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U.S. challenges Chinese export subsidies

WASHINGTON, D.C. (Reuters) — The United States has launched a legal challenge to Chinese export subsidies supporting billions of dollars of exports across a wide swath of industries from steel to shrimp.

U.S. trade representative Michael Froman said Chinese companies in designated export hubs benefited from free or subsidized services, cash grants and other incentives, which gave their products an unfair advantage.

The request for consultations last week is the first step in a World Trade Organization dispute. The USTR office estimates that suppliers of subsidized services to Chinese export hub companies received more than US$1 billion from the Chinese government over three years and said some companies received at least $635,000 in support annually.

Chinese officials were not immediately available for comment.

U.S. lawmakers 
target biofuel reform

NEW YORK, N.Y. (Reuters) — A group of United States lawmakers have started new attempts to introduce a bill that would reform the Renewable Fuel Standards program, targeting an end to ethanol fuel-blending mandates.

The lawmakers said the bill would eliminate requirements for corn-based ethanol blending and cap blending levels for other biofuels at actual production levels. They hope the latest move will garner support now after months of disputes over how much biofuel should be blended with oil-based fuels and growing concerns that the program drives up agriculture and food costs.

The RFS Reform Act is the latest bid in recent years by Republican representatives Bob Goodlatte and Steve Womack, along with Democrats Peter Welch and Jim Costa, to change a government program that Welch described as a “well-intended flop.”

The same bill failed to pass in the House when the group of four introduced it in 2013.

Supporters of the RFS say that the policy reduces greenhouse gas emissions and creates jobs in the U.S. farm belt.

The reform would effectively do away with a mandate that corn-based ethanol be blended in gasoline and repeal the waiver that raised the cap on ethanol content at 15 percent from 10 percent after Congress expanded the RFS policy in 2007.

Bunge profits down from expectations

CHICAGO, ILL. (Reuters) — Bunge Ltd., one of the world’s largest agricultural trading houses, reported fourth-quarter profit that was well below analysts’ expectations due to deteriorating oilseed-crushing margins in China and hedging losses.

Declines in earnings and revenue were disappointing after Bunge’s projection last year that fourth-quarter results would be strong due to record U.S. harvests, analysts said.

It was the second consecutive quarter in which Bunge had US$80 million of hedging losses at least partly tied to its North American oilseed processing business that contributed to lower-than-expected earnings.

In the company’s key agribusiness segment, net sales fell 20 percent to $10 billion and adjusted profit dropped about eight percent to $319 million.

Weak soybean crushing margins in China and slower farmer selling in Europe overshadowed strength in Bunge’s North American businesses, JP Morgan analyst Ann Duignan said.

“We would expect the stock to react negatively to the print,” she said, referring to Bunge’s financial results.

Net profit for the quarter was $82 million, or 56 cents a share, compared with $115 million, or 78 cents, a year earlier. Excluding special items, earnings per share were $1.20, down from $1.35 a year earlier. Analysts had expected $2.51, according to Thomson Reuters analysis.

Revenue dropped to $13.898 billion from $16.375 billion. Analysts had expected $16.72 billion.

Climate change paper grows complicated

GENEVA, Switzerland (Reuters) — Almost 200 nations complicated a drive for a United Nations’ deal to combat climate change in 2015 last week by more than doubling the length of a draft negotiating text to about 100 pages of radically varying solutions.

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Government delegates said the additions at the Geneva talks, held Feb. 8-13, were to let all countries air their views, ranging from OPEC nations fearful of phasing out fossil fuels to small island states worried about rising sea levels.

“It’s like 195 authors trying to write a book together,” said Ahmed Sareer of the Maldives, chair of the 44-nation Alliance of Small Island States, which added text including stress on a need for deep cuts in greenhouse gas emissions.

“It’s to be expected,” Elina Bardram, head of the European Commission delegation, said of the additions.

Japan’s farm lobby accepts reform plan

TOKYO, Japan (Reuters) — Japan’s politically powerful farming lobby have accepted plans by the ruling Liberal Democratic Party to reform the agricultural sector, after the initial proposals were watered down.

Prime minister Shinzo Abe has made agricultural reform a symbol of his “Third Arrow” structural changes to fuel long-term growth.

Investors have been watching Abe’s push to see if he would back down for fear of alienating the farm lobby ahead of nationwide local elections in April.

In Japan, a dwindling band of ageing farmers work tiny plots, while the Japan Agriculture (JA) lobby group controls most aspects of pricing and distribution through its network of 700 co-operatives, and supplies feed and machinery.

“We are at a big turning point and I’ve made a decision (to accept it),” JA-Zenchu president Akira Banzai told reporters.

The reforms are aimed at weakening the power of JA-Zenchu and giving local co-operatives greater autonomy, in a bid to increase income of farmers.

Under the reform plan, JA-Zenchu loses the power to audit local co-operatives. JA-Zenchu will also lose its privileged status and become a general incorporated body in five years.

Record soybean 
crop predicted

BUENOS AIRES, Argentina (Reuters) — Argentina is expected to produce a record 58 million tonnes of soybeans in the 2014-15 season, the Rosario Grains Exchange said, citing recent rains as a key factor increasing its previous estimate of 54.5 million tonnes.

“Storm fronts remained active in January in the Pampas farm belt, consolidating a scenario of high production,” the exchange said in its crop report.

The rainy conditions lasted through the first 10 days of February, bumping nationwide soy yields up to an expected 1.2 tonnes per acre, the report said.

Saputo posts higher quarterly profit

(Reuters) — Saputo Inc., Canada’s largest dairy producer, has reported higher quarterly earnings, lifted by a jump in revenue that included its Australian acquisition.

The Montreal-based company, whose brands include Dairyland milk and Armstrong cheese, is among the top three cheese producers in the United States and also has significant operations in Argentina and Australia. Higher U.S. prices of cheese and butter boosted revenue from that country.

Earnings before interest, taxes, depreciation and amortization increased internationally due to Saputo’s purchase early last year of a majority stake in Australia’s Warrnambool Cheese and Butter Factory Co Holdings Ltd. The company said EBITDA from Canada fell due to greater competition and higher warehousing and logistical costs.

In the third quarter ended on Dec. 31, net income rose to C$154.6 million or 38 cents a share, from $144.1 million or 37 cents a share a year earlier.

Revenue climbed 20 percent to $2.8 billion, above analysts’ forecasts of $2.66 billion.

U.S. southern farmland 
values hold steady

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CHICAGO. Ill. (Reuters) — Farmland prices in the southern United States Midwest and Delta region held mostly steady in the final quarter of 2014 despite declines in farm income amid depressed grain prices, the Federal Reserve Bank of St. Louis said.

Quality grain land values were up .8 percent during the fourth quarter of 2014 from a year earlier, the bank said in its quarterly survey of 39 farm banks in its district.

Ranch land or pastureland prices declined 2.6 percent during the fourth quarter from one year ago, the bank said.

“Farm income, farm household spending and capital equipment expenditures all declined in the fourth quarter relative to the same period a year earlier,” the bank said, adding that most bankers expect farmland prices to decline in the first quarter of 2015.

“It is very difficult for farmers to buy farmland and new equipment with corn prices in the (US)$3.50 range,” one Missouri lender told the bank. “Many received much less for their crops this fall. Farmers with a lot of debt cannot postpone the sale of their crop waiting for prices to rebound when they have payments due after harvest.”

Egypt denied exemption

MOSCOW, Russia (Reuters) — Russia cannot exempt wheat supplies to Egypt, its major customer, from a recently launched export tax, agriculture ministry said, citing Russian law.

Egypt, the world’s largest wheat importer, is negotiating an exemption with Russia, Cairo said last week, after Russian president Vladimir Putin visited the country.

“Duty rates … are not subject to change due to persons or countries engaged in import or export of goods,” the ministry said when asked whether Egypt could get the exemption.

It said any exemption would have to apply to other countries as well.

Moscow imposed informal curbs on grain exports in December as it seeks to cool domestic prices amid an economic crisis. The move delayed some supplies to Egypt, the second-largest buyer of Russian wheat.

The tax on wheat exports was added to informal curbs from 
Feb. 1. The duty is set at 15 percent of the customs price plus $10.68 but will be no less than $50 a tonne.

Coffee harvest bountiful

SAO PAULO, Brazil (Reuters) — Brazilian coffee producers sold 79 percent of the estimated 48.9 million bag harvest of 2014 by Feb. 6, surpassing the 75 percent average for this time of year, local crop analysts Safras e Mercado said last week.

Each bag is 60 kilograms, according to the International Coffee Organization.

In December, producers had sold 72 percent of their harvest and by Feb. 6, 2014, they had sold 70 percent, Safras said.

“The rise in prices in early February, due to the appreciation of the dollar and rise in international prices, improved the liquidity on the market and help stimulate sales,” said Safras’ coffee consultant Gil Barabach.

In Minas Gerais, the state that accounts for half of Brazil’s coffee crop and most of its arabica output, producers had sold 81 percent of last year’s harvest, Safras said.

Safras added that 79 percent of the arabica crop, estimated at 33.4 million bags, had been sold by last week, while 77 percent of the 15.5 million bag robusta crop had been sold.

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