Wednesday, April 23, 2008

Panic over rice prices hits home in capital
Fearing shortages, Asian market shoppers in south area buy up supplies.
By Jim Downing - jdowning@sacbee.com

Published 12:00 am PDT Saturday, April 19, 2008
Story appeared in MAIN NEWS section, Page A1

As word of food riots and export shutdowns in Asia reached California in recent weeks, worried shoppers have been buying up hundreds of pounds of rice at a time from the Asian supermarkets that line Stockton Boulevard, looking for security against rising prices.

"When people saw the price jump $2 or $3, they started buying like crazy – 10 bags, 15 bags," said Cu Van, a floor manager at Goldstar Supermarket. Each bag weighs 50 pounds.

In recent weeks, the retail price for a 50-pound sack of Thai jasmine rice, the prized variety served steamed in Chinese and Southeast Asian cuisine, has risen from roughly $20 to $40, straining budgets for families and restaurants.

The spike in the cost of Thai rice is one of the most extreme examples of a trend that is pushing up prices for all the major globally traded food commodities – rice, wheat, corn, soy and dairy products. Experts say the increases largely have been driven by demand from booming Asian economies combined with poor harvests in key export countries like Australia. The demand for corn and soy to make ethanol and biodiesel also has boosted food prices, though economists disagree on how much.

Rice markets in particular have been jolted as a number of rice-exporting countries have restricted international sales in order to reduce prices for their own citizens.

State rice farmers thriving

For California rice farmers, though, the high rice prices are a boon. Even though the short- and medium-grain varieties grown here are sold into different markets than Thai jasmine rice, which has seen the steepest increases, spot-market prices for bulk California rice are up 50 percent since February, to about $20 for 100 pounds.

"We're kind of riding the coattails," said Pat Daddow, who runs the California Rice Exchange in Yuba City.

Domestic varieties of rice – long-grain from Texas, for instance – sell in some of the Stockton Boulevard markets for less than half the price of Thai jasmine rice. But grocers, shoppers and restaurateurs said the cheaper domestic long-grain varieties are suitable only for fried rice: Only Thai jasmine delivers the softness and aroma for proper steamed rice.

Still, Van said, some of her customers have begun to try other varieties. One morning last week,she pointed to a single bag of California medium-grain rice – typically used for sushi – lying askew on a pallet. It was all that was left of a one-ton shipment that arrived two days earlier.

But Paula Duong, manager at King Palace Seafood Restaurant on Stockton Boulevard, which goes through more than 300 pounds of dry rice a week, is still buying Thai rice. Her customers would notice any change, she said. She hasn't stockpiled, but is instead buying sacks as needed and hoping the cost will drop within a few months. She hasn't raised menu prices, citing the need to stay competitive.

Duong said that as soon as prices of Thai rice began to climb, she bought 10 sacks for her home. That 500-pound order will last her extended family of seven about eight months, she said.

"Every meal, there's rice," she said.

Importers in bidding wars

Nathan Childs, an expert on global rice markets with the U.S. Department of Agriculture, tied the jump in the price of Thai rice to a cascade of events touched off by attempts by several rice-growing nations to combat food inflation within their own borders.

Last fall India and Vietnam, both of which typically export several million tons of rice annually, announced they would be reducing rice exports in order to drive down domestic prices. China, Egypt and Cambodia followed suit, further restricting the amount of rice on the global market.

Rice-importing nations around the world then began scrambling to secure supplies, driving up the price for what rice remained available on global markets.

Thailand, the world's largest rice exporter, is reporting record harvests this year. But the increase in supply hasn't been nearly enough to offset global demand, Childs said, and the price of bulk Thai jasmine rice has nearly doubled since December.

With California rice prices at the highest levels since 1980, Sacramento Valley farmers are expanding planting this year – but only by about 3 percent, according to USDA surveys. Rice needs certain clay soils, which limits expansion. In addition, the cost to grow it has been especially impacted by the high price of oil, so some farmers are choosing to switch some of their land to other crops.

"They can make as much, if not more, on wheat or corn," said Don Bransford, a prominent rice grower in Colusa.

Tight global supplies and the run on Thai rice in specialty supermarkets have forced U.S. importers into bidding wars to fill their orders, said Pete Lee, who owns Southern California-based Sun Lee Inc., a major rice distributor.

Lee said he sold nearly his entire inventory of Thai rice in the last two weeks – but he worries that a big slowdown is in store for the summer.

"The panic just drained our stocks so quick," he said. "The thing is, everyone's buying future inventory. And if they buy everything now, we won't have anything to do two or three months from now."

Prices may have stabilized

Lee said he's guessing prices will stay at their current levels, or rise a bit, until at least the next Thai jasmine harvest, which begins in October. But there are too many variables in global rice trade to know for sure, he said.

"Whoever can predict that would be quite rich," he said.

Ronnie Duong (no relation to Paula Duong), who owns New Asia Supermarket on Stockton Boulevard, worries that high rice prices will eat into his profits. He makes the same margin on a sack of Thai rice whether it's priced at $20 or $40, he said – but his customers have a limited food budget.

"If they spend so much on rice, they don't have money to spend on other items in my store," he said.

Van, the Goldstar Supermarket manager, said as far as she can tell, the peak of the local rice panic has passed. Prices have stabilized, at least for now, and those customers who do buy rice get only a bag or two. Plenty, she reckons, won't need to restock for quite some time.

"Everybody's home has so much rice already," she said.

Sunday, April 20, 2008

Clock ticks down to Microsoft deadline, For Yahoo

Sun Apr 20, 2008 4:57am EDT
By Eric Auchard - Analysis

SAN FRANCISCO (Reuters) - Yahoo Inc (YHOO.O: Quote, Profile, Research) faces a critical week that could decide whether the pioneering Web company can remain independent or must surrender to an unsolicited takeover by Microsoft Corp (MSFT.O: Quote, Profile, Research).

Yahoo is racing to forge a credible alternative that lets it stay independent or at least forces Microsoft to raise its $31 a share cash-and-stock bid, now valued at $42.8 billion.

"Yahoo is willing to try things at the 11th hour, that it never felt the urgency to try," Sanford C. Bernstein analyst Jeffrey Lindsay said. "Shareholders win, either way."

"They are coming up with some of their best stuff now," he added. "We just wish they had done these things last year."

When it reports first-quarter results on Tuesday, Yahoo has perhaps a last chance to demonstrate some financial strength and progress it has made in stabilizing the company's Internet media and advertising business after two years of decline.

Mid-week, Yahoo is set to complete a test with Google Inc (GOOG.O: Quote, Profile, Research) on whether Google should run a piece of its Web search ad sales, a move sources familiar with the talks say is part of a plan to merge with Time Warner's (TWX.N: Quote, Profile, Research) AOL and fend off Microsoft.

Time runs out by Saturday, the date Microsoft has set for Yahoo to accept the deal or face a drawn-out proxy battle by Microsoft to unseat Yahoo's board. Two weeks ago the software giant threatened to lower its offer if Yahoo did not conclude friendly merger talks with Microsoft by April 26th.

Yahoo's chief technology officer will use a speech on Thursday at the Web 2.0 Expo industry show to spell out a strategy to open up Yahoo services such as e-mail, news, sports and advertising to make them more relevant across the Web, not just for users drawn inside its own sites.

That same day, Microsoft reports its own quarterly results. The software giant is expected to show strong underlying fundamentals across its range of businesses.

DEADLINE? WHAT DEADLINE?

But despite mounting time pressures -- and veiled threats by Microsoft to walk away from the deal if it drags on -- Wall Street analysts say they expect neither side to blink.

Microsoft sees the massive merger as necessary for both to effectively compete with mutual arch-rival Google. But Yahoo has impressed many analysts by managing to cobble together a scenario where it might just drive off much-feared Microsoft.

Some analysts argue Microsoft's pressure tactics could backfire and spoil hope of Yahoo's board agreeing to a deal.

"You don't win by dragging a company to the altar," Canaccord Adams analyst Colin Gillis said. "If you are going to pick a partner, treat them nice. Make them feel pretty."

Global Crown Capital analyst Martin Pyykkonen gives Microsoft more credit for how it has played the courtship game. Imposing a deadline was Microsoft's way of enticing Yahoo to talk: "Why else would Microsoft set a three-week deadline?"

But if the two do not reach a deal this week, the stand-off could drag on for months. Yahoo has until mid-July to hold its annual shareholder meeting -- where Microsoft could propose its own slate of directors.

"We do think the two sides will go up to the limit on the timing," Lindsay said. "Microsoft will most likely have to initiate a hostile bid."

Once Microsoft sets in motion a campaign to go directly to shareholders, Yahoo's response would be to come forward with its own plan to merge with AOL and turn over search ad sales to Google, arguing this has more long-term value, Lindsay said.

Youssef Squali of Jefferies & Co disagrees. Going hostile would alienate Yahoo employees and spoil the deal. Cutting the deal's price would lead to a protracted battle. Instead, he sees Microsoft sweetening its bid with an all-cash $31 offer.

Some analysts don't see how Yahoo can make the economics of an alternate deal work. Internet stock valuations have suffered from a weak economy this year and Yahoo share's price, currently above $28, could fall below its $19 level of late January without the support of Microsoft's standing offer, they argue.

But Squali says if Yahoo does a half decent job in its quarterly results, it could support a share price in the upper $20s. "All of a sudden Microsoft isn't offering a 60 percent more for Yahoo, but more like a 20 percent premium."

A side deal in which Google would sell ads alongside Yahoo Web search services could push Yahoo shares into the low $30s, forcing Microsoft to raise its offer or walk away, he said.

FEW SURPRISES LEFT

On January 29 -- the day before Microsoft presented Yahoo's board with an unsolicited takeover bid -- Yahoo warned it had a tough year ahead as it cut jobs and spent more to shore up its advertising business, sending its shares to four-year lows.

In mid-March, Yahoo reaffirmed its income from operations should be line with its lowered outlook of $100 million-$110 million. Excluded from that is a $450 million to $550 million one-time investment gain on China's Alibaba.com (1688.HK: Quote, Profile, Research).

That narrows the debate to whether profits will be near the top or bottom of a range of from 6 cents to 13 cents per share. On average, Wall Street expects 9 cents, down from 10 cents a year earlier, according to Reuters Estimates.

"Expectations are sooooo L-O-W," Gillis said.

Google shares soared 20 percent last week after the Internet leader reported strong results and swore off any economic weakness in its business, but analysts see little chance of a similar reaction for Yahoo.

"Maybe Yahoo won't miss their quarter. But they can't say anything bullish that people will believe," Pyykkonen said. "Investors will discount any upbeat comments, saying 'Oh yeah, Yahoo is just trying to get a higher price."

(Editing by Lincoln Feast)

Wednesday, April 09, 2008

PRELUDE TO WAR: THE COURT-MARITAL OF SHORT AND KIMBLE


ROSAMOND, CA - (IFS) - As kids growing up in Rosamond, California at Avenue "A" and 60th Street, I attended the the Del Sur Elementary School in Lancaster, about 1957-58. As we would walk to the bus stop, I remember passing by a pink four bedroom home where an American Japanese family lived. The two kids were the same ages as we were. The oldest boy was named Kenneth Samiguci and his pretty sister was named Susan.

We only talked and visited with them only at the bus stop during the week. We never saw them ever after school. We never played together. We never socialized at all. After a couple of years of this. Then one day, as I passed by their house, all the curtains were down, and the house was empty. They were gone. I personally always felt that I did something to them. Something that really offended them, but I never could remember anything. I was always polite and on my best behavior. I remember once, seeing their mother looking out of the front window - from a distance. And as soon as I would see her, I would wave my hand, but she would disappear behind the window curtain. That family has always been a mystery to me. I only remember Kenneth telling me about his parents were placed in a "war camp" and they had lost everything, their farm and home.

While talking with my friend, Tom, we came upon the question as to the court-martial of Short and Kimble, the airbase and naval commanders, whom that horrible burden fell upon their shoulders.

". . . In the 1930s, U.S. industry was free to sell the Germans and the Japanese whatever they'd buy, including weapons. Not to lose out, the British and French sold tanks and bombers to Hitler. Calls by Joseph Tenenbaum of the American Jewish Congress to boycott Germany were ignored. There was no attempt to contain, isolate, hinder or overthrow Hitler -- not because of naiveté but because of commerce. It was the Depression. There were Germans trying to overthrow Hitler, but the U.S. and Britain and their industries were obstructing that effort.

Baker shows that the Japanese, as early as 1934, were complaining that Roosevelt was deliberately provoking them. In January 1941, Japan protested the U.S. military buildup in Hawaii. Joseph Grew, our ambassador to Japan, reported rumors that the Japanese response would be a surprise attack on Pearl Harbor. Yet according to World War II mythology, America was blissfully sleeping, unprepared for war, when caught by surprise by the dastardly "sneak attack." (Isn't it curious that Asians carry out "sneak attacks," whereas Westerners launch "preemptive strikes"?) A year earlier, Baker shows, Roosevelt began planning the bombing of Japan -- which had invaded China, but with which we were not at war -- from Chinese air bases with American planes and, when necessary, American pilots. Pearl Harbor was a purely military target, but Roosevelt wanted to bomb Japanese cities with incendiary bombs; he'd been assured that their cities would burn fast, being made largely of wood and paper.

Roosevelt evinced no desire to negotiate. In fact, Baker writes, in October he "began leaking the news of his new war plan," with $100 billion earmarked for airplanes alone. Grew again warned Roosevelt that he was pushing Japan toward armed conflict with the United States, but the president continued his war preparations. Finally, the night before the Japanese attack, Roosevelt sent a message to Emperor Hirohito calling for talks. He read it to the Chinese ambassador, remarking that he thought the message would "be fine for the record."

People are going to get really angry at Baker for criticizing their favorite war. But he hasn't fashioned his tale from gossip. It is documented, with copious notes and attributions. The grace of these well-ordered snapshots is that there is no diatribe; you are left to put things together yourself. Read "Human Smoke." It may be one of the most important books you will ever read. It could help the world to understand that there is no Just War, there is just war -- and that wars are not caused by isolationists and peaceniks but by the promoters of warfare.

- Mark Kurlansky Copyright 2008 Los Angeles Times [See the Fair Use Notice, below.] (via Lew Rockwell)

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