China, whose quest for foreign farmland has stirred debate worldwide, came a step nearer control of nearly 1,000 square kilometres of Australia when it gained consent for the purchase of a huge cotton grower.
Wayne Swan, Australia’s treasurer, on Friday approved a request by a consortium led by China-based textiles giant Shandong Ruyi to buy Cubbie Station, a Queensland enterprise which has been run in administration since financial collapse in 2009 under Aus$320m of debts.
The approval clears the way for Shandong Ruyi and Australia-based Lempriere, the minority partner in the consortium, to bid for Cubbie Station, which has been valued at up to Aus$500m, although the groups are believed to be considering an offer of below Aus$300m.
But it comes amid a growing concern at Chinese interest in acquiring foreign farms, deals which, given the country’s huge needs for imports of crops such as cotton and soybeans, have prompted some governments, such as Brazil’s, to curb foreign ownership of land.
In Australia, where China’s Shanghai Zhongfu Group is bidding for a 15,000-hectare farm Ord East Kimberley Expansion project in the Western Australian outback, opposition politicians have called for tighter controls on farm purchases by foreigners, and for a register of land ownership.
However, relations with China are of great importance for Canberra, given that the country is an important trade partner, and large importer of Australian raw materials such as iron ore besides, in 2011-12, wheat too.
Mr Swan listed a series of conditions for approving Shandong Ruyi’s bid, including that the Shandong-based group – which booked 15.3bn yuan ($2.4bn) of revenues last year – cuts its ownership from 80%, as envisaged in the consortium set-up, to 51% within three years.
Lempriere, "part of an Australian family-owned group of companies", will be responsible for running the Cubbie operations "in conjunction with the existing management team," Mr Swan said, placing limits on the business’s crop sales strategy too.
"All cotton will be sold on arms-length terms in line with international benchmarks and standard market practices."
Furthermore, the consortium would be limited in its use of the property’s huge water reserves, which amount to rights over 537,000 mega litres of water.
The approval comes ahead of the findings of a probe by Australia’s Senate into land ownership which are expected to be reported next month, and expected to add press on the government to tighten up ownership rules.
Australian opposition politicians have proposed a cut to Aus$15m in the threshold for foreign purchases of land requiring approval.
Australia’s Foreign Investment Review Board, which estimates that less than 1% of investment from abroad in 2010-11 went into agriculture, is currently obliged to consider only deals valued at Aus$244m or more.
Statistics: Posted by yoda — Fri Aug 31, 2012 9:50 am
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Dry Weather Threatens India Cotton Crop
07 August 2012
INDIA – The 2012/13 area planted to cotton is expected to drop 200,000 hectares to 10.6 million hectares, significantly lower than the record 12.2 million hectares that were planted in 2011/12.
If rains do not improve during August, area could drop further. 2012/13 production is forecast at 30.0 million 170 kg bales, down 700,000 bales from the current USDA estimate.
Indian cotton continues to trade at a premium to the international market, prompting mills to increase their imports of cotton and exporters to sell stocks in the domestic market. Strong spinning margins are leading to robust mill consumption. 2012/13 exports are forecast 600,000 170 kg bales lower at 5.4 million 170 kg bales due to lower production prospects.
Area and Production Forecast Lower
According to official reports, cotton sowing had reached 8.3 million hectares across India as of July 20, 2012. The pace is 700,000 hectares slower than the year-ago pace when Indian farmers planted a record 12.2 million hectares. The Government of India is currently projecting planted area of 11.5 million hectares, significantly higher than the current USDA estimate of 10.8 million hectares.
Within India, two-thirds of cotton is produced in the central cotton growing zone in the states of Maharashtra, Madhya Pradesh, Gujarat and Odisha where much of the crop is rain-fed. The northern zone, which consists of the states of Punjab, Haryana and Rajasthan, produces cotton under irrigated conditions and accounts for about 15 per cent of production. In the south, the states of Andhra Pradesh, Karnataka and Tamil Nadu account for 20 per cent of production.
Trade and official sources indicate that farmers in Gujarat and Maharashtra (India’s largest cotton producing states) could still increase area if rains materialize in August, but yields will likely be affected due to late planting. Recent field travel to Gujarat indicates that cotton area is down by over 50 per cent due to dry conditions. Farmers are shifting to guar and are waiting to see if rains materialize in early August before deciding to plant castor, cotton or more guar. A significant shift to groundnuts is not expected because the crop requires relatively significant levels of water.
While August rains could spur farmers to plant more cotton, persistent dry conditions at this late stage suggest that planted area will drop further and 2012/13 area is now estimated 200,000 hectares lower at 10.6 million hectares based on lower estimated area in Gujarat and Maharashtra. Yields are also expected to drop further to 480 kg per hectare, lowering production to 30 million 170 kg bales (23.4 million 480 bales), down 700,000 170 kg bales (547,000 480 lb bales) from the current USDA estimate.
Statistics: Posted by yoda — Tue Aug 07, 2012 8:55 pm
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China cotton hoard could haunt market ‘for years’
The "significant uncertainty" over the cotton market created by China’s cotton stockpiling programme, which has swallowed more than 40% of the domestic harvest plus substantial imports, could last "for years".
China on Saturday completed a programme of replenishing state cotton stocks run down in the previous two seasons as the country – the world’s top consumer, importer and producer of the fibre – released supplies in an attempt to put a brake on soaring prices for its mills.
According to the China Cotton Association, the project stockpiled 14.4m bales (3.13m tonnes) of domestic cotton, equivalent to about 43% of the domestic harvest, on top of some 4.5m bales of imports.
The programme also means that China will have accounted for two-thirds of the increase in world cotton stocks in 2011-12 – creating a long-term risk to global prices, the International Cotton Advisory Committee said.
China and India
While the stockpiling "supported both domestic and international prices so far [in 2011-12], sales from the reserve could reduce Chinese imports and depress world cotton prices in the future", the committee, an intergovernmental group, said.
"The size of the Chinese national reserve creates significant uncertainty for the global cotton market for months and maybe years to come."
However, the committee also noted upward pressure on prices for now from separate state action, in India, where the government last month blocked exports after they far exceeded expectations, raising concerns for domestic supplies.
"The impact of India’s export ban on international cotton prices was limited in March.
"However, the longer the ban remains in place, the greater its upward impact on world cotton prices could be."
Traders do not expect the curbs to be removed soon, with Mike Stevens, the veteran Louisiana-based cotton analyst, saying that "it is doubtful that the export ban will be removed before summer".
The ICAC’s comments came in a monthly report in which it revised down estimates for world production in both 2011-12 and 2012-13 by a combined 484,000 tonnes (2.2m bales).
Latest China Cotton Association estimates show Chinese growers may cut sowings by 16.7%, while farmers in the US, the top exporter, are widely expected to reduce plantings by more than the 10.2% estimated by US Department of Agriculture on Friday.
However, the ICAC reduced its forecast for consumption by more, by a combined 604,000 tonnes, meaning a further upgrade to the estimate for year-end stocks.
Inventories were seen ending 2011-12 at 13.1m tonnes (60.2m bales), and next season at 14.6m tonnes (67.2m bales) – equivalent to a rich 61% of use, or seven months’ supplies.
The stocks-to-use ratio is seen as a key metric for assessing a commodity’s price potential, in showing the availability of a raw material, and therefore the extent to which buyers will need to compete for supplies.
Statistics: Posted by yoda — Tue Apr 03, 2012 9:20 am
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