Analysts see Russian grains continuing
LAUSANNE, Switzerland (Reuters) — Some of the world’s biggest oil and grains traders see little risk of any disruption to supplies from Russia, despite the worst East-West crisis since the Cold War.
The annexation of Ukraine’s Crimea region was unlikely to lead western powers to target Russian energy exports or to prompt retaliatory supply cuts from Moscow, trading house executives and co-owners told the FT Commodities Summit.
“Some of us are old enough to remember the end of the Cold War days,” said Ian Taylor, head of the world’s largest independent oil trader, Vitol. “In the energy space, gas and oil have tended to continue to flow because it is in the interest of both sides that they continue to do so.”
Oil prices have been supported by the crisis after the United States and the European Union imposed sanctions on some Russian government officials and businesspeople loyal to president Vladimir Putin.
Swithun Still, director of Solaris Commodities, a Russia and Ukraine-focused grains trader, said he did not expect grains exports from the region to be hit even if the West decided to slap sanctions on energy exports.
“The oil market brings in a week the same revenue (to Russia) that the grains market brings in a year, so if they are going to target anyone it’s going to be oil and gas and a couple of banks, it’s not going to be the grains sector,” he said.
He said that although it was not business as usual in grain ports such as Sevastopol in Crimea, flows of grains continued.
Russia targets Aussie beef
MOSCOW, Russia (Reuters) — Russia is restricting imports of Australian beef due to the presence of the stimulant Trenbolone, the state veterinary and phytosanitary service has said.
Limits on chilled beef from Australia were imposed March 31, while frozen beef imports were to be restricted starting April 7, VPSS spokesperson Alexei Alekseenko said.
“Basically this will mean restrictions on all (beef) imports (from Australia),” Alekseenko said, adding that Russia would accept supplies which were already on their way.
Australia is the world’s third-largest beef exporter after the United States and Brazil.
Iowa farmland prices fall
CHICAGO, Ill. (Reuters) — Farmland values in Iowa, the top U.S. corn and soybean state, fell 5.4 percent over the past six months, under pressure from lower grain prices, according to a benchmark survey of realtors.
Still, the market remains underpinned by strong demand from wealthy farmers and non-farming investors, said the Iowa Realtors Land Institute survey, which is based on information from local farm real estate brokers, lenders and others with knowledge of land prices.
“The report overall was encouraging because we knew the price of corn had fallen off 35 percent since this time last year,” said Kyle Hansen, past-president of the institute and broker with Hertz Real Estate in Iowa.
The average selling price of farmland across Iowa in March was $8,286 an acre, compared with $8,758 six months before. Prices were down 4.6 percent from $8,690 a year earlier.
Snow pack suggests drought will continue
SACRAMENTO, Calif. (Reuters) — Snow atop California’s Sierra Nevada mountains, key indicators of available water, remained precariously low despite recent storms.
The snow pack, which feeds streams and reservoirs throughout the state, has just a third of the amount of water it normally contains this time of year, said Mark Cowin, director of the state Department of Water Resources.
“We’re already seeing farmland fallowed and cities scrambling for water supplies,” Corwin said.
Recent rain has not brought enough water to alleviate three of the driest years on record, he said.
Monsanto earnings up
Reuters — Monsanto, the world’s largest seed company, reported higher-than-expected quarterly earnings as its corn and soybean businesses expanded globally.
The company, which specializes in genetically modified crops, said the profit margin in corn, its top revenue producer, increased 2.5 points in the second quarter ended on Feb. 28.
The corn business was on track to post record volume for the fiscal year, despite lower plantings expected in the United States this spring.
Growing market opportunities in Eastern Europe and advancements in Latin America are helping the company’s corn business. And despite year-to-year fluctuations in output and demand, Monsanto said it sees demand for corn worldwide surging with population and income growth over the next several years.
UN reports food price increase
ROME, Italy (Reuters) — Global food prices rose to the highest level in almost a year in March, led by unfavourable weather affecting crops and geopolitical tensions in the Black Sea region, said the United Nations food agency.
The Food and Agriculture Organization’s price index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 212.8 points in March, up 4.8 points or 2.3 percent from February. The reading was the highest since May 2013.
FAO’s cereal price index saw the second month of significant increases, rising 5.2 percent to its highest value since August 2013 over unfavourable weather in the south-central United States and Brazil, and uncertainty over grain shipments from Ukraine.
Brazil pests afflict soybean crop
SAO PAULO, Brazil (Reuters) — Caterpillars and fungus, as well as drought, hurt Brazil’s current soybean crop and higher costs to control them will limit planting of new fields next season, the director of agricultural analysis firm Agroconsult has said.
Brazil will likely produce 86.9 million tonnes of soybeans in the season that is drawing to a close, still a record crop but well below the firm’s initial forecasts for more than 90 million tonnes, Agroconsult’s director Andre Pessoa said.
Starting in September, area planted with soybeans will likely expand by 2.47 million acres, down from 6.18 million new acres of soybean area sowed this season, he said.
Brazil is the world’s top soybean exporter and its crop size has approached that of the top-producing United States the last two years.
But farmers have been battling a new type of caterpillar, helicoverpa armigera, that likely arrived from Asia, sending pesticide costs skyrocketing and challenging Brazil’s farmers.
Potash subsidy cut
MUMBAI, India (Reuters) — India has cut potash subsidies by nearly a fifth to $160 per tonne for the year in an effort to contain a ballooning fiscal deficit.
A smaller subsidy would keep retail potash prices elevated despite a drop in overseas prices, dashing hopes for a recovery in demand in one of the world’s top importers of the fertilizer. Global miners have been banking on Indian imports to help counter a slump in prices.
India relies on overseas supplies to meet its entire potash demand. It has accounted for about one-tenth of global shipments over the past five years, but its share has been slipping as local prices rise due to subsidy cuts and a weaker rupee.