A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
Terre-net
  Editorial  
 

Russia and China in the eye of the 2014 Cyclope Yearbook



Frédéric Hénin, Editor in Chief, Terre-net


Article published in Terre-net Média



Philippe Chalmin has presented the 29th edition of the “Clyclope World Commodities Markets”, which focuses on the prominent role of China. The Middle Kingdom has become a price and market setter. All eyes are also fixed on the Russo-Ukrainian crisis, whose resolution is a total unknown.

Global farming events are marked by the return of agricultural policies in the major producing nations, China’s random behavior on global markets where the country has the means to “blow hot and cold”, and the Russo-Ukrainian crisis whose end is impossible to predict.

“Do not look for the person who knows, he or she does not exist!” recently said François Luguenot, one of the sixty professionals responsible for the 29th edition of the “Clyclope” presented in May 14, 2014 by Philippe Chalmin, who wrote the chapter on grains.


UNCERTAINTY ON RUSSIAN EXPORTABLE WHEAT

A whole array of scenarios can therefore be envisioned in the next weeks regarding the resolution of the current crisis in Ukraine, with as key issue the volume of available exportable wheat in Russia.

As far as the 2013/2014 harvest is concerned, it has reached 16.4 million tons (MT) out of a total production of 58 MT. While it is too early to forecast next year’s harvest of spring wheat, which has just been planted, questions are being raised on farmers’ financial means to purchase the necessary inputs to get good yields.

More importantly, the financial sanctions imposed by the United States that restrict––even ban––financial transaction in dollars with Russia could paralyze all sales. If this happens, over 20 million tons of grain would be withheld from markets. Nonetheless, the weakness of sanctions currently implemented suggests that the international community is not yet ready to move down that extreme road.


INVESTORS ARE RETURNING TO MARKETS

Other uncertainties relate to Russian gas and the collateral effects of a supply disruption in Western Europe. It might not be transported through pipeline, so that it could not be sucked out by Ukraine, which is close to a suspension of payments.

Yet the rapid conclusion of current negotiations with Iran regarding its nuclear program and uranium enrichment could foster the return of Iranian oil on markets, provided that oil companies have an incentive to exploit the massive hydrocarbon reserves.

These events are encouraging the return of investors in agricultural markets, especially tropical production––coffee and cocoa––and soybean. Their operations could increase if climate change significantly alters precipitation patterns.


China active on all markets

The Middle Kingdom is “a price setter” stresses Cyclope in a chapter that is completely dedicated to China. Every year, the country increasingly relies on oil and industrial commodity imports. The smallest importation of agricultural products involves millions of tons.

Every year, China confirms its rank as the world’s largest importer of soybean (60 percent of all transactions), of cotton and corn whose volumes are increasing. And any new market entry by the world’s second largest power is duly noted. It is especially the case of French dairy products.

In addition, the food shows held in China are providing new opportunities for increased imports of French agricultural and agro-food products, for their quality and production standards.

More importantly, China has the means to generate tensions by withdrawing from markets large volumes of commodities to create shortages and thus impact global prices. “Chinese importers use stocks as leverage to speculate on markets, and it is difficult to predict their positions. The exchange rate of the Yuan is indeed working to China’s benefit,” adds François Luguenot.


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Paris, 10 December 2018