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Let Them Eat Unleaded

Markwet forces may soon look like the events in the Sci Fi book of that title....Lets put on our connect the dots thinking caps and consider these announcements.
1.
NAB, the most internationally-focused Australian bank with operations in the UK and New Zealand, will acquire Great Western from the Hamann family.

John Stewart, NAB chief executive, said the acquisition would strengthen the group's agribusiness relationship bank model in the US.

NAB said agriculture was a high growth sector, estimating global trade had grown 50 per cent in the last five years.

Agriculture contributed US$310bn to US gross domestic product, a figure 10 times larger than Australia.
2.
Policymakers already concerned about the relentless rise in global food inflation are facing more bad news in the shape of soaring soyabean prices.

Soyabean prices have risen to their highest level in 34 years, boosted by strong Chinese demand and fears that current prices are not high enough to swing acreage from corn to soyabeans in the US, the world's largest producer.

=...do any of you, perhaps clued in by your reading come to a conclusion like my title, cortesy the infamous French Lady Aristocrat? Let them eat unleaded.....indeed

and you thought it would be heating oil OR feed the kids....skinny chance

WARNING : don't race to conclusions, they will come fast enough as the world gets flatter and reaction times shrink to the speed at which 24/7 markets can "respond" alas for the good old days when a moment of reflection was imposed by the slow speed of things. Now there is no need to ponder, reflect, discuss...markets can do their magical blind reasoning algorhythms faster than the mind can take it all in.

Market advice. But bullets, buy plows, buy draught horses.

Don't worry, be prepared
Australia's NAB buys US bank for $798m
By Peter Smith in Sydney

Published: November 29 2007 01:28 | Last updated: November 29 2007 01:28

National Australia Bank has agreed to pay US$798m for Great Western Bank as part of its strategy to expand its US agribusiness banking.

The South Dakota-based bank has assets of more than US$3.4bn and a network of more than 100 branches across six mostly midwest states.

EDITOR'S CHOICE
NAB buys stake in Chinese trust - Sep-10NAB takes action to improve liquidity - Sep-06NAB, the most internationally-focused Australian bank with operations in the UK and New Zealand, will acquire Great Western from the Hamann family.

John Stewart, NAB chief executive, said the acquisition would strengthen the group's agribusiness relationship bank model in the US.

NAB said agriculture was a high growth sector, estimating global trade had grown 50 per cent in the last five years.

Agriculture contributed US$310bn to US gross domestic product, a figure 10 times larger than Australia.

NAB said it had a thorough understanding of the farming sector, and that US and Australian farmers grew similar crops and financial needs.

NAB also highlighted opportunities in emerging markets and in bio-fuels.

Mr Stewart said Great Western offered a springboard to accelerate NAB's organic growth strategy.

"It is a strong, well run bank with a robust history of expansion, a strong deposit base and sound financial performance," Mr Stewart said.

He added that the US bank was active in the commercial lending, wealth management distribution and insurance agency sectors, areas where NAB already had a "strong track record".

Great Western will form part of NAB's development and new business division under George Frazis, with Jeff Erickson conntinuing as Great Western chief executive.

An amount of US$75m will be held back from the purchase price for up to three years to provide cover for indemnity and related claims.

NAB is required to pay a break fee of US$25m under certain circumstances.

NAB said its capital position would remain strong after the acquisition.

"It is expected to be earnings per share neutral by year three, approximately 0.5 per cent dilutive in year one and have no impact on dividend per share."

NAB shares rose 39 cents to A$39.80 in early trading on Thursday.
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Soyabeans to stoke food price inflation
By Javier Blas in London

Published: November 28 2007 20:50 | Last updated: November 28 2007 20:50

Policymakers already concerned about the relentless rise in global food inflation are facing more bad news in the shape of soaring soyabean prices.

Soyabean prices have risen to their highest level in 34 years, boosted by strong Chinese demand and fears that current prices are not high enough to swing acreage from corn to soyabeans in the US, the world's largest producer.

In Chicago, soyabean prices this week hit $11.14 a bushel, the highest level since July 1973, helped by rising demand from the biofuel industry as crude oil prices approached $100 a barrel and also by worries about the Brazilian crop - the world's second largest - after dry weather in Mato Graso state, the key producing area. Soyabeans traded on Wednesday at $10.85 a bushel.

The price jump threatens to resonate through the supply chain, boosting meat and poultry prices because soyabean is used largely for animal feed, analysts warned.

The surge in soyabean costs - coupled with price increases in other feedstock, such as wheat and corn - could prompt some farmers to abandon production of pork, beef and lamb amid mounting losses, paving the way for higher meat prices in the future.

Food inflation is already a big concern for policymakers in developed and developing countries. German inflation has just hit 3 per cent for the first time since at least 1995 on higher food and energy costs while Chinese inflation has surged to a 10-year high.

Together with corn, rice and wheat, soyabeans are one of the world's key crops. About 80 per cent of the harvest is processed into soyameal and cakes for livestock feeding, while the other 20 per cent is converted into oil for human consumption (and more recently also to feed the biodiesel industry).

Peter Thoenes, an oilseeds specialist at the UN Food and Agriculture Organisation in Rome, said that Brazil and other South America soyabean crops were now key to offsetting the shortfall from the US, after farmers in the world's largest soyabeans-growing region converted some of their acreage to corn.

"Any unfavourable weather in South America could spark a price hike," Mr Thoenes said.

The lower soyabean crop coupled with higher demand for animal feed and for biodiesel production has led to a fall in global inventories, with the stock-to-use ratio at the lowest level for at least five years, according to FAO estimates.

Currently stocks are equivalent to 10 per cent of annual demand.

Gavin Maguire, of Iowa Grains in Chicago, said: "Surging demand combined with the lingering effect of reduced US production in 2007 make complete inventory depletion a real possibility."

The Chinese government has recently encouraged soyabean purchases, reducing temporarily the import tariff from 3 per cent to 1 per cent in an effort to bring down local prices. Beijing hopes the measure, which expires in late December, will boost pork production, after a disease earlier this year killed millions of pigs.

World Oil, the Hamburg-based consultants, yesterday said additional large-scale Chinese purchases were "likely in the near to medium-term". China is the largest world importer, acquiring about 40 per cent of the world's traded soyabeans, followed at a large distance by the European Union and Japan.

Earlier this year soyabeans became the latest victim of the agricultural market's turf war, after US farmers responded to higher prices for corn in late 2006 by increasing the acreage they devoted to corn to the highest level in over 60 years.

That increase led directly to a sharp reduction in soyabean acreage and, to a lesser extent, wheat and cotton.

The soyabean-planted area in the US dropped this year by about 16 per cent to 63.7m acres, according to the US Department of Agriculture. The acreage fall, together with lower yield productivity, cut soyabean supply to 2.6bn bushels, down 19 per cent from last year's record production.

Lewis Hagedorn, agriculture analyst at JPMorgan in Chicago, said: "Soyabeans need to purchase back acreage from corn ahead of next spring's planting season."

So far, it is unclear if current record prices will be enough to convince farmers to switch crops because corn prices for next year's harvest season remain high.

CBOT December 2008 corn, the futures contract that corn farmers use to measure the profitability of their crops, is trading at $4.25 a bushel, well above current spot prices of about $3.80 a bushel. Meanwhile, CBOT November 2008 soyabean, the benchmark for next year's crop, trades currently at $10.20 a bushel, below spot prices.

Although the corn to soyabean price ratio has recovered from last year's low of 1.8 times - prompting farmers to abandon soyabeans in favour of corn - at 2.4 times it is not high enough to convince farmers to move back to the oilseed, according to analysts.

Mr Maguire said that if corn prices remain close to $4 a bushel, then soyabeans will need to scale the $12-a-bushel mark "in order to establish the key 3-to-1 ratio that would bring about a ramp-up in soyabean production".
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WARNING : don't race to conclusions, they will come fast enough as the world gets flatter and reaction times shrink to the speed at which 24/7 markets can "respond" alas for the good old days when a moment of reflection was imposed by the slow speed of things. Now there is no need to ponder, reflect, discuss...markets can do their magical blind reasoning algorhythms faster than the mind can take it all in.