Tag Archives: ukraine
FranceTo Take Lead In Wheat Exports To Egypt
A US forecast that the European Union will lift its wheat exports to 23.0m tonnes this season, the third highest on record, is based on ideas that France will take up the baton on supplying Egypt. Romania, on the European Union side of the Black Sea, has proved the major shipper to Egypt, so far in 2013-14, chalking up orders of more than 800,000 tonnes, out of the 2.1m tonnes ordered by the top importing country. That is more than orders from Russia, which has traditionally dominated early-season orders by Egypt’s Gasc grain authority, and Ukraine, also known as a fierce competitor on international markets. And Gasc looks likely to turn largely elsewhere in the EU for supplies once Romania, a relatively minor producer, exhausts its exportable supplies, the US Department of Agriculture said. ‘France expected to take over’ “Romania is aggressive exporting to Egypt, and France is expected to take over the Egyptian business as Romanian supplies dwindle,” the USDA said. This is at a time when Egypt has been “tendering aggressively, intending to replenish the countries’ wheat stocks to provide subsidised bread to about a quarter of its population who live below the poverty level”. While Egypt has run into economic problems, and ran down its stocks in 2012-13 in an effort to save cash, “several Arab countries – Saudi Arabia, United Arab Emirates and Kuwait – pledged monetary support for Egypt to aid the currency strapped country whose trade deficit is widening”. However, French supplies at the latest Gasc tender closed the gap with offers from the Black Sea exporters. The USDA also flagged that France has been exporting to China, Algeria and Saudi Arabia, helping EU wheat exports, as measured by licences, hit 2.5m tonnes since 2013-14 began at the start of July, the fastest pace in 10 years. Squeeze on quality wheat The comments came as the USDA expanded on the reasons behind an upgrade last week of 1.0m tonnes to 23.0m tonnes in its estimate for EU wheat exports this season, besides lifting by 500,000 tonnes to 9.5m tonnes its forecast for Egyptian purchases. However, they also sharpen ideas of the uneven availability of high quality wheat, which is seen as abundant in the EU, as flagged separately by trade comments on UK wheat dynamics , but tight in many other geographies. High-quality wheat “is expected to be in short supply this year”, the USDA said, echoing comments from the likes of Australia’s Abares crop bureau and Macquarie . ‘Moisture content too high’ Indeed, Russia is viewed as having slender supplies of high quality wheat, after rains at harvest in the central region, and most lately in Siberia, where it had been hoped that a strong spring wheat crop would bolster supplies. “Russia is struggling with wet conditions on the tail end of their wheat harvest, which has raised more concerns about the overall quality of the Russian crop,” Brian Henry at US broker Benson Quinn Commodities said. In Siberia, “fields are still wet, which complicates the access of the farmers,” Agritel said. “Furthermore, the moisture content of the grains seems still too high,” a worry as it encourages sprouting which can render wheat unfit for milling, besides making storage difficult if the grain is not dried. However, “the weather conditions are getting better”, Agritel said. SovEcon, the Moscow-based consultancy, has warned of a “significant decline” in Russian grain exports this autumn, thanks to higher prices encouraged by the shortage of high quality grain. French hopes Hopes for French wheat exports, by contrast, are buoyant, with the official FranceAgriMer bureau last week forecasting an 11% rise to 11.0m tonnes in shipments outside the EU this year, and many traders believing the result could turn out higher still. France in 2012-13 shipped 17.1m tonnes of wheat, 9.9m tonnes to buyers outside the EU. Continue reading
Ukraine Hopes To Cash In On Massive Corn Harvest
http://www.ft.com/cms/s/0/54852a9a-1ba2-11e3-b678-00144feab7de.html#ixzz2f3Up7YOa By Roman Olearchyk and Emiko Terazono Fifty years ago, inspired by a visit to the US cornbelt, Nikita Khrushchev’s grand plan to grow corn across the Soviet Union resulted in devastating crop failures and food shortages. Today, however, in one ex-Soviet state, his vision may be realised. This year, Ukrainian farmers are harvesting their largest corn crop, and as Serhiy Didyk, who farms on the steppes of central Ukraine, said: “Khrushchev’s dream of producing vast quantities of corn on our land is finally becoming reality.” With its rich black soil, Ukraine has historically been known as the “breadbasket of Europe”. Already a large wheat supplier to the Middle East, now Ukraine’s corn acreage is expanding as well, as it offers higher profits and faces far less state regulation than wheat markets. And unlike past efforts for mass production of the grain, these days better quality seeds, fertiliser and pesticides, and favourable weather have boosted yields. Changes in the weather patterns in Ukraine in the past few years have “made corn growing more attractive and less risky compared to other agricultural crops traditionally grown in Ukraine,” says the US Department of Agriculture. This year’s expected corn harvest of 29m tonnes has set the stage for a 35 per cent jump in exports to 18m tonnes, catapulting the eastern European country to the world’s second-largest corn exporter alongside Argentina and Brazil, according to the USDA. Kiev is pinning high hopes on its corn exports. In a rallying call, Mykola Prysyazhnyuk, Ukraine’s agriculture minister, last week said: “There will be strong demand for corn on global markets, with Asia, the Middle East and Africa increasing imports. Let’s make this Ukrainian corn.” The country’s corn boom is a bright spot for Ukraine, which is grappling with its second recession in five years, a ballooning current account deficit and also hit by the recent emerging market currency turmoil that has depressed Kiev’s foreign currency reserves to dangerously low levels. Grain exports – expected to total a record $5.5bn this year, according to consultancy Ukragroconsult – have not been able to offset the sharp declines in revenue from heavy industry and other resource sectors. However, with investments in agriculture expected to rise, the sector’s growth is expected to provide diversity for an economy that is regarded as being too reliant on exports of steel and minerals. Vladimir Pantyushin, regional economist at Barclays, said: “Agriculture has partially offset the decline of metals exports and can extend these gains over the short-to-medium term.” Ukraine aims to meet growing global demand for corn as rising incomes in emerging markets lead to higher meat and dairy consumption. The country’s first ever shipment of corn to China is expected to leave ports in the coming weeks as part of a $1.5bn loan-for-corn deal brokered by both countries last year. Countries including Egypt, Israel, and Spain are among the largest buyers of Ukrainian corn, while producers are also making inroads into Asia, exporting to South Korea, Japan and Malaysia, thanks to competitive prices compared to US and South American counterparts. Asian importers, traditionally reliant on US and Latin America, are also keen to diversify their sources after the worst US drought in 50 years in 2012 devastated corn crops, leading to a price surge. Ukraine’s rising prominence in the world agriculture markets has attracted Monsanto, the US agritechnology group, which announced plans to pump $150m into building a seed production facility, and Dupont Pioneer this summer started production at a $40m seed plant. However, the corn shift is not without challenges. Bumper grain crops worldwide have depressed international prices to three-year lows. Meanwhile the country’s infrastructure is desperately in need of investment in equipment, grain storage and logistics such as ports, roads and railroads. Leading agribusiness groups – international traders such as Cargill, Archer Daniels Midland, Bunge – are already in Ukraine, but Kiev needs more, say analysts. “The government needs to improve the investment climate in the country overall, reduce its role in the sector further and instead focusing on improvements in infrastructure in order to be prepared for more grains exports,” said Aivaras Abromavicius, partner at East Capital, which manages $5bn in emerging markets But these are challenges one ex-Soviet leader could only have dreamt of. Mr Didyk, the corn farmer, said that if Khrushchev were alive today, “he would be happy to see our big corn crop,” although he probably would not be as pleased to see Ukraine becoming such a leading independent agriculture player. Continue reading
Upbeat Deere Farm Takings Number Puzzles Investors
14 th Aug 2013, by Agrimoney.com US farmers’ cash takings are to remain at an “excellent level” despite tumbling in crop values, Deere & Co said, remaining sanguine on European farm finances too – but acknowledging some setbacks to former Soviet Union customers. Deere & Co, at an investor meeting after announcing better-than-expected quarterly profits, faced a barrage of questions over forecasts that US farmers’ cash receipts will fall by only $10.1bn, or 2.6%, in 2014 to $379.7bn, remaining “historically high”. Deere forecasts for US 2014 cash receipts, and (change on year) 2014 receipts: $379.7bn, (-$10.1bn) Comprising – Crops: $198.3bn, (-$6.5bn) Livestock: $170.3bn, (-$1.4bn) Gov. payouts: $11.1bn, (-$0.2bn) 2013 receipts: $389.8bn 2012 receipts: $402.1bn 2011 receipts: $384.7bn Barclays analyst Andrew Kaplowitz said that while Deere was “usually pretty conservative” with forecasts, “if I talked to bears out there on ag, they would say that your forecast looks not conservative at all”. Larry de Maria at William Blair asked why Deere, while utilising larger crop estimates than the USDA, was using similar price forecasts, when a large crop might imply weaker values, with Bank of America, Credit Suisse and JP Morgan analysts also questioning the receipts forecast. The cash receipts number is particularly important for agricultural machinery investors, in being closely correlated with equipment demand. Susan Karlix, Deere’s manager of investor communications, saying that cash receipts “are expected to remain at an excellent level, helping keep farmers in a financially sound position”, termed them “the number one predictor of farm equipment sales”. Volume and price However, Marie Ziegler, Deere’s deputy financial officer, strongly defended the estimate, saying that “at this stage of the game this is our best forecast”, flagging the role of strong crops in making up for lower prices. “Remember that cash receipts is a function of quantity, which will be very good this year, in addition to price,” she said. “Cash receipts doesn’t discriminate between the commodity price and the quantity.” Tony Huegel, Deere investor relations director, said that the Deere estimates had been put together before the USDA’s numbers on Monday. And while $4.90 a bushel was historically “very strong pricing” for corn, even with prices in the low-$4s a bushel, “farmers are still making good money”. Arable vs dairy Deere was sanguine over the impact of lower crop prices on European Union agricultural finances too, saying that while “arable farm income is weakening”, it “remains at supportive levels”. Furthermore, “improving milk prices will support dairy farmers”, with prices in the UK hitting a record 30.77p per litre in June and, in the EU as a whole, butter values last month standing 57% higher than a year before, with skim milk powder up by more than 40%. However, Deere acknowledged some dent to prospects in the growing former Soviet Union market from tight credit and some crop setbacks. “Hot, dry weather has impacted crop prospects in southern Russia and Ukraine, and credit availability is also hurting equipment demand,” Ms Karlix said. With import duties also weighing on combine demand, Deere nudged down to “moderately lower”, from “down slightly”, its forecast for farm machinery industry demand in the former Soviet Union this year. Continue reading
