The agriculture boom has started

A series of bad weather events has affected the agri market on the supply side. Expect more news like this to follow in the coming months

Rice may rally 22 percent by yearend as Thailand, the world’s largest exporter, buys the grain from farmers at above-market rates, pushing up costs for importers and fanning global inflation even as economic growth slows.

The price of 100 percent grade-B Thai rice, the regional benchmark, may rally to $750 per metric ton by Dec. 31, according to the median estimate in a Bloomberg News survey of seven exporters, traders and millers conducted last week. That target is $50 higher than the median estimate in a separate Bloomberg survey undertaken in the first half of this month.

http://www.bloomberg.com/news/2011-08-29/rice-may-rally-22-by-yearend-as-thai-buying-elevates-costs-curbs-exports.html

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Sino Forest part 3 – CEO resigns

In another bout of China fraud the CEO just resigned. The most incredible part of this is if you have had a chance to read about the views of former CEOs, the Chinese firmly believe that what the rest of the world considers defrauding is perfectly normal behaviour. Try google this article “confessions of a s-chip ceo”

 

Perhaps OSC has better tools and sharper teeth to enter China to conduct asset recovery?

 

Sino-Forest’s chief resigns amid probe into accounting

Sino-Forest Corporation’s CEO Allen Chan has resigned after the Ontario Securities Commission ordered a 15-day trading halt on its shares on Friday.

The regulator said Sino-Forest may have inflated its revenues and exaggerated the value of some of its timber holdings.

Earlier this year, Muddy Waters research had also levelled similar allegations against the company.

Sino-Forest’s shares have plunged more 70% this year due to these accusations.

“Allen Chan has voluntarily resigned pending completion of the review by the Independent Committee of the allegations made by Muddy Waters”the company said in a statement.

‘Serious nature’

Continue reading the main story

“Start Quote

The allegations made in the Ontario Securities Commissions’ temporary order, while unproven, are of a serious nature”

Sino-Forest Corporation

There have been growing concerns about accounting or audit standards at Chinese companies, especially those listed on exchanges in North America.

Since March, 30 US-listed Chinese firms have had their auditors resign and 20 have been delisted, tarnishing the image of Chinese companies among investors and regulators.

Earlier this year, another tree plantation owner, China Forestry, admitted that its bank statements and harvesting records had been faked, while its accounts had gone missing.

Sino-Forest has denied the allegations levelled against it and says it takes the accusations seriously.

“The allegations made in the Ontario Securities Commissions’ (OSC) temporary order, while unproven, are of a serious nature.” it said.

The company said it has placed three employees under “administrative leave” as a part of its investigation into the charges.

“These actions were undertaken by the Company after certain information was uncovered during the course of the Independent Committee’s review, subsequent to the release of the Company’s second quarter financial results,” it said.

However, Sino-Forest said it had uncovered this information before the OSC’s ordered a trade halt on its shares.

http://www.bbc.co.uk/news/business-14705169

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Sino Forest Saga part 2 – rebound (Bloomberg)

Sino-Forest Corp. (TRE), the Chinese tree- plantation company accused by a short seller of overstating timber holdings, rose for a second day after Wellington Management Co. said it owned an 11.5 percent stake.

Sino-Forest climbed 27 percent in Toronto trading today, adding to a 30 percent gain yesterday, after the Boston-based investment firm said in a regulatory filing it held 28.3 million shares as of June 30. The stake was valued at C$90.7 million ($94.2 million) on that date. Wellington, which manages $663 billion, held 79,700 Sino-Forest shares, or 0.03 percent, as of Dec. 31, according to data compiled by Bloomberg.

“Maybe they know something the bears don’t,” Arthur Salzer, Toronto-based chief executive officer of Northland Wealth Management, which oversees C$200 million, said yesterday in a telephone interview.

Sino-Forest plunged 82 percent last month after Muddy Waters LLC, a research company founded by short seller Carson Block, said in a June 2 report that Sino-Forest overstated its tree-plantation holdings. Sino-Forest, based in Hong Kong and Mississauga, Ontario, rejected the allegations. Wellington’s purchase of the Sino-Forest stake suggests it’s the timber company’s second-largest shareholder, according to data compiled by Bloomberg.

‘Might Be Value’

“If they believe Sino has more licenses than Muddy Waters thinks they do, there might be value there,” said Salzer, who said he toured Sino-Forest’s plantations in China in 2005 and doesn’t own the shares.

Sino-Forest has commissioned an independent investigation and appointed PricewaterhouseCoopers LLP to assist. Sino-Forest said June 14 the probe won’t be completed for two to three months.

Sara Sherman, a Wellington spokeswoman, declined to comment when contacted by phone. Stan Neve, an external spokesman for Sino-Forest, declined to comment yesterday when contacted by e- mail.

Wellington, a closely held partnership founded in 1928, serves as aninvestment adviser to more than 1,950 institutions in 50 countries, according to its website. In addition to managing equity and fixed-income assets worldwide, the firm also runs alternative and multi-asset investment strategies.

US Airways Financing

In 2005, Wellington provided financing to allow US Airways Group Inc. to emerge from bankruptcy and merge with America West Holdings Corp. Wellington went on to become US Airways’ largest shareholder before cutting its stake in 2008.

Wellington managers are also responsible for at least an additional 3.2 percent holding in Sino-Forest through funds sold by Hartford Financial Services Group Inc., according to Bloomberg data. Wellington manages some Hartford funds under sub-advisory agreements.

Sino-Forest climbed C$1.14 to C$5.29 at 4:36 p.m. in Toronto Stock Exchange trading. The shares, which traded at an eight-year intraday low of C$1.29 on June 21, have more than doubled in the last five trading sessions.

“When the stock goes down to C$2, the investor base totally changes,” Marcus Xu, Vancouver-based director of equity investments at Genus Capital Management, which oversees C$1.7 billion, said in a telephone interview. “There’s definitely a lot of value you can argue for just on the simple probability of Muddy Waters being wrong on some of these points.”

‘Stomach the Risk’

“Right now Sino-Forest could very well be a good bargain for those investors who have the stomach for the risk,” Eric Yan, who helps manage about C$2.7 billion at Matrix Fund Management Inc. in Toronto, said in a telephone interview. “But we need more information from the company and a trustworthy independent source like PricewaterhouseCoopers.”

Paulson & Co., the hedge fund that had been Sino-Forest’s largest holder, said last month in a letter to clients it sold its entire 12.5 percent stake and had lost C$462 million since May 31 on Sino-Forest. Davis Selected Advisors LP held 30.9 million shares, or 12.6 percent of Sino-Forest, as of April 29, according to the Bloomberg data.

“I’m just as certain today that the company is a fraud and that the stock is a zero as I was on the day that we published,” Block said last week in an interview with Erik Schatzker on Bloomberg Television’s “InBusiness With Margaret Brennan.”

Sino-Forest unit Greenheart Group Ltd. gained 19 percent to HK$1.34 today in Hong Kong.

To contact the reporters on this story: Christopher Donville in Vancouver atcjdonville@bloomberg.net; Matt Walcoff in Toronto at Mwalcoff1@bloomberg.net.

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; Simon Casey at scasey4@bloomberg.net.

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Can timber investing be sustainable? (blog)

Forestry and timber investing – the very concept seems either dull or extremely alien to most people.  After all, it’s much more satisfying to follow the rest of the herd and chase the latest hot social networking stock.  However individual investors – especially those looking for diversification and stable returns – are missing out by ignoring the value timber investments can bring to their overall portfolio.  Noted stock market skeptic Jeremy Grantham of GMO Asset Management has long been a fan of timber investments (whilst being quite pessimistic about the long-term returns on offer from global equities at their current valuations).

 

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Sino Forest Saga

Sino-Forest scrambles to defend its reputation

JACQUIE McNISH, DAVID EBNER, PAUL WALDIE AND TIM KILADZE
Jun 03, 2011

It took just one report from a little-known short-seller to send the stock of one of Canada’s biggest publicly traded forestry companies into a tailspin and its startled board of prominent directors scrambling for answers.

On Friday, the board of Toronto-listed Sino-Forest Corp., Sino-Forest Corp. (TRE-T5.23 -9.23, -63.83%) which includes Hong Kong magnate Simon Murray and former Southam Inc. CEO William Ardell, publicly warned investors to view with “extreme caution” a “shock jock” short-sellers report that accused the company of grossly exaggerating the value and scale of the core timber holdings it buys and sells in China.

Behind the scenes, however, one person close to the company described the directors as “rattled” by the report. The directors held an emergency board meeting Thursday and appointed a special committee of three independent directors, including Mr. Ardell, to review the claims. Sources said the board also agreed to hire an independent accounting firm to investigate the claims.

“The directors believe that this is a company of substance. They are shocked and they intend to take a hard look at these claims,” said the source.

Sino-Forest’s board is under intense pressure to contain the damage. In heavy Canadian trading on Friday, the company’s stock collapsed like a fallen tree, wiping out a total of $2.3-billion from the company’s total stock market valuation in one day. On the Toronto Stock Exchange, Sino-Forest closed at $5.23, a 64-per-cent drop from the previous day and a 79-per-cent drop from the company’s 2011 peak valuation of $6.2-billion in March. The company has lost nearly $5-billion in market value in that span.

The stunning wipeout raises awkward questions for a company that was rated a “buy” by seven Bay Street analysts, backed by respected investors such as Wall Street’s John Paulson and a large cast of leading Bay Street investment banks including TD Securities and RBC. Its auditors are the global accounting firm Ernst & Young.

Sino-Forest is one of hundreds of Chinese companies that have gained entry to North American stock exchanges through a technique known as a reverse takeover of a dormant public company. While reverse takeovers have been a common practice, regulators and politicians in the United States have become concerned about the sharp influx of Chinese-led reverse takeovers. The U.S. Securities and Exchange Commission recently launched an investigation of U.S.-listed Chinese stock plays after several were accused of accounting irregularities and fraud.

Until this week, Sino-Forest was untouched by scandals that have tainted some of its smaller competitors. Last month an independent committee of directors at China Forestry revealed that the Hong Kong-listed company had falsified logging permits. Cathay Forest, which is listed on the TSX Venture Exchange, had its stock suspended in late January and the company is probing a variety of investments and contracts related to its timber assets.

Created in 1994 through a reverse takeover on the Alberta Stock Exchange, Sino-Forest’s main business is buying and selling giant blocks of trees. It manages nine tree plantations in China and one in New Zealand. Sino-Forest is also involved in log trading and manufacturing of some wood products such as plywood and flooring.

“Let me say clearly that the allegations contained in this report are inaccurate and unfounded,” Sino-Forest chairman and chief executive Tak Yuen (Allen) Chan said in a statement Friday.

Mr. Chan, a trained sociologist from Hong Kong who started in business with Chinese ventures in the 1980s in everything from the hotels to clothing sectors, is the architect of the sprawling Sino-Forest enterprise.

Mr. Chan’s earlier businesses foundered in 1989 amid the chaos of Tiananmen Square, and he has described the stress from this time as so overwhelming that he became paralyzed. He learned to walk again after physiotherapy. Back on his feet, Mr. Chan turned his attention in 1993 to an emerging business in China that was fuelled by a construction boom. Partnering with Kai Kit Poon, a veteran government forestry engineer in China, Mr. Chan began investing in large tracts of trees.

Mr. Chan ‘s greatest achievement with his new venture was building a bridge to North American investors for his company. He created his company through a reverse takeover of his fledgling Hong Kong company with two dormant companies that came with a public listing. His early forays into the Canadian market allowed him to raise $5-million.

For a Hong Kong businessman whose English to this day is difficult to understand, his success in raising money from investors has been nothing short of remarkable. Despite volatile markets the company has been able to attract more than $1-billion for stock and debt investors in recent years.

One of Sino-Forest early backers was Simon Murray, the Hong Kong-based businessman famous for his stint with the French Foreign Legion and multitude of business interests which include managing billionaire Li Ka-Shing’s Hutchison Whampoa and serving as chairman of Switzerland-based Glencore. In 1999, a company controlled by Mr. Murray provided Sino-Forest with $20-million in financing in return for an ownership position and a seat on the board. He has been a director ever since and been involved in several other deals with Sino-Forest, including co-owning Greenheart Resources, which owns forests in Suriname.

Sino-Forest has attracted investors with its steady revenue and profit growth.

Sino-Forest has scored consistent and steady success throughout its history, even through difficult economic periods. A decade ago, revenue rose like clockwork, $126-million in 2000 to $137-million in 2001 and $201-million in 2002. In the past several years, as the global recession ravaged many industries, and resources particularly so, Sino-Forest did not falter and growth spectacularly accelerated. Revenue of $896-million and profit of $229-million in 2008 roughly doubled to $1.9-billion of revenue and $395-million of profit in 2010. The company, which reports more than $1-billion of cash on its books, does not pay a dividend and does not plan to pay one because it wants to use the money to fund additional growth.

Mr. Chan holds 6.58 million shares of Sino-Forest and the only recorded disposal of stock in the past several years was the sale of 182,000 shares in June, 2010. Mr. Poon, nominally president of Sino-Forest but essentially retired, sold most of his 2 million shares in 2008 and currently owns about 100,000. The 2008 sale of stock was for “personal reasons,” a company spokeswoman said.

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Transportation bottleneck for wood exports to China

The Cielo di San Francisco, a newly built cargo ship, is sailing across the Pacific Ocean, destination Vancouver, and set to arrive in late May with one purpose: bring British Columbia lumber to China.

Booming sales of B.C. wood to China – March sales tripled from a year ago – have injected the long-suffering forestry industry with some much-needed optimism and a sense that better days could be lasting.

But the surge has created its own problems.

For decades, most of B.C.’s wood went south to the United States, by rail or truck, with a smaller portion exported by sea. Today, however, the U.S. market remains extremely weak in the wake of the housing bust, while lumber is lined up at jammed ports in Vancouver and Prince Rupert ready to set sail for China.

Faced with a transportation bottleneck that will only worsen as demand in China soars, the forestry industry has come together in a deal to secure vital shipping capacity.

This spring, four leading forestry companies – West Fraser Timber Co. Ltd., Canfor Corp., Tolko Industries Ltd. and Western Forest Products Inc. – partnered to charter the Cielo di San Francisco for the next year, an experiment to give the firms more control over the movement of their products.

“We are putting the ports under a lot of pressure, with the volumes of lumber,” said Chris McIver, vice-president of lumber sales at West Fraser, North America’s top producer. “We’ve never seen anything like this.”

The chartered cargo ship is the latest solution for an industry enjoying and grappling with an export renaissance.

Lumber and pulp now fill about half of all containers exported from Vancouver. That has helped strain the availability of containers at the busy port.

Years ago, industry powers such as MacMillan Bloedel actually owned their own fleets of ships. This strategy was largely abandoned in the 1990s when containers – a cheaper way to move wood – became widely available and deals to move product were made with shipping companies.

But as available containers become more scarce, forestry companies are turning more to cargo ships. Vancouver-based International Forest Products Ltd. in January bought full control of Seaboard Shipping Co., which owns two cargo ships and has contracts for others. The firm was created in 1936 to export B.C. wood.

For West Fraser and its partners, the Cielo di San Francisco offered a perfect chance to ensure access to the lucrative Chinese market.

The ship was built in a Korean shipyard, set sail for Vancouver on May 9, and is expected to arrive around May 24. The first official fully loaded sailing for the ship, owned by d’Amico of Italy, is slated for the end of May from Vancouver.

Seven round-trips are planned for the next year, which would bring a total of 175 million board feet of lumber to China – about 3 per cent of the wood B.C. will send to China in 2011. To put the export growth in perspective, the 175 million board feet is more than the amount of wood B.C. exported to China in all of 2005.

Tolko, privately held and based in Vernon in the province’s interior, has had several record months for overseas sales, said John Langley, general manager of export sales. He called the chartered cargo ship a “hedge” against troubles securing enough containers and said shipping has squeezed the industry before.

“It’s been the pinch point many times,” Mr. Langley said.

This time, the move to charter a cargo ship stems from the strained availability of export containers, on which the industry has come to rely.

Pat Bell, B.C.’s Minister of Jobs and formerly in charge of forestry, called it a “major challenge” earlier this year. B.C. foresters depend on so-called backhaul containers, which arrive from Asia fully loaded with other products. Once delivered largely by rail to their destinations in different parts of Canada or the U.S., they return empty to Vancouver.

Given the still-uncertain future of the U.S. economy – and thus demand for imported goods, and a steady supply of empty backhaul containers – foresters decided to co-operate on their year-long bet on the cargo ship.

“It gives us control of our own destiny,” said Dave Lefebvre, a Canfor spokesman.

Companies that are normally rivals have learned to co-operate as they have cracked China. Under the leadership of Mr. Bell, who is widely credited by industry executives for leading the charge, companies present a united front in China rather than individually competing for business.

The strategy has produced spectacular results. Last year, B.C. sales to mainland China jumped 112 per cent to $668-million, exceeding Japan for the first time to make China the No 2 destination for Canadian wood.

This year, the pace of growth has picked up significantly. March was the second-biggest month ever for exports to mainland China and sales are up 158 per cent to $240-million in the first three months of the year. It is surprising because even as B.C. ships more wood, the percentage growth increases – gains in 2009 and 2010 were roughly 115 per cent.

The strong start to the year is somewhat unusual. Demand in China for B.C. wood is generally strongest in the last four months of a calendar year and if the current pace of growth holds up, B.C. exports to China would reach $1.7-billion in 2011.

That would be a dizzying figure, nearly as high as the value of wood sent to the U.S. in 2010 and far greater than even the most optimistic forecasts of Mr. Bell, a major industry cheerleader whose bullish forecasts have often seemed wildly aggressive. Even if growth slows, B.C. appears certain to hit four billion board feet of wood shipped to China this year. When Mr. Bell first made a forecast of four billion board feet three years ago in 2008, it was roundly dismissed as impossible to reach.

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Timber firms rally to japan reconstruction effort

Major Canadian forest products companies are joining forces to support a massive reconstruction effort in Japan that will spur much-needed demand for timber and other building materials.

Canadian forestry companies – particularly lumber producers in British Columbia – have carefully built deep relationships in Japan over the past several decades. Now they are rushing to help government-led efforts to rebuild infrastructure and put up new housing for the hundreds of thousands left homeless in the natural disaster that hit last week.

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Prayers for Sendai

The news reports that have been streaming in since Friday are shocking! The damage and lives lost still remains unknown and every update only increases the estimates.

 

Over here at College Green we take this chance to wish all the peoples of Japan affected by the quake & tsunami the very best. Our prayers go out to all of you and we hope you can rally together in this time of crisis and that the darkest days will perhaps be a little less dark because the rest of the world is moving to help in whatever ways they can.

God bless Japan

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Sarawak timber may not benefit from Japan reconstruction effort

KUCHING: Analysts believe that the 8.9-magniture earthquake which struck off Japan’s north-eastern coast would affect Malaysian timber players as Japan was anticipated to require higher timber demand for rebuilding purposes.

AmResearch Sdn Bhd (AmResearch) in its latest research note revealed that though reconstructions were to be expected, timber players did not expect a sudden and significant jump in timber exports towards the reconstruction process.

“We have contacted timber players, who are also unsure of the extent of damage stemming from the latest earthquake and the aftershocks,” revealed the research firm.

“One timber player rules out a ’30-40 per cent jump in exports’ to Japan – which mostly buys plywood from Malaysia – but expects a probable steady rise in demand from Japan to help in the reconstruction process, depending on the extent of the damage to buildings.”

Of the two timber companies under AmResearch’s coverage, Ta Ann Holdings Bhd (Ta Ann) currently exports 90 per cent of its plywood production to Japan. Its timber products are shipped to trading houses in Osaka, which is located further south of Tokyo, in the central-southern region of Japan.

Japan’s Research Institute of Construction Economy has projected Japan’s housing starts to rise 9.9 per cent to 898,900 units in the fiscal year ending March 31, 2012.

Japan reportedly imported nearly 1.15 million cubic metres of panel products worth RM1.7 billion, representing almost half of the Sarawak’s total exports of 2.5 million cubic metres (or RM3.43 billion) for the 11 months through November last year.

 

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Kimberly Clark sells off Pulp Business

Kimberly-Clark ( KMB ), the maker of Huggies diapers, Kleenex tissues and Kotex sanitary pads recently announced its 2010 results, which generated a mixed response from analysts. While the erosion in overall EBITDA margin by over 1 percentage point raised some concerns, management appeased investors by announcing a 6% increase in dividends, a $1.5 billion stock repurchase plan and a restructuring program that involves selling off the remainder of its pulp business.

Read more: http://community.nasdaq.com/News/2011-03/kimberlyclark-shuts-pulp-business-to-focus-on-profitability-core-brands.aspx?storyid=61086#ixzz1GYEV2b2V

 

 

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