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.
Glencore story is striking but not yet compelling 3 Mar 2011 The Swiss commodities trader, currently pondering an IPO, says quarterly operating profit is near its 2007 peak. But the impressive financial performance isn't in itself a guarantee that Glencore will achieve its mooted $60 billion equity valuation.
Cargill gives BHP a second shot at potash 18 Jan 2011 The biggest private U.S. firm is spinning off its majority stake in $37 bln phosphate and potash producer Mosaic. The complex deal will create three share classes and take a while but should still invite suitors in time. And Minnesota may be more welcoming than Saskatchewan.
Protectionism remains a threat – not a reality 4 Nov 2010 Canada's rejection of the Potash bid is wrong, but not a sign of rising protectionism. Actual barriers to trade of investments haven't multiplied since the beginning of the slump. Governments have wised up to the lessons of the past, and economic populism doesn't pay.
BHP should go where it’s wanted: under the sea 4 Nov 2010 Canada's objections to the miner's $39 bln bid for Potash Corp look hard to overcome. BHP investors won't care much, as the logic for the offer was never very powerful. The group can now use the cash on higherreturn projects, where size isn't a hindrance like deepsea oil.
Blocking BHP’s Potash bid could damage Canada 1 Nov 2010 The government will decide this week whether to allow the $39 bln deal. A BHP takeover may squeeze the tax that Potash Corp pays its home province. But those costs are outweighed by the discount that Canadian companies would suffer if the country was viewed as protectionist.