January 30, 2016

Two Articles On The Global Grain Market

An excerpt from, "A new normal in the grains market" by Chris Lyddon, World-Grain, January 25, 2016:
Experts at the recent Global Grain Conference in Geneva, Switzerland took a close look at how the grains sector, and the wider economy, has changed in some of the most important producing and consuming regions. The Black Sea, including Russia and Ukraine, has become much more important as a source of grain and its rulers plan for it to become more important going forward. China’s growth has slowed, but it is going to remain a big customer, while it must remain a big producer of grains. Producers of commodities of all types struggle, while commodity buyers are boosted by the possibility of buying cheap raw materials.

Sergey Feofilov of UkrAgroConsult outlined how the role of the Black Sea region in the global grain market has grown.

“The countries of the Black Sea managed to increase grain production and export tremendously over the previous 20 years,” he said.

China has increased in importance as a buyer, especially for Ukrainian grain exports. Exports from the Black Sea region now account for around 20% of the global market.
An excerpt from,"The Likely Monsanto-Syngenta Merger and the Chinese Factor" by Carmelo Ruiz, Global Research, January 30, 2016:
Monsanto, the US-based biotech and agribusiness colossus, is seeking a merger with its European competitor Syngenta. Such a transaction would create a gargantuan corporation that would control 45% of the world’s commercial seeds and 30% of the farm chemicals market. This is a time of major mergers in the ag sector. The largest of these took place last November, when two of the largest US players, Dow and Dupont, agreed to merge. The resulting spawn of both will have no less than 25% of the world commercial seed market.

The much-talked about Monsanto-Syngenta merger is likely but not inevitable. Monsanto began 2016 with its third buyout offer to the European corporation in less than a year. Syngenta’s management announced it will not decide on Monsanto’s latest bid right away because it is considering other offers. In a conference in Switzerland in mid-January, company chairman Michael Demare said it is evaluating proposals from German companies BASF and Bayer, which are also world leaders in the agricultural biotech and pesticide sectors, and from ChemChina.

Although not very well known in North America and Europe, the Chinese state-owned ChemChina is one mammoth of a corporation. With $45.6 billion in annual revenues and some 140,000 employees, it ranks 265th in the Fortune 500 index.