Australia FTA unlikely to impact UK grains market

  • Spanish Market: Agriculture
  • 29/06/21

The new UK-Australia free trade agreement (FTA) is unlikely to have a direct impact on UK grains producers in the short term, given domestic safeguards for UK farmers and with Australian grains producers focused on larger nearby markets for exports.

UK farmers had voiced concerns that a zero-tariff agreement with Australia could risk undercutting the domestic market with surplus goods — particularly livestock beef, sheep and sugar — from Australia's large-scale agriculture sector.

But competition for barley, the UK's main grain export, is not expected to rise substantially as a result of the trade deal, given strong import demand for Australian product from nearby Asia-Pacific markets and high freight costs to the UK.

Australia exported 5.4mn t of barley in August–April amid a bumper domestic harvest, up from 2.3mn t in the same period last year, customs data show. The rise came despite the country's traditional largest buyer, China, imposing an 80.5pc import tariff on Australian barley in May last year.

Saudi Arabia, Thailand and Japan became Australia's top three buyers of barley in August-April, receiving 2.3mn t, 952,000t and 770,000t, respectively, amid strong demand for livestock feed. This marked a strong contrast with a year earlier, when no barley headed from Australia to Saudi Arabia.

Barley trade between the UK and Australia has remained negligible, with the former sending less than 1pc of its malting barley exports to Australia in 2017-20, as nearby EU markets are its dominant destinations, data from the UK's Agricultural and Horticultural Development Board show.

Similarly, for wheat and corn — the UK's main grains imports — more proximal markets in the EU and Canada dominate supply, while Australia depends on large Asia-Pacific markets for its exports, meaning UK-Australia trade in these products should also remain minimal.

But for livestock and sugar, among the more sensitive of the UK agricultural markets, the government has committed to a gradual rise in the tariff-free quota for Australian products over eight to 10 years, which will minimise any impact to domestic markets in the short-to-medium term.

"While details remain very thin on the ground, it appears that the UK-Australia trade agreement will include important safeguards that attempt to strike a balance between liberalising trade and supporting UK farm businesses, as well as a reasonable time period to allow UK farmers to adjust to the new trading environment," the National Farmers' Union (NFU) of England and Wales president Minette Batters said.

With farmers expecting the deal to form the basis of the UK's next post-Brexit FTAs, concerns remain about ensuring stronger safeguards for deals with nearby markets, such as Canada or the US, that have a greater likelihood of significantly disrupting the UK's domestic industries.

"It is vital the UK government approaches its other negotiations with countries such as the US, Canada and all major agricultural producers and exporters on its own terms, and ensures that future deals balance access to UK agricultural markets with at least the same level of opportunities for British agri-food exports," the NFU said.

The UK-Australia FTA was was agreed in principle on 17 June but the deal is not likely to come in to effect before late 2022, if approved by the both parliaments. Once approved, the UK's Department of International Trade projects that it could increase the overall value of UK exports to Australia by up to £900mn ($1.25bn).

UK barley exports 000t

Australia barley exports mn t

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20/06/24

Shipping industry urges action to stop Red Sea attacks

Shipping industry urges action to stop Red Sea attacks

Dubai, 20 June (Argus) — The International Chamber of Shipping (ICS) has called for urgent action to stop "unlawful attacks" on commercial shipping in the Red Sea by Yemen's Houthi rebels after the sinking of a second bulk carrier since November last year. "This is an unacceptable situation, and these attacks must stop now," the ICS said. "We call for states with influence in the region to safeguard our innocent seafarers and for the swift de-escalation of the situation in the Red Sea." The Iran-backed Houthis began attacking ships in the Red Sea six weeks after the Israel-Hamas war broke out last year in what they claim is an act of solidarity with Palestinians in Gaza. The British-owned, Belize-flagged Handysize bulk carrier Rubymar sank on 4 March this year, four weeks after a Houthi attack. And the United Kingdom Maritime Trade Operations (UKMTO) said on 19 June that it believes the Greek-owned and operated bulk carrier Tutor has also sunk after the Houthis struck it with an unmanned surface vessel on 12 June. Since the attacks began, three sailors have been killed and two ships seized in separate incidents, one of which has since been freed. "We have heard the condemnation and appreciate the words of support, but we urgently seek action to stop the unlawful attacks on these vital workers and this vital industry," the ICS said. "And we must not forget the crew members from the [cargo vessel] Galaxy Leader and [containership] MSC Aries who are still being held captive." The Houthis have stepped up their attacks in recent days, prompting counter measures by US and UK military forces deployed in the area. The Red Sea is one of the world's most important shipping lanes, serving as a vital trade link between Europe and Asia. The attacks have led to an increase in freight rates and shipping insurance costs. And they have disrupted trade flows through the Suez Canal at the northern end of the Red Sea as many shipowners opt to avoid the area by taking the longer route around the southern tip of Africa. The combined flow of crude and oil products transiting the Suez Canal in both directions dropped by 34pc on the month and by 65pc on the year in May, according to preliminary data from trade analytics firm Kpler. Most oil passing through the canal southbound is now of Russian origin — 92pc in May, according to Kpler data. India, China and the Middle East were the main destinations. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australia’s 2022-23 cattle herd estimate revised higher


20/06/24
20/06/24

Australia’s 2022-23 cattle herd estimate revised higher

Dalby, 20 June (Argus) — The estimated size of the Australian cattle herd as of 30 June 2023 has increased significantly with a methodology change for collecting data. The Australian Bureau of Statistics (ABS) previously relied on producer surveys to estimate beef and dairy herd sizes but a poor response rate forced it to gather data from other sources. This led to a change in the estimated herd size from 24.4mn head of cattle in Australian paddocks at the close of the 2022-23 fiscal year to 27.8mn. The data primarily serves as a retrospective figure with a minimal impact on future slaughter rates and current market prices. But government and industry research agencies use it to forecast future herd movements and to estimate the impact of livestock. A change in the methodology is the inclusion of cattle on smaller farms. Since 2015 the ABS excluded livestock businesses with annual output of less than A$40,000 ($26,700) to reduce reporting burdens on micro-size producers. When releasing its new estimated herd size the ABS explained that this was because of a herd rebuild in Queensland, the largest contributing state to the Australian cattle population, where cattle numbers increased by 4.2pc from a year earlier to 13.2mn head. Beef cattle numbers also increased in New South Wales by 6.2pc to 5.9mn and in Victoria by 5pc to 2.9mn. But the value of livestock disposals in 2022-23 fell by 1pc to A$23.3bn, according to the ABS. Lower rainfall through the early stages of 2023 reduced producers' confidence, resulting in volatile market conditions and affecting prices for red meat throughout the second half of the year. By Amy Phillips Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Porto Alegre, Brazil partially reopens post-flood


17/06/24
17/06/24

Porto Alegre, Brazil partially reopens post-flood

Sao Paulo, 17 June (Argus) — The Porto Alegre port, in Brazil's flood-hit southern Rio Grande do Sul state, partially resumed operations last week while other area ports continue to recover. Activities had been suspended at Porto Alegre since 2 May, following the unprecedented floods that hit the state in late April and May, but there was a partial reopening on 14 June. Porto Alegre is still carrying out cleaning and maintenance, and port authority Portos RS is still analyzing damage to infrastructure. The first operation will take place at the POA02 terminal, leased by logistic firm Serra Morena. The 60,456 dwt bulk carrier Nord Mississipi will be unloading inputs for fertilizer production. Porto Alegre is one of three ports in Rio Grande do Sul, along with Pelotas and Rio Grande. Pelotas was also hit by the floods but resumed operations on 21 May. The port of Rio Grande did not suspend operations but has had to reduce the draft of ships allowed in to port because of debris and sediment left by the flooding. The draft at the Bunge, Bianchini and Termasa/Tergrasa terminals was reduced to 12.8 meters (42ft) on 21 May and is now 11.9m. Rio Grande do Sul is once again on alert because of the forecast of new rains in the state over the next few days. By João Petrini Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Rains return to Brazil's Rio Grande do Sul state


17/06/24
17/06/24

Rains return to Brazil's Rio Grande do Sul state

Sao Paulo, 17 June (Argus) — Rainfall returned to Brazil's flood-hit Rio Grande do Sul state over the weekend and is likely to remain until Wednesday, according to meteorological firm Climatempo. Downpours started in late April brought havoc to the state, flooding rivers and lakes and hampering several logistics points. Several state and national highways are still damaged and the state's main airport is likely to remain closed until the end of the year. The weather had eased in the last few weeks, with lake and river levels dropping below flood levels since at least 9 June. But two new cold fronts brought rains to the state once again on 15 June, Climatempo said. Rains are likely to reach an accumulated 200-300mm (7.9-11.8in) from 15-19 June in the state's central-northern and northwestern regions, Climatempo said. Other areas will receive 80-150mm in the same span. Showers in the central-northern region of the state hit 50-60mm on 16 June alone, according to the US National Oceanic and Atmospheric Administration. The Cai and Jacui rivers have reached above-flood levels once again, according to the state's civil defense. The Taquari River's levels are "above caution quotas," reaching 17m (55.7ft). Levels need to be below 5m to be considered normal. Civil defense authorities have also issued a flood warning for those that live close to the Sinos River, asking them to evacuate risky areas. Rio Grande do Sul is one of Brazil's main agricultural states. The US Department of Agriculture has cut the state's 2023-24 soybean production estimate because of the floods. The extreme weather has left at least 176 dead and over 422,000 people displaced, according to the civil defense's latest report published on 14 June. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Low-CO2 biofuel feedstock imports to rise: USDA


13/06/24
13/06/24

Low-CO2 biofuel feedstock imports to rise: USDA

New York, 13 June (Argus) — A new US tax credit kicking off next year that is more generous for fuels that produce fewer greenhouse gas emissions will likely spur more imports of low-carbon feedstocks, the US Department of Agriculture (USDA) said in a report this week. A raft of government incentives, including the federal renewable fuel standard and low-carbon fuel standards (LCFS) in states like California, has already spurred a boom in renewable diesel production, upping demand for feedstocks that can be used to make the fuel. The US was a net soybean oil importer for the first time ever in 2023 because of strong demand from domestic refineries, and the value of US imports of animal fats and vegetable oils more than doubled from 2020 to 2023 according to the report. That trend could become even more pronounced next year as the Inflation Reduction Act's 45Z tax credit, which offers up to $1.75/USG for sustainable aviation fuel and up to $1/USG for other fuels like renewable diesel, comes into force. The credit can only be claimed for fuel produced in the US, likely cutting biofuel imports and sending more feedstocks that would have been refined abroad to the US instead, the report says. The 45Z credit will also be more generous to fuels with lower carbon intensity, upping demand for waste feedstocks like used cooking oil that already fetch greater discounts in LCFS programs. Fast-rising imports of China-origin used cooking oil have already frustrated some agricultural groups, which lose out if there are more ample supplies of waste feedstocks. The report says that while soybean oil was the "crucial feedstock" allowing for the recent growth in US renewable diesel, its share of the feedstock mix has been trending downwards because of competition from lower-carbon feedstocks and lower-cost canola oil from Canada. While soybean oil exports have plunged because of the renewable diesel boom, they could recover slightly if refineries increasingly turning to waste feedstocks cuts into US soybean oil's current premium over global vegetable oils. The report adds that soybean oil's role in renewable diesel production is also at risk from rising supplies of soybean meal, which is produced alongside oil at crush plants and where the global demand picture is less clear. "Based on global demand for soybean meal, soybean oil cannot continue to fuel renewable diesel production growth at current rates during the next few years without major changes to global soybean meal demand, shifts in exporter market shares, or lower supplies in other exporting countries," the report says. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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