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Shipping disruptions to keep coffee prices high for longer, say experts

NEW YORK: Disruptions to transportation of coffee around the world, caused by container shortages and port congestion, will likely keep coffee prices high for a longer time since they make it more difficult for the market to rebalance supplies geographically.

Coffee analysts and traders said on Friday during the annual conference organized by the Swiss Coffee Trade Association (SCTA) that transportation problems are preventing available supplies from moving quickly to meet demand in some areas of the world, boosting prices for the commodity.

“When you have a global supply deficit, you will look for stock draws. High prices would boost transportation (of available coffee), but that is really not happening,” said Ben Clarkson, head of the coffee platform at Louis Dreyfus.

“There are clearly risks of higher prices. The market is scrambling for some kind of equilibrium but has not found that yet,” Clarkson added.

Arabica coffee prices in New York were near the highest in seven years this week, as the market deals with the outlook of a reduced supply in top grower Brazil after drought and frosts.

“We believe in a deficit of around four million bags, other analysts see it as high as seven million bags,” said Carlos Mera, head of agri commodities market research at Rabobank, adding that exports from Brazil and other producing countries have been slow due to shipping bottlenecks.

Nhung Ly, managing director at COMCO Trading in Vietnam, said the Asian country, the world’s second-largest coffee producer, will have a large 2021/22 coffee production on top of already big carry-over stocks, but companies have been struggling to move that coffee out of the country.

The experts said that current high prices will eventually boost production in countries and regions other than Brazil, such as Colombia, Central America and Africa, which will lead to a more balanced supply, but that would take time.

Weakening rupee, subsidy system may impact fertiliser sector: Rabobank

MUMBAI: A potentially weakening rupee and probability of disappointing monsoon due to El Nino effect, alongwith subsidy system may impact the fertiliser sector further, says a report.

The demand remains under pressure with the Ministry of Chemicals and Fertilisers struggling to pay out subsidies, Rabobank said in its fertiliser Q2 2014 report, adding that a potentially weakening rupee and disappointing monsoons could impact fertiliser demand further.

In terms of urea, the ministry is still struggling to pay out subsidies. In the interim Budget, the UPA government dedicated $11 billion to fertiliser subsidies. Last year the same ministry also struggled to pay out subsidies, and banks had to step in to provide loans, Rabobank said.

Currently, a metric tonne of urea can be purchased by farmers at a maximum retail price (MRP) of Rs 5,360 ($90). The difference between the MRP and the delivered costs of urea is paid as a subsidy to fertiliser producers.

Under a new scheme, the subsidy is based on the production cost of urea, something that will only stretch the budget of the ministry further and reduce cash flow within the Indian domestic urea industry. Urea demand in India is likely to remain subdued until July, as the country waits with another urea tender until the Chinese export window opens.

Some stock building is feeding demand in India, with April stocks at 675,000 tonnes, up more than 200 per cent on the previous month, the report said. There is a deteriorating trend in the price of fertilisers and Rabobank expects this to continue in the coming quarter.

Rabobank said that in terms of phosphates, the Indian story isn’t rosy either. Based on the MRP and the subsidy system, Indian Diammonium Phosphate fertiliser (DAP) prices are capped at around $480/tonne CFR basis.

A weakening rupee could potentially lower this cap even further and make phosphate imports less affordable. The same applies to all fertiliser imports. While changes to the heavily subsidised fertiliser industry are much needed, they are likely to occur in small incremental steps, it said.

UPL Corporation raises EUR 100 million loan to meet working capital needs

NEW DELHI: Leading agrochemical company UPL on Wednesday said its wholly-owned subsidiary has arranged EUR 100 million (approximately Rs 768.80 crore) loan at zero interest rate to meet the working capital requirements across the group. UPL Corporation has arranged the financing, and the transaction is expected to be completed in August-September 2019 after receipt of required approvals, the company said in a regulatory filing.

“The short tenor loan carries zero running coupon and is the first such financing raised by the group,” UPL said.

The facility is proposed to be arranged by Cooperatieve Rabobank UA, the leading Dutch Food and Agri-focused bank.

Earlier, the UPL Corporation had raised USD 3-billion five years unsecured term loan to part finance the acquisition of Arysta Lifescience. The loan was jointly syndicated by MUFG Bank and Cooperatieve Rabobank UA.

The term loan was later swapped into EUR equivalent of USD 1.5 billion at a fixed rate of 1.50 per cent annum and USD 400 million into JPY at fixed rate of 1.15 per cent per annum as substantial business is in these currencies would provide a natural hedge, the UPL said.

With its acquisition of Arysta Lifescience in January 2019, UPL became the fifth largest overall and largest post patent company in the agri-chem space and reported revenues and EBITDA of Rs 21,837 crore and Rs 4,114 crore in 2018-19 fiscal, respectively.

Rabobank-backed PE fund invests about Rs 100 crore in Parijat Industries

NEW DELHI: Rabobank-backed India Agri Business Fund II (IABF-II) has invested about Rs 100 crore in agro-chemicals company Parijat Industries, the private equity fund announced on Thursday.

This is the second investment announced by the $200 million (about Rs 1,331 crore) fund this month, after it invested Rs 100 crore in condiments manufacturer Cremica Food Industries.

The private equity fund, which has picked up a minority stake in the New Delhi-headquartered Parijat Industries, did not, however, disclose the exact stake picked up by it in the company, in its official press statement.

“We are especially excited at the company’s export forays and new products expected to be launched in the domestic market over the next few years,” said Rajesh Srivastava, chairman and managing director, Rabo Equity Advisors.

India Agri Business Fund II is the second PE fund backed by Rabobank, and focuses primarily on backing ventures operating in the country’s food and agri-business segment.

Sponsored by Rabobank, the fund is advised by Rabo Equity Advisors, a subsidiary of the Dutch multinational banking and financial services major, and counts development finance institutions, such as, CDC and Asian Development Bank, as anchor investors.

Rabo Equity Advisors also advises India Agri Business Fund I, a $120 million (about Rs 798 crore) fund which has invested in 10 companies, across sectors, and includes, Prabhat Dairy, LT Foods, and Vacmet, among others.

The PE fund had made a partial exit from Prabhat Dairy in September last year, after the Ahmednagar-based, integrated milk and dairy products company had made its public market debut.

Parijat Industries, which makes and distributes crop protection chemicals, and has wholly-owned subsidiaries in Russia, Hong Kong, UK and West Africa, has projected sales of Rs 1,500 crore by 2021, and has also stated plans of expanding its domestic distribution network to 10,000 retail points in three years, from its current 4,500.

“Our team at Parijat is committed to exponentially growing its domestic presence besides the international footprint. We are delighted to have Rabo Equity as our partner and hope to leverage their extensive domain knowledge and global outreach in the Food & Agriculture sector,” said Keshav Anand, managing director, Parijat Industries.

CredAble ropes in Ranjit Singh as EVP and head of credit

CredAble, a fintech platform, has roped in Ranjit Singh as EVP and head of credit. Singh has over two decades of experience across corporate banking, credit ratings, insurance and IT. At CredAble, he will lead the credit and risk management function.

“Given the ever-evolving MSME requirements, Ranjit’s role is to ensure that the credit and risk framework will enable CredAble to create real-time financial inclusion. He will be leading this initiative by designing innovative and flexible credit models,” Ram Kewalramani, Co-Founder and Managing Director, CredAble said.

According to a statement shared by the company, Singh has been a corporate banker for 13 years with Rabobank and Standard Chartered Bank.

“During the pandemic, I have seen a sharp escalation in the financing needs for both big and small enterprises to survive… A credit paradigm that breaks this template by tracking cash flows has long been talked about but is taking shape only now. With its innovative solutions, CredAble is ensuring liquidity in the supply chain ecosystem across industries,” said Singh.

Prior to banking, he has worked with Crisil,

ICICI Lombard

, QAI India and TCS, according to the company statement. Singh is an alumnus of FMS Delhi and Delhi College of Engineering.

Dutch Rabobank to cut 5,000 jobs in next five years

Hague: Dutch number two Rabobank said Thursday it planned to slash some 5,000 jobs over the next five years, partly blamed on the impact of the coronavirus crisis.

Speaking of a “difficult environment”, the Utrecht-based cooperative bank said that “ongoing improvements… (are) expected to result in an average annual reduction of our workforce by 1,000 ( employees) over the next five years.”