PRESS DIGEST - Financial Times - Feb 26

Financial Times

WHEAT IN BIGGEST ONE-DAY RISE AS PRICE SOARS 22 PER CENT.

In the biggest one-day price increase ever, prices of top quality wheat rose 22 percent yesterday to a record high as Kazakhstan said it would impose export tariffs to reduce sales. The move is likely to put further pressure on global wheat supplies. Kazakh grain, prized for its high gluten and protein content, is similar to some of the scarce top quality North American crops that jumped in price on Monday. Spring wheat at the Minneapolis Grain Exchange surged to a record high of 23.30 dollars a bushel as consumers rushed to secure scarce supplies and speculators moved new money into the agriculture market. The price of spring wheat has more than doubled since January and quadrupled in the last year.

INVESTMENT IN NORTH SEA FALLS SHARPLY

Despite record oil prices, investment in North Sea oil and gas fell sharply last year as the industry found extraction more difficult. According to Oil & Gas UK, companies invested 4.9 billion pounds in 2007, down 14 percent from 2006. The association said depletion of mature fields, insufficient investment and project slippage meant production was likely to fall short of objectives set at the beginning of the decade. A target was set for keeping UK oil and gas production at round three million barrels of oil equivalent a day by 2010, this figure now looks likely to be only round 2.4 million boe/d. The UK sector is thought to still hold 16.5 billion to 25.5 billion boe of oil and gas but these resources are being found in small pockets which are difficult to exploit commercially.

MORTGAGE DEALS WITH NEW CLIENTS DROP 31 PERCENT

According to the latest figures from the British Bankers Association, the number of new mortgages fell 31 percent year on year last month. But overall mortgage lending rose slightly in January, boosted by refinancings. The BBA said net lending rose by 5.2 billion pounds compared with an increase of 4.9 billion pounds in December, and that house remortgaging accounted for 49 percent of all approvals. New loans for equity withdrawal and other purposes have fallen year on year by 23.6 percent but at less than the rate of decline in new mortgage approvals. The BBA also said credit card lending was flat in January compared with a year earlier, with repayments at 7.6 billion pounds and new spending at 7.3 billion pounds.

NATIONWIDE RAISES RISKIER LOANS RATES

In the latest sign lenders are distancing themselves from riskier loans, Nationwide [NAT.UL] has increased mortgage rates for borrowers with cash deposits of 25 percent of less. As house price growth starts to stall, Nationwide is one of several lenders which have become increasingly reluctant to lend higher loan-to-values. Last week several lenders, including Northern Rock, Alliance and Leicester (ALLL.L: Quote, Profile, Research, Stock Buzz), Abbey (ANL_p.L: Quote, Profile, Research, Stock Buzz) and Birmingham Midshires withdrew mortgage products that offered 100 percent or more of a property's value. Nationwide has introduced a new pricing structure for all of its mortgages and home buyers who want to borrow between 75 and 90 percent of a property's value can expect to pay 0.2 percentage points more than those with bigger deposits.