Agriculture

Australia nudges dairy saga toward a finish

17 Dec 2013

Saputo has raised its offer for cheesemaker Warrnambool to A$537 million, at a regulator’s prompting. It could prove higher than a rival bid by Murray Goulburn, and looks more deliverable. Barring a knockout counterbid, investors would do well to take Saputo’s cash.

ADM should call Australia’s bluff with GrainCorp

2 Dec 2013

The U.S. agribusiness faces a paper loss on its 20 pct stake in GrainCorp after Australia blocked its A$3.4 bln takeover, arguing the market wasn’t sufficiently mature. ADM should sit tight, and then try again later. That would force Australia to show its real hand.

Australia too mealy-mouthed on protectionism

29 Nov 2013

Blocking ADM’s $3.1 billion takeover of GrainCorp is illogical. The U.S. buyer was paying a tidy premium for the Sydney-based wheat trader. While foreign investors won’t be happy, Canberra’s real mistake is in not saying plainly that it prefers a local bully to a foreign one.

Aussie dairy battle needs cheap debt to stack up

19 Nov 2013

Three bids in as many days have lifted the price tag for Australian dairy Warrnambool above A$500 million. Local cost savings and projections of China’s thirst for foreign milk help justify the frenzy. But the investment case also depends on low borrowing costs.

Review: Buffett clan puts up a good food fight

25 Oct 2013

The Oracle of Omaha has made billions and his farmer son is helping give them away. In “Forty Chances,” Howard Buffett chronicles efforts to end world hunger and bad philanthropic habits. It’s hard at times to relate to the plight, but reassuring to know his family is on the case.

China’s dash for dairy based on frothy forecasts

4 Oct 2013

Foamy figures about milk’s popularity in China have lifted share prices of domestic producers, propelled Huishan’s $1.3 bln IPO last week and attracted big investors like Henry Kravis. China’s market size potential is massive, but the rate of growth may be leaner than advertised.

Milk scare exposes New Zealand’s dairy dependency

5 Aug 2013

A contamination warning from the country’s largest producer has triggered recalls and import bans worldwide. The fallout may be limited, and substitutes in short supply. But with milk products generating a quarter of exports, New Zealand can ill afford a sustained backlash.

U.S. justices’ hefty IP docket is patently logical

14 Feb 2013

The Supreme Court is reviewing fewer total cases but more on intellectual property. That makes sense. Patent law is badly muddled - as next week’s hearing about rights to altered soybean seeds is likely to demonstrate. Clearing up such legal quagmires is crucial to the economy.

Grains are the commodities to watch in 2013

18 Dec 2012

Iffy global economics make it hard to gauge the outlook for copper and iron ore. Grains are different. Stocks are low and the drought that hit harvests in 2012 has continued. Low rainfall is also hitting river-borne U.S. trade routes. Expect prices to stay high.

Asian rice producers’ cartel is a bad idea

5 Nov 2012

Having spent $10 billion to buy rice paddy from farmers at above-market rates, Thailand must dread being forced to sell its stockpiles at the prevailing low prices. But forging an alliance of Southeast Asian exporters won’t give Bangkok more pricing power: unlike oil, rice rots.

Farm subsidies need rethink in era of budget woes

15 Aug 2012

President Obama’s call to pass a $500 bln U.S. farm bill is unhelpful. OECD agriculture subsidies represent 22 pct of output and block poor nations’ exports. Slashing them would reduce deficits, increase poor-country incomes and remove a corrupt wealth-killing distortion.

Global warming adds to food inflation risk

13 Jul 2012

Corn prices spike after the hottest U.S. six months ever. Russian wheat is also afflicted. Does global warming threaten a food price shock? For now, the risk is mitigated by a big commodity price retreat from 2011’s speculative bubble. But in the long term, the threat is serious.

"Cabbage in formaldehyde" is toxic dish for China

8 May 2012

After tainted milk and glowing pork, a new scandal will hurt China’s small but growing food export trade. A bigger effect will be felt at home. Food scares are inflationary, hurt the poor and erode confidence. Long-delayed agricultural reform should be top of the policy menu.

Farmland promises real investment harvest

21 Mar 2012

The hunt is on, among fearful long-term investors, for inflation protection. History suggests that agricultural land could provide part of the answer. But ownership brings responsibilities, costs, and risks that need close management.

Glencore tiptoes onto the Canadian prairies

20 Mar 2012

The commodity trader has roped in two local partners for its $6.1 billion purchase of Viterra, the Canadian grain firm. That setup nearly halves its outlay and takes out some unwanted businesses. It also reduces the risk of a BHP-style political backlash.

China’s pig farms will dampen corn bulls’ hopes

19 Mar 2012

Hopes of China becoming a corn importer have fuelled a global rally in corn prices. But traders underestimate Beijing’s will for self-dependence in this commodity. Improvements in pig-farming efficiency and supply-chain bottlenecks will make global corn prices vulnerable.

Glencore faces fight to land $5.5 bln Viterra deal

12 Mar 2012

Buying Canada’s biggest grain handler would round out the commodity trader’s growing agricultural portfolio. The assets are attractive and the timing is right. But rival bidders, a lack of obvious synergies and Canada’s penchant for resource nationalism may present obstacles.

PhosAgro IPO exposes murky political tie

22 Jun 2011

As the Russian fertilizer group prepares a London listing, it has revealed that Vladimir Litvinenko, a former teacher of Vladimir Putin, owns a 10 percent stake. While such a useful connection might help the company, investors should also consider the questions that it raises.

U.S. finally shows some spine on ethanol subsidies

16 Jun 2011

A Senate vote to scrap $6 bln of support for the cornbased fuel still faces political hurdles. But the move to end the distortion on markets, the environment and global trade is a step in the right direction. It might even signal that Congress is willing to tackle bigger issues.

Little downside from bulking up Glencore syndicate

4 Mar 2011

The commodities giant may hire more banks to prepare its mooted $60 bln IPO. Doing so allows Glencore to pressure fees, reach more investors and quash negative research. The banks get league table credit and a cut of some $240 mln in fees. The only potential losers are investors.