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Those fretting about the global scarcity of high quality wheat have one more reason to worry: heavy rains at the wrong time in Australia, one of the world’s biggest exporters of the grain.
Just as farmers were set to head into the fields and pull off a bumper harvest, sheets of heavy rain have battered crops across major growing regions in the country’s east, bogging down machinery and raising the risk of hefty downgrades that are likely to worsen a worldwide shortage of milling wheat.
The torrential downpours are typical of a La Nina weather event, which the Australian Bureau of Meteorology said on Tuesday had now commenced. The phenomenon brings above average rainfall to eastern and northern areas of Australia and to Southeast Asia, and dry weather to parts of the Americas.
“There’s no doubt that everyone is downgrading wheat, to the point where we are going to get 200% to 300% more feed wheat than a normal year,” said Ole Houe, chief executive of IKON Commodities. New South Wales state would be facing the greatest losses with around 30%-40% of total output at risk of being low-grade animal feed — up from around 8% in a normal year, he said.
Still, Australia is on track to produce a record 37 million tons of wheat this season, according to IKON, with output from Western Australia largely unaffected by the torrential rains. If conditions remain the same during the season, only 15%-20% of the national crop is likely to be downgraded to feed, said Houe, who added that even the feed will be met with “plenty of demand.”
Tesla CEO Elon Musk offered a flippant response to being sued for $162 million by JP Morgan Chase, threatening the nation’s biggest bank with a “one star review on Yelp.”
In the lawsuit, filed Nov. 15 in the US District Court of the Southern District of New York, JPMorgan accused Musk’s electric car company Tesla of stiffing the bank on a trade that JPMorgan helped arrange in 2014.
In a statement, JPMorgan said, “We have provided Tesla multiple opportunities to fulfill its contractual obligations, so it is unfortunate that they have forced this issue into litigation.”
Musk struck a more joking tone.
“If JPM doesn’t withdraw their lawsuit, I will give them a one-star review on Yelp,” Musk said in response to requests for comment from The Wall Street Journal.
“This is my final warning!” he added.
Musk and JPMorgan CEO Jamie Dimon have feuded behind the scenes for years, with the conflict only recently spilling into public view with the lawsuit, the Journal reported.
Conversations between the two companies have regularly upset executives from both companies, the Journal reported, citing people familiar with the matter.
The conflict between Tesla and JPMorgan may have led the bank to miss out on business with Tesla, which has become an increasingly important client on Wall Street as its stock price has soared in recent years.
JPMorgan worked on Tesla’s IPO in 2010 as well as several deals in the years that followed, but the bank was usually ranked behind rivals such as Goldman Sachs and Morgan Stanley, according to the Journal.
In the past decade, JPMorgan has made about $15 million for advising Tesla and working with the electric car maker on deals while rival Goldman has made about $90 million in the same period, the report said.
But the bank hasn’t done any work with Tesla since 2016, according to public records collected by the Journal.
And in Musk’s personal capacity dealing with finances, he’s spurned JPMorgan, instead using Morgan Stanley, Goldman and Bank of America.
According to people familiar with the matter, JPMorgan’s consumer bank was hesitant to back Tesla early on because the bank questioned the long-term viability of electric vehicle batteries, the Journal reported.
But later, bank executives sought to strike an agreement with Musk in which Chase would become the primary lender to Tesla buyers at dealerships, according to the Journal.
Musk declined and now, JPMorgan struck a deal similar to the one they once sought from Tesla with rival electric truck maker Rivian, the report said.