2024-08-30 07:15

Record summer heat and drought wither crops Worries of climate change grow as weather changes Wine could be rare bright spot as grapes sweeten BACKI PETROVAC, Serbia/RAHOVEC, Kosovo, Aug 30 (Reuters) - Rastislav Pucovski held a fistful of soy beans shriveled to the size of peppercorns on his farmland in northern Serbia where the soil, dried to dust by drought, swirled in the wind. A brief rain shower, the first in over 40 days, offered no relief. The surrounding fields, near the town of Backi Petrovac, remained parched, the corn and soy crops withered. "Everything is bone dry," said Pucovski, 48, as he surveilled his land this week. "I don't know how we will sell it." Serbia, like much of the Balkans, experienced its hottest summer on record, fuelled by repeated heatwaves that pushed temperatures above 40 degrees Celsius (104 degrees Fahrenheit). The heat, coupled with drought, has strained the region's fragile power grid, reduced key water reserves and led to crop failures. It has also raised concerns about creeping climate change, including erratic rainfall and higher temperatures that much of southern Europe is already experiencing. Balkan wine growers say they could be rare winners because the hot weather has boosted the sugar content in their grapes. But corn, soy, sunflowers and some vegetables can be devastated, farmers said. Agriculture accounts for around 6% of Serbia's GDP. Preliminary data by producers suggest Serbian corn yields may drop by about 20%. One problem is water access. Serbia, which has historically enjoyed plenty of rain, only irrigates 1.4% of its agricultural land, Statistics Office data show. Hundreds of millions of euros would be needed for it to reach the global average of 17% of farmland under irrigation, said Belgrade-based agricultural analyst Branislav Gulan. He expects farming revenue losses this year of around 500 million euros ($554.35 million) because of drought. In neighbouring Bosnia, drought may halve the corn yield to 4.5-5 tons per hectare, said Dragan Mandic, an expert at the Agricultural Institute of Bosnia’s Serb Republic. Dejan Jovanovic, a farmer from the Bijeljina region, said his crops "were devastated." "The corn leaves are paper-white and crumbly, the grains are tiny." GRAPES BY NIGHT The hot weather has drastically altered the grape harvest in the Balkans this year. Producers have been forced to pick grapes earlier than anyone can remember. Some harvests will be smaller but the quality will be better, producers said. In Croatia's eastern Ilok region, the headlights of grape harvesting machines pierce the dark lanes between vines. Wine makers have started picking at night because the grapes begin fermenting too fast when picked in the heat of the day. "It's better to harvest at night because it is not so hot," said Darko Sili, a machine driver. This year's harvest will be nearly a month earlier than usual and could be up to 30% smaller due to the heat, said Vesna Stajner, a spokeswoman for the Ilocki Podrumi winery. In Kosovo, picking began in August, also a month earlier than last year. Owners said they scrambled to find pickers so early in the season. Dozens of workers gathered at dawn in the vineyard of the Stone Castle winery near the southern town of Rahovec. “Our great grandparents cannot remember grapes being harvested so early,” said Nebi Duraj, grape production coordinator at Stone Castle. There's an upside. “It is like eating sugar,” a worker in his 60s said as he filled his mouth with white grapes. Duraj said the wine quality would be better than ever this year because of the sweetness, which turns to alcohol. “When you look for wine in the coming years, ask for the 2024 vintage.” ($1 = 0.9020 euros) Sign up here. https://www.reuters.com/business/environment/wine-wins-crops-lose-farmers-grapple-with-record-balkans-heat-2024-08-30/

2024-08-30 06:54

KUMAGAYA, Japan, Aug 30 (Reuters) - Grappling with a rice shortage after extreme weather ravaged last year's crop, Japan is hoping new heat-resistant varieties of its staple food can help stave off future supply shocks. Last summer's high temperatures and dry conditions led to lower rice yields in key growing regions and damaged the quality of grains, contributing to the lowest inventories seen in 25 years, according to official data. Along with higher demand - partly attributed to record inbound tourism this year - supermarkets across the country have struggled to keep rice shelves stocked in recent months and some have imposed quotas on how much customers can buy. The local government in Saitama, a prefecture north of Tokyo that is one of the hottest regions in the country, hopes science can avert future shortages and is pushing ahead with one of several nationwide projects to develop more resilient rice. "It's going to keep getting hotter, which makes me feel that without varieties that resist high temperatures, this is going to become a very tough job," said Yoshitaka Funakawa, a 73-year-old farmer who is participating in the trial run for Saitama's heat-resistant rice called emihokoro or 'beaming smile'. Japan sweltered in its warmest July on record in 2024. High heat disrupts the accumulation of starch inside rice grains, causing them to appear more opaque, mottled with white flecks and less desirable for human consumption, impacting the crop's market value. "The more this cloudy, white phenomenon there is on rice, the grade of rice decreases, which leads to declines in farmers' income," said Naoto Ooka, who oversees rice breeding at Saitama's Agricultural Technology Research Centre. At the centre, researchers take seeds from across Japan, cultivate and cross-pollinate them in a drive to create more resistant varieties like emihokoro, which has been planted in 31 fields as a trial this year. Rice is a source of pride for Japan, renowned for premium grains that are the base for signature dishes like sushi, but it is also a widely consumed food. Rice is also one of the few staples the nation has historically been able to be self-sustainable in producing. The world's fourth-largest economy imports more than 60% of its food resources. Last year's poor yields are among the factors that have driven up prices sharply. Private rice inventories in Japan amounted to 1.56 million tonnes in June 2024, the lowest end-of-season volume since 1999 when comparable data was first collected, according to the agriculture ministry. Inflation data for July released last week showed rice, excluding the famous 'koshihikari' premium brand, saw the highest rate of price increase in over 20 years. At a branch of the Akidai supermarket chain in western Tokyo, shelves normally stocked with bags of rice were largely empty. The supermarket chain's president Hiromichi Akiba said wholesalers have been unable to fulfil its orders, and sometimes they cannot deliver any rice. While the current shortage may be relieved when a new crop becomes available as early as September, tight supply is expected to remain through next year with hot weather posing risks for upcoming harvests, research firm BMI said in a report this month. Meanwhile, the government is increasingly concerned that climate change will threaten its most important crop longer term unless action is taken. An agriculture ministry report released in July showed paddy rice yields in Japan are projected to decline about 20% by 2100 compared to the previous century. The ministry said shifting to high temperature-tolerant varieties was the most important measure to address the impact of climate change on rice crops and possible future shortages. ($1 = 143.9500 yen) Sign up here. https://www.reuters.com/markets/commodities/sweltering-summers-ravage-crops-japan-bets-heat-resistant-rice-2024-08-29/

2024-08-30 06:51

SHANGHAI/BEIJING, Aug 30 (Reuters) - Major state-owned banks were buying dollars in China's onshore foreign exchange market on Friday to slow down a rising yuan, four people with knowledge of the matter said. The banks' actions come as the yuan strengthened to an eight-month high of 7.0895 per dollar, breaking chart resistance at 7.1 and erasing year-to-date losses. The people requested anonymity because they are not authorised to talk about market matters publicly. China's state banks usually act on behalf of the central bank in the country's foreign exchange market, but they could also trade on their own behalf. Reuters reported last week that Chinese authorities have worked behind the scenes to ensure the currency does not spike abruptly, which could roil fragile domestic financial markets and hurt exporters. Markets are also keenly focused on whether sharp gains for the currency could prompt exporters to start converting an estimated $500 billion in accumulated receipts into yuan. The yuan traded at 7.0936 per dollar as of 0625 GMT. Sign up here. https://www.reuters.com/markets/currencies/china-state-banks-buying-dollars-amid-rapid-yuan-gains-sources-say-2024-08-30/

2024-08-30 06:46

TOKAR, Sudan, Aug 29 (Reuters) - Since floods swept away their home in eastern Sudan, Ahmed Hadab and his family have survived by drinking water mixed in with milk from his last surviving goat. "We don't have any food," he said after days of walking, trying to find something to eat, somewhere else to stay. "The sorghum and flour was taken by the torrent, and two of my goats and my donkey." Floodwaters from heavy rains that started surging in earlier this month have brought devastation across a country already shattered by 500 days of fierce fighting between the army and paramilitary Rapid Support Forces. Now, the natural disaster has spread destruction further than the conflict. Near the town of Tokar, in the country's eastern region which has so far escaped the violence, a Reuters reporter saw people pulling each other out of the water onto the remnants of a bridge with ropes. Elsewhere in the eastern Red Sea State, the Arbaat Dam collapsed on Sunday, threatening the freshwater supply for Port Sudan, the country's de facto capital, up to now a relative refuge for the government and aid agencies and hundreds of thousands of displaced. At least 64 people from the area are missing. Others are stranded on higher ground with no food and little hope of rescue, according to locals. Many hundreds of households are also displaced in Sudan's Northern State, another region largely untouched by the fighting, according to the United Nations. In Darfur, where millions are threatened with extreme hunger, the rain has damaged displacement camps and delayed the arrival of crucial aid according to the World Food Programme. The U.N. estimates that, over all, more than 300,000 people are impacted by the flooding. It has brought cholera for the second year running with 1,351 cases reported as of Wednesday, likely an undercount as the army-aligned health ministry struggles to access the large portion of the country occupied by the RSF. Abulgasim Musa, head of Sudan's Early Warning meteorological unit, said that the extreme rains that have unusually hit desert areas were likely caused by climate change. His unit had warned about them in May, he said. In the land around Tokar, Mohamed Tahir joined scores of others on the roads. An underfunded and overstretched aid effort has meant that only a few construction vehicles are dotted around the region helping carry people across the flood water and fixing routes so they can escape. "Homes are collapsed. There's some who have been taken by the water and not been found," Tahir said. "There are some who have died and they haven't been buried." Sign up here. https://www.reuters.com/world/africa/sudans-rains-spread-wartime-suffering-across-country-2024-08-29/

2024-08-30 06:33

KARACHI, Aug 30 (Reuters) - Heavy rains and stormy winds forced authorities in Pakistan's largest city, Karachi, to close schools on Friday, after a deep depression in the Arabian Sea that the weather office says could develop into a cyclonic storm. Parts of Karachi received 147 mm (5.79 inches) of rain overnight, the local weather office said, and the city's mayor, Murtaza Wahab, in a post on X, asked residents to avoid "unnecessary movement". The deep depression which is off the Rann of Kutch in India's Gujarat, is expected to intensify into a cyclonic storm on Friday, India's weather office said, adding that it would move north-west over the Arabian Sea in the next two days. Authorities in Pakistan asked fishermen and sailors not to venture out to sea, and warned that the storm is likely to result in flooding in cities as well as flash floods in hilly areas in coming days. More than 28 people died and around 18,000 have been evacuated since Sunday from cities near the Gujarat coast, disaster management authorities said on Thursday, even as more rain was expected in the state as the cyclonic storm builds up. The formation of a cyclonic storm over the Arabian Sea in August was a rare occurrence, the Indian Express newspaper reported, saying the last such storm was in 1964. Sign up here. https://www.reuters.com/business/environment/schools-pakistans-karachi-closed-rare-august-cyclone-builds-up-2024-08-30/

2024-08-30 06:02

LONDON, Aug 30 (Reuters) - While there has been a lot of talk about the West's strategic decoupling from China's sputtering economy, Europe's direct trade links with Beijing have actually been deepening. This difference may help to explain some of the divergence in monetary easing between the Federal Reserve and the European Central Bank. The latter is expected to deliver a second interest rate cut before the Fed even gets going next month and will likely move a third time in October. If China's economy keeps stumbling, this divergence between the Fed and the ECB could grow. Worries continue to mount about the state of the world’s second-biggest economy. China keeps slowing despite Beijing’s multiple efforts to stimulate domestic demand, the country’s property bust shows no signs of letting up, consumer and producer price deflation lurks, and trade tensions are mounting. The potential drag on the global economy from China's slowdown was a concern raised by central bankers gathered at the Federal Reserve's Jackson Hole symposium last week. And then this week investment bank UBS cut its 2025 China growth forecast to just 4% - far below Beijing's 5% target and the 5.1% forecast by the International Monetary Fund. While China's weakness will obviously affect both the U.S. and Europe, the latter seems to be in much bigger trouble. The Peterson Institute for International Economics, a Washington-based think tank, this week crunched the latest customs-cleared data through last year and highlighted the extent of this divergence. The PIIE report showed that while the United States reduced its dependency on Chinese imports sharply in the five years through 2023, the share of EU imports originating in China has actually grown. The deepening trade links between China and the EU are even more pronounced when zeroing in on manufactured goods. While China relies on the United States for less than 10% of its manufactured imports, it purchases more EU goods than it did five years ago. The EU's strong ties with China are further underscored by the fact that the yuan accounts for more than 18% of the euro's trade-weighted index, about 5 percentage points more than its share in the dollar's equivalent. PIIE authors Mary Lovely and Jing Yan offered a 'geo-economic' take on these trends. "Despite efforts by the Biden administration to convince the European Union to wean itself off Chinese imports, the opposite is happening. Europe has grown more dependent on China in recent years as the United States has become less so," they wrote. "This increasing divergence in US and European economic interests may make it harder for them to agree in the future on national security and technology policies involving Chinese imports." But for most investors the takeaway may be a lot simpler: Europe's relative economic exposure to China is still massive and has serious implications for growth, inflation, and, by extension, central bank policy. CHINA CHANNEL This data set covers a pivotal period in U.S.-China relations. It includes the tariff wars of Donald Trump's presidency, the impact of the pandemic and the Ukraine/Taiwan-related geopolitical and security tensions that have further curbed U.S. investment and trade with China. There has also been the much-documented 'near-shoring' or 'friend-shoring' trend that has diverted trade with China to countries such as Mexico or Vietnam. No matter who wins the race for the White House this November, there is little chance that the next administration will be willing to row back standing China trade curbs. And there is a significant risk that these tensions will be ratcheted higher. On the other side of the pond, Europe has made noise about reducing its exposure to China, but any action on this front has been limited. So if China's growth and deflation worries persist or even worsen, then the EU's still-rising relative exposure to Beijing could leave the ECB with a much different macro policy horizon than its U.S. counterpart. Financial markets have tended to view the ECB and Fed monetary policy cycles as joined at the hip, but that doesn’t appear to be the case this cycle. The ECB has started to cut well in advance of the Fed, and U.S. policy rates are currently more than 150 basis points above ECB equivalents. The effect of China headwinds may be one reason why the ECB has been willing and able to jump the Fed gun this year and may mean that the ECB will need to stay multiple steps ahead of the Fed going forward. And yet investors don't appear to be pricing in these assumptions. Money markets expect 50 basis points more Fed easing over the next year than they expect from Frankfurt. And the euro has recently ascended to a one-year high against the dollar. This raises a question of what will happen to relative pricing if things in Beijing deteriorate further. There's little doubt China still packs a huge punch for the global economy at large, with recent estimates showing it provides 35% of the world's gross manufacturing production. But what investors may need to focus on more is how much harder that punch could land in Europe. The opinions expressed here are those of the author, a columnist for Reuters Sign up here. https://www.reuters.com/markets/europe/ecb-hurry-may-owe-much-deepening-eu-china-trade-mike-dolan-2024-08-30/