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DuPont underlines fears over US sowing delays

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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.

'Substantial frost'

There has been talk of "substantial frost in the ground", after the cold winter, Steve Kahler, chief operating officer at Teucrium Trading, said.

"Some say two foot of frost. Others say up to 54 inches. It's a subject to watch," Mr Kahler told

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 again'

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," Doane said.

Mild weather

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.

"Conditions are 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.

"Weather models 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".


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