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HGCA talks world grains, Australia grain value, Cargill v Viterra, herbicide

By Nicola Cottam

- Last updated on GMT

World grain production to outstrip demand this season, says HGCA
World grain production to outstrip demand this season, says HGCA
HGCA reports buoyant global grain market, WA aims to double grain value by 2025, Cargill takes action again Viterra, and EPA approves new herbicide.

Buoyant global grain market

World grain production will outstrip demand again this season for the second successive year, according to HGCA cereal and oilseed analyst, Jack Watts.

Speaking at the HGCA annual grain market outlook conference, Watts told delegates that global maize production will reach approximately 900 million tons (mt) this season with further gains of one billion tons (bt) by 2016.

Wheat also performed well with UK yields up by 40% to 16.6mt, representing the largest year on year increase since records began in 1893, he said.

Watts maintained that wheat exports were critical for EU and UK trade overall, but a key challenge for the global wheat trade remains the level of investment needed in logistics.

He added that the EU was the powerhouse for barley production, but despite the UK harvesting a 7mt crop for the second year running, barley's stocks-to-use ratio (17% by September 2015) was still lower than for any other grain.

“Global barley supply and demand looks to remain tight, but has to follow the dynamics of the broader grain market to avoid being priced out,”​ he said.

Doubling the value of Western Australia grains

The Grains Industry Association of Western Australia (WA) has released an industry strategy with a view to doubling grain value by 2025.

The report says the WA industry needs to focus on innovative ways to achieve and maintain a competitive edge in the face of increasing global production and exports, particularly from Eastern Europe and South America.

“The grains industry is the most important agricultural industry in Western Australia; accounting for more than 50% of the gross farm gate value of agricultural production in the State,” ​the authors wrote.

“More than 90% of grain grown is exported as whole grain into highly competitive international markets. It is essentially a high volume commodity business, and this will continue to characterise the industry through the next decade to 2025.”

The association aims to rally support from trade organisations, government bodies and major corporations to optimise grain handling and transport infrastructure, reduce regulations and red tape, improve access to new markets, and identify valued added opportunities.

Cargill court action

Cargill Australia has launched a court action against Glencore subsidiary, Viterra Malt, seeking damages against losses arising from ‘breaches of warranty, misleading conduct and negligent misstatement’ ​in relation to its acquisition of Joe White Maltings last year.

Cargill bought Joe White from Viterra Malt for approximately $420m mark but is claiming close to $32.4m in damages, due to lost production and unforeseen payments.

Pivotal to the case is a Cargill claim that in order to deliver barley to buyer specifications, it has been forced to cut production of malt by up to 40%, or by 60,000 tonnes.

Cargill is also seeking recompense to the tune of $2.39m regarding a storage agreement and payments to WA-based bulk handler CBH, which it was not made aware of at the time.

According to reports, Viterra says it will dispute the allegations, but remained tight-lipped about the specifics of the case, saying it would not comment further while the legal proceedings were running.

EPA approves new herbicide

The US Environmental Protection Agency (EPA) has approved a new version of the 2,4-D herbicide, Enlist Duo, used on genetically modified corn and soybeans.

The US Department of Agriculture recently approved the use of new GM seeds resistant to the weed killer but farmers have delayed planting pending approval of the latest Enlist herbicide as many weeds have become resistant to its predecessor, containing glyphosate. The new version contains a combination of both 2,4-D and glyphosate.

Critics remain reticent about 2,4-D and have called for more research to assess its effects on public health. However the EPA says it is satisfied that the herbicide meets safety standards for the public, agricultural workers and endangered species.

This is the third time the EPA has reviewed the safety of the herbicide in recent years.

Enlist Duo is the world's most popular herbicide and the third most popular in the United States, behind atrazine and glyphosate. 

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