Agriculture companies from Norway to Poland to Lithuania slumped on dimmed sales prospects after Russia’s ban on food imports from the U.S. and Europe while a Brazilian meatpacker and a Turkish chicken producer rallied.
Minerva SA, Brazil’s third-largest beef producer, climbed to a 16-month high on speculation the ban will lift sales. Banvit Bandirma Vitaminli Yem Sanayii Ticaret AS, a Turkish chicken breeder, added 4.1 percent. Marine Harvest ASA, the world’s largest salmon farmer, posted the biggest decline in almost three years in Oslo.
Russia slapped import bans on an array of food goods from the U.S., European Union, Norway, Canada and Australia, including all cheese, fish, beef, pork, vegetables, fruit and dairy products. The curbs target nations that sanctioned or supported punitive measures against Russia amid a standoff over Ukraine as Russia’s military masses troops across the border.
Retailers in Russia can replace food imports from “places like Turkey, Egypt, Argentina and Brazil,” Natalia Kolupaeva, an analyst at ZAO Raiffeisenbank in Moscow, said by telephone. “For countries like Latvia and Poland, there will be big material losses.”
Chilean salmon producers Empresas AquaChile SA and Multiexport Foods SA rallied. Russia accounts for 6 percent of Chile’s salmon exports, with 17,145 tons sold in the first half of the year, according to data from industry group SalmonChile.
Brazil sees an opportunity to boost beef, pork, poultry, corn and soybean exports to Russia because of the U.S. and European ban, agriculture policy secretary Seneri Paludo said.
“That’s a good opportunity for Brazilian exporters,” said Sandro Fernandes, a trader at brokerage firm Geraldo Correa in Belo Horizonte, Brazil. “Investors are optimistic about the prospects of their sales to Russia now.”
Imported goods account for as much as 25 percent of retail sales in Russia, Andrey Karpov, the executive director of the Retail Companies Association, said by phone yesterday. Russia imported $43.1 billion of food and raw agricultural materials last year, including $36.9 billion from countries outside the former Soviet republics in the Commonwealth of Independent States, according to Federal Customs Service data.
In the U.S., there was little impact on shares of agriculture companies. Last year, the U.S. exported $1.2 billion of agricultural products to Russia, less than 1 percent of the total.
In Moscow, shares of OAO Magnit, Russia’s biggest food retailer, slid 5.2 percent, the most since March 3, on concern import restrictions will cut into revenue. The company’s ruble bonds due in September 2015 lost the most in three weeks, sending the yield up 2 percentage points to 11.53 percent.
Russia is embroiled in the worst standoff with the U.S. and its allies since the Cold War over Ukraine, where government troops are cracking down on pro-Russian insurgent strongholds in the east. The U.S. and the European Union have targeted Russia’s economy, expanding penalties last week, joined by Canada, Japan and Switzerland, after the downing of a Malaysian Airline System Bhd jet in a rebel-controlled area.
Norway’s 13-member Seafood Index retreated 7.8 percent, the most on record, after the ban, which cuts off the nation’s salmon farmers from Russia’s population of more than 140 million. Leroy Seafood ASA (LSG) dropped 8.3 percent.
Lithuanian dairy producers also tumbled, with shares of Rokiskio Suris falling 3.8 percent to the lowest level since December as volume surged to 23 times the three-month average.
“The most vulnerable to the Russian sanctions is Lithuania, where exports of the banned products to Russia are equivalent to 2.5 percent of gross domestic product,” analysts at Capital Economics Ltd. including Neil Shearing said in an e-mailed note. “Accordingly, a sudden stop in food exports to Russia could cause Lithuania’s economy to slow sharply.”
Graal SA, a Polish producer of canned fish, slumped 5.2 percent on 10 times the three-month average daily volume.
“More food will be imported from Belarus, Kazakhstan, and it can be arranged relatively quickly,” Evgeny Gavrilenkov, the chief economist at Sberbank CIB in London, said by e-mail. “It will take more time to increase imports from Latin America. Plus of course local producers will somehow increase supply.”
Food companies in Thailand and China, and African producers, may also benefit from the shift in Russia’s purchasing habits, Maarten-Jan Bakkum, an emerging-market strategist at ING Groep NV in The Hague, said by e-mail.