of excessive mining, China's rare earth reserves have kept declining and the years of guaranteed rare earth supply have been reducing."
State employee retirees' healthcare is yet another cost adding pressure to the state budget. A new report by California Common Sense estimates unfunded liabilities outside pensions, known as Other Post-Employment Benefits, to be more than $62 billion. "One of the things that may have caught many analysts and the state off guard was the rising costs of healthcare," California Common Sense Autumn Carter said.
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