Fungus threat to EU cereals boosts BASF's ag sales

BASF said that 2014 had "begun well" for its agrichemicals division, lifted by strong demand for agrichemicals in its Europe, where disease pressures on grain crops have been enhanced by a mild winter.

Revenues at the German conglomerate's agricultural solutions business rose 6.2% to E1.65bn in the first three months of the year, the fastest growth of any of its divisions.

The increase, which BASF termed a "good start to the year", reflected growth in both sales volumes, of 9%, and product prices, of 3%, which more than offset a dent to the result from a stronger euro.

And growth was particularly strong in Europe, where "sales were considerably higher than in the same quarter of the previous year", buoyed by the boost to crop diseases from a mild winter.

'Sharp increase in demand'

"The mild, moister weather conditions in the winter months led to a sharp increase in demand, particularly for cereal fungicides," BASF said.

The comments come the day after agronomists in the UK warned of "high" levels of fungal diseases, such as yellow rust, in domestic winter wheat.

In fact, for BASF, Germany and "broad areas of Eastern Europe" proved particularly strong markets.

Sales growth in the US and Asia was described as "slight", while BASF's takings in South American fell "considerably" year on year, depressed by weak currencies, such as Argentina' peso.

In Brazil which during the quarter suffered drought in centre east areas, sending coffee and sugar prices soaring, and excessive rains further west - "unfavourable weather" depressed sales to levels "considerably below" those a year ago.

Mixed quarter

The results are the latest for what has been a mixed quarter for agrichemical groups, some of which have seen strong agrichemical sales in Brazil, where farmers have been fighting growing pressure from Helicoverpa moth caterpillars, so-called corn earworm, which attacks the likes of soybean and cotton crops too.

However, groups such as Syngenta which sell seed also have seen this market sapped by a drop in Brazilian sowings of safrinha, or second crop, corn, besides by the late start to the spring sowing season in North America, which witnessed an unusually long and harsh winter.

BASF reported a 1% drop to E19.5bn in group revenues for the quarter, while underlying operating profits fell 3% to E2.1bn, in line with market expectations.

Underlying operating profits in agriculture rose 2.4% to E510m.

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