DISCORD IMPACTING EU GRAIN, FEED INDUSTRIES
Politicians on both sides of the conflict now express fears that the dispute over the Ukrainian grain imports widely covered in media could weigh heavily on the European determination to keep supporting Ukraine in its attempts to resist the invading Russian forces. Despite a rise in yields in 2023, European grain farmers are seeing their margins dwindle, primarily owing to a drop in prices over the previous several months.
In 2023, Ukraine’s exports of agricultural and food products totaled $21.9 billion and accounted for 61% of total exports of goods from Ukraine. At the same time, the EU’s share in total exports of agri-food products from Ukraine in 2023 was 56.6%, or $12.4 billion. “Ukraine may face a macroeconomic crisis and currency devaluation if international financial support does not materialize,” UCAB claimed.
The Polish National Poultry Council calculated Poultry imports from Ukraine to the EU reached nearly 250,000 tonnes in 2023, against only 90,000 tonnes before the trade liberalization. Farmers warn that new environmental and animal welfare standards hurt their business, eventually making them less competitive in the global arena. EU compound feed production for farmed animals in 2023 is estimated at 144.3 million tonnes, reflecting a 2% decrease compared with the previous year, FEFAC reported. EU grain export prices fell sharply from the start of 2023, dropping 20% to 25% by June, where they remained the rest of the year.
Besides, the ongoing crisis on the Red Sea has exacerbated supply concerns in the European feed market. Although some companies continue to operate in the area with minimal disruptions, there is apprehension that prolonged crisis could lead to considerable cost escalations in the second and third quarters of 2024 linked to higher freight costs. Trade capacities to the Middle East have been affected by the crisis, resulting in uncertainties regarding trade routes and transportation logistics.
(Link: WorldGrain)
EXCLUSIVE-SIERENTZ GLOBAL MERCHANTS TO HALT MOST GRAIN TRADING ACTIVITIES, SOURCES SAY
Commodity trading firm Sierentz Global Merchants is closing physical grain trading activities around the world and many traders have already left their posts, sources said on Thursday. Sierentz’s grains division, launched in 2017 by a group of former Louis Dreyfus Company traders and based in Geneva, Switzerland, had been targeting exports of Black Sea grains, mainly from Ukraine. The company did not answer a request to comment. Four sources within and outside the company, who declined to be named because the matter is sensitive, said many traders had already left, notably in the Geneva and Kyiv offices.
Among reasons for the decision sources cited losses in Ukraine, difficulties because they were too reliant on the country as an origin, tough times in derivatives after some early profits, and also unsuccessful staff changes. One source said Sierentz would keep farming activities in Brazil and Russia and that some people would stay on the Geneva soybean desk to support farming in Brazil. Sierentz ended its Singapore-based palm oil trading activities in 2019. It had said it wanted to focus on grains and other oilseed trading.
(Link: nasdaq)
