DuPont underlined concerns of the potential for the
unusually cold US winter to delay spring sowings, warning of a "challenge" to
its profits, which also face a setback from the Ukraine crisis.
The conglomerate – the owner of the Pioneer seeds business,
and for which agriculture is the top source of revenues, responsible for nearly
one-third of revenues sales last year – said that it was sticking by a forecast
for 2014 operating earnings per share of $4.20-4.45.
However, it acknowledged that growth in revenues and profits
for the current quarter "will be challenged by the extended cold temperatures
and winter storms in North America", besides by "business disruptions in the
Ukraine, and farmer uncertainty which may impact the timing of sales and potential
changes in planted area".
The comments come amid growing market attention on the potential
for the harsh US winter to prompt at least delays in spring sowings.
Besides US snow cover being the third highest since the 1966
record according to official meteorologists, posing the threat of flooding when
it melts, markets are concerned over the depth of frost in soil.
There has been talk of "substantial frost in the ground",
after the cold winter, Steve Kahler, chief operating officer at Teucrium
"Some say two foot of frost. Others say up to 54 inches.
It's a subject to watch," Mr Kahler told Agrimoney.com
At Iowa-based broker US Commodities, Don Roose said: "We
need to get soil temperatures to 54 degrees Fahrenheit," for corn germination.
"But in the northern Corn Belt, there is 4-5 feet of frost.
And ideally, corn has to be in by May."
Goldman Sachs caution
Further south, sowings in Texas - one of the few states
whose US Department of Agriculture staff released weekly reports through the
winter - are already behind in corn seedings, with 10% sown as of Sunday
compared with an average of 18%, overnight data showed.
The hold-up is, however, linked to drought as well as cold
temperatures, with USDA officials saying that "dry soil conditions continued to
delay corn planting in the Blacklands".
Separately, Goldman Sachs signalled that this delay could set a trend.
"While medium-term weather forecasts do not point to a colder-than-normal spring, historical Iowa and Illinois weather data since 1895 suggest that cold winters (December-March average temperatures) can often be followed by cold springs and delayed planting progress," the bank said.
'Crisis could heat up
DuPont's caution over Ukraine comes three weeks after an
initial warning from Paul Schickler, president of the company's seed division,
over sales from a new $40m plant in the east of the country.
Factors including farmer credit and broader economic
conditions could affect the business, Mr Schickler said.
US grains broker Doane warned overnight that Ukraine
tensions could rise again as the Crimea in the south of the country approaches
a controversial vote over whether to become part of Russia.
"The crisis in the Ukraine could heat up again, pending
international reaction to a referendum planned for Ukrainian citizens living in
the Crimean peninsula as to whether or not they wish to be 'annexed' by Russia,"
The comments come as temperatures are unusually warm in
Ukraine, setting the scene for an early start to spring sowings – if farmers
indeed have the cash to pay for seed.
mild over the Black Sea area," consultancy Agritel said, flagging forecasts of
temperatures reaching 16 degrees Celsius in Kiev by the end of this week, and 12
degrees Celsius in the Russian capital of Moscow.
are forecasting that these temperatures could be observed also next week."
With no rains
forecast, "farmers should be able to get in the fields for spring sowings,
starting in the northern part of the country".