Commodity Corner

Views on commodities and energy

from Global News Journal:

Can export bans be challenged at the WTO?



Russian grain harvest

Russia’s ban on grain exports as a heat wave parches crops in the world’s third biggest wheat exporter has raised questions whether such export curbs break World Trade Organization rules. Russia is not a member of the WTO, and it remains to be seen how its new grain policy will affect its 17-year-old bid to join. But other grain exporters, such as Ukraine, which is also considering export curbs, are part of the global trade referee.

WTO rules are quite clear that members cannot interfere with imports and exports in a way that disrupts trade or discriminates against other members. But in practice most WTO rules aim to stop countries blocking imports – shutting out competitor’s goods to give their own domestic producers an unfair advantage.

WTO protest



Saudi Arabia and other members of the oil cartel OPEC (not all of whom are members of the WTO) routinely control the production and hence export of oil to defend target prices, but have not faced challenges at the WTO.

What can be challenged are restrictions on exports designed to hurt competitors. The United States, European Union and Mexico are currently suing China at the WTO over Beijing’s export duties and other restraints on raw materials. They argue that these make the raw materials more expensive for foreign competitors, putting them at a disadvantage to Chinese processors.

Locked out of car, cut finger breaks monotony on crop tour


    It was a case of keys being accidentally locked in the car, a cut to the finger by a corn leaf and a chat about hail damage at a scouting stop on the Pro Farmer crop tour on Tuesday in Carlton, Nebraska.
    And thus, the monotony of scouting a seemingly-endless number of corn and soybean fields in the Midwest grain belt was broken, momentarily, by these incidents.
    At the stop in Carlton, a U.S. Agriculture Department official, in the car behind ours, accidentlly locked his keys in his rented Hyundai.
    Then, this reporter deeply sliced his finger on the leaf of a corn stalk.
    While the government man borrowed a phone from another scout to call the rental company and I dressed my wound with a wet napkin and a bandage, the farmer whose bean field we were scouting pulled up in his pickup.
    Then, Rich Mosier, a broker with brokerage and research company Allendale, Inc., passing through from his home in Davenport, Iowa, stopped for a chat.
    All of the sudden, it was a veritable meeting of the minds on the side of Highway 4.
    With a locksmith on his way, talk returned to farming.
    Scout Elwood Line, our driver and a farmer from northeast Illinois, asked if Carlton farmer John Lange was a ‘John Deere’ man, referring to the farm machinery maker Deere & Co.
    “Both — John Deere and International,” Lange said. “International combine and a John Deere head.”
    Mosier said the crops in this area, especially the dryland fields, were first hammered by hail and are now thirsty for rain.
    “The dryland has suffered the last three weeks. We haven’t had any big rains,” Mosier said.
    After about 45 minutes, the locksmith showed up to jimmy the door of the Sonata.
    Asked how he was doing, the locksmith replied, “Better than you, I guess.”
    Corn yield in the field we scouted  was projected at 193 bushels per acre, while the soybean count was 1,034 pods in a 3-by-3 foot area.

The Devil is in the details


Numbers, or rather the lack of them, are the latest gripe of Argentina’s disgruntled farm sector.

Statistics published by the government for years have been disappearing since the Agriculture Secretariat ceded control of the country’s multibillion-dollar grains and beef trade to another state agency, the ONCCA, earlier this year.

Potash Corp carps about stock price


    Top officials from the world’s largest fertilizer maker were in London this week trying to convince investors their stock has been unjustly thumped.
    Potash Corp of Saskatchewan shares at the Toronto Stock Exchange have lost 30 percent of their value since a mid-June peak, even though prices for potash fertilizer continued their meteoric rise.
    “Not that I’m whining about it, but we do have the lowest multiples we’ve ever had. Ever. And I’m not sure it reflects the true value of the company,” said Wayne Brownlee, the chief financial officer of Potash Corp, which plans to boost its potash capacity by 80 percent to capture higher prices.
    Hedge funds fled commodities and unwound Potash Corp positions since June, Chief Executive Bill Doyle said.
    Doyle continued to hold fast to his rosy outlook, noting producers are short on potash and prices should continue to rise this year, although not at the same rate as last year, when they tripled.
    Grain prices should remain historically high, Doyle said, leaving farmers flush and able to pay more for fertilizer.
    “Farmers will grouse that their costs are up. They are up, about $39 billion, but their receipts are up $50 billion. So the math works,” Doyle said.
    And despite recent events rocking the world’s financial capitals, demand for grain will continue to grow, keeping pressure on supplies, Doyle said, unless the world economy slips into a depression.
    “A lot of the people (in developing economies) who have this aspiration to eat better, I guarantee you, wouldn’t know what had happened to the investment banking community in New York,” he said. “It’s not high on their priority list, where food is.”

Photo: REUTERS/David Stobbe    Potash is piled into a large storage facility which is then loaded into a train car and transported in Saskatoon, Saskatchewan in this December 2006 file photo.