RSS
Twitter
Linked In
News In
News
Linked In
RSS
https://twitter.com/Agrimoney
http://www.newsnow.co.uk/h/Industry+Sectors/Agriculture

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

China slowdown reaches agriculture groups

Twitter Linkedin

The slowdown in Chinese economic growth, which wobbled world markets, has reached the agriculture businesses, with Asian Bamboo revealing a dropping sales hopes and warning of "serious difficulties" among rivals.

The China-based bamboo producer - which in August forecast that consumer demand would "not be significantly impacted by any economic slowdown", as its consumers were "largely price insensitive" – acknowledged that orders had in fact suffered.

"Weakness in export markets and domestic credit tightening is having an impact on demand from small and medium sized companies," the German-listed company said.

The company was set to miss full-year targets for sales of bamboo trees, bought largely by construction, furniture and pulp industries.

Chinese slowdown

The warning comes the day after China revealed economic growth at an annual rate of 9.1% in the July-to-September, the lowest for two years, and less than the market had anticipated.

The data caused losses on many markets before hopes for a resolution to the eurozone crisis revived sentiment.

And, in further evidence that the Chinese slowdown was reaching agribusiness, weekly inflation data revealed the first food price falls since mid-August.

The data showed that government measures, which have included credit squeeze and price controls, for controlling food inflation had been "effective", Ker Chung Yang, analyst at Singapore-based Phillip Futures analyst, said, adding that this result looked likely to encourage further restrictions.

"We expect Beijing to [retain its] current stance of controlling food prices," Mr Ker said.

Size matters

Asian Bamboo added that many of its rivals were faring even worse, with "many smaller competitors experiencing serious financial difficulties".

The credit restrictions that China has engineered in an effort to ease inflationary pressures have tended to impact smaller companies most.

"Those that had access to bank credit lose it, and those that never had access find that the cost of informal financing rises," Standard Chartered analyst Wei Li said.

Indeed, Asian Bamboo said that it might, longer term, "benefit from the economic slowdown" if it knocks out competitors denied access to loans.

French loan

The group revealed that it had itself agreed a E20m loan from French-based Proparco, the emerging market- focused private equity group, whose other investments include a $50m loan to sugar group Tereos Internacional for a cane operation in Brazil.

Asian Bamboo has in turn, besides agreeing to pay interest, handed Proparco options over 143,900 shares, to be exercised between three and seven years' time, and with a strike price of E26.34 a share.

The loan agreement - plus backing from a Western investor at a time when fraud claims have put the accounting of Chinese groups under scrutiny – helped Asian Bamboo shares gain 0.4% to E11.50.

By Agrimoney.com

Twitter Linkedin
Related Stories

Festive staff shortages 'likely' as British growers cut ties with UK supermarkets

Faced with mounting concerns over labour shortages and fears they may not be able to fulfil retailer contracts, some British growers have sought to cut ties with UK supermarkets in favour of companies elsewhere in Europe.

Hard Brexit to have 'catastrophic' effect on European meat industry; new report

A hard Brexit will have a ‘catastrophic impact’ on the European meat industry, according to a report published by Europe’s meat industry body, UECBV, as the UK and EU continue negotiations.

Manufacturers stockpile agrochemicals in bid to keep post-Brexit prices down for farmers

Manufacturers of crop protection products are stockpiling agrochemicals in warehouses in a bid to keep input costs down for farmers after Brexit, according to the chief executive of the Crop Protection Association, Sarah Mukherjee.

Dairy groups sidestep shockwaves from GDT price slump

Indeed, shares in the likes of A2 and Beston soar. Still, that does not mean there are no losers from the dairy price falls...
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© Agrimoney.com 2017

Agrimoney.com and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069