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Wheat May Take Over From Corn as Grain Market Driver, FAO Says

Wheat May Take Over From Corn as Grain Market Driver, FAO Says | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
Wheat may take over from corn as the driver of grain prices next year because of potential production setbacks, said Abdolreza Abbassian, an economist at the United Nation’s Food & Agriculture Organization.
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China to step up control on grain imports as stockpiles rise

China to step up control on grain imports as stockpiles rise | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

(Reuters) - China will strengthen control over grains imports and crack down on illegal activities like smuggling in a bid to cut oversupply, with record stockpiles creating storage problems for the new harvest, China's vice premier said on Friday.

China's stockpiling policy, under which it buys from farmers at inflated prices, has made cheaper overseas supplies more attractive for end-users like feed mills, forcing the government to take action to try to curb surging imports.

"We will strengthen import and export controls for grains while severely cracking down on irregularities like smuggling in order to stabilizes the domestic market," vice premier Wang Yang said at a national conference.

China's rejection of cheap U.S. corn cargoes on the grounds that it contained a genetically-modified strain not permitted for import was also seen as part of Beijing's efforts curb cheap imports and support domestic corn prices.

But buyers in the world's No.2 corn consumer have turned to non-traditional exporters, including Bulgaria and Ukraine, to fill the gap following the restrictions on U.S. supplies. There has also been an increase in smuggling.

"The wide price gap between domestic and overseas markets has spurred an increase in grains imports. Stockpile of autumn grains face many difficulties and problems," said Wang, according to a transcript of his speech published on China's official government website.

The gap between U.S. and domestic corn prices <0#ASCORN-CN> is at a record high as a huge American crop has pushed down prices there while China's support for corn growers has remained unchanged. Beijing pays farmers 2,220-2,260 yuan ($362.9-$369.5) per ton for corn. U.S. corn is now at $143 per ton.

Commercial storage facilities should be used and more companies will be encouraged to stockpile grains in order to ensure that farmers are able to sell their crop, Wang said.

China does not reveal details of its total grain stockpiles, but analysts estimate the country was sitting on close to 100 million tonnes of corn stocks - equivalent to about half annual domestic consumption - before the current harvest began. 

Industry analysts expect Beijing to stockpile a big volume of corn for a third year in a row in the marketing year to September 2015.

Wang said China is facing new challenges with respect to boosting rural income and production amid an economic slowdown and sliding fiscal revenue, adding that with production costs rising, the government is forced to offer more and more subsidy to keep farming profitable. 

Overuse of resources and environmental pollution have also threatened sustainable development, he said.

(Reporting by Niu Shuping and Dominique Patton; Editing by Himani Sarkar)

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Dozens of lawsuits filed over Syngenta's release of GMO corn seed that China refuses to buy

Dozens of lawsuits filed over Syngenta's release of GMO corn seed that China refuses to buy | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

DES MOINES, Iowa - Agrochemicals giant Syngenta is facing a growing number of lawsuits challenging its release of a genetically modified corn seed that China had not approved for import, with losses to farmers estimated to be at least $1 billion.

More than 50 lawsuits have been filed in 11 major corn-growing states, including Illinois, Iowa, Missouri and Nebraska with hundreds more being prepared. Some suits are from farmers represented by individual attorneys, others are class-action lawsuits representing hundreds more.

A federal court panel that manages complex lawsuits involving large numbers of plaintiffs has scheduled a Dec. 4 hearing in Charleston, South Carolina, to decide where to consolidate the cases. It's likely to be in Iowa or Illinois, according to Rick Paul, an attorney representing 13 farmers who filed suit in federal court in Iowa.

The legal dispute centres around Syngenta's sale of a hybrid corn seed called Agrisure Viptera, which was genetically altered to contain a protein that kills corn-eating bugs such as earworms and cutworms. The U.S. Department of Agriculture approved it in 2010, and Syngenta first sold it to farmers in 2011.

It has been industry practice for biotech seed developers to wait until major trade partners have approved new products before selling it widely, Paul said. But China, a growing importer of U.S. corn that refuses to buy genetically modified crops it hasn't tested, had not approved Viptera.

China discovered the Viptera corn trait in several U.S. shipments in November 2013 and in February began rejecting the nation's corn. It has rejected more than 130 million bushels as of late October, the lawsuits say.

Damages have been estimated to exceed $1 billion for the last nine months of the marketing year ending Aug. 31, according to research by the National Grain and Feed Association, a grain marketing trade group.

Exports of U.S. corn are down 85 per cent this year compared to 2013 and that has driven down corn prices, according to the 13 suits filed in federal court in Des Moines, Iowa.

"The loss of a large purchaser of U.S. corn like China as a result of the Viptera contamination has had a sudden and calamitous impact the U.S. corn market," Iowa farmer Ward Graham says in his lawsuit.

Graham, 47, who farms 700 acres of corn and soybeans, said he believes the impact is extensive. "Even for a small farmer like me when these markets are just depressed like this because of exports it's a huge number," he told The Associated Press on Monday.

A Syngenta spokesman said the right of U.S. farmers to use the newest technology to improve profits should not be dependent on the approval of other countries.

"Syngenta believes that the lawsuits are without merit and strongly upholds the right of growers to have access to approved new technologies that can increase both their productivity and their profitability," spokesman Paul Minehart said in a statement.

He said the company has been in full compliance with regulatory and legal requirements for the new seeds.

The lawsuits seek to compensate farmers for the alleged lost market and additional money to punish Syngenta. Since many factors affect corn prices, the lawyers representing farmers must prove the extent to which the Viptera trait contributed to falling corn prices.

Graham said he hopes the legal actions lead to a new precedent, "that makes it mandatory that they get approval for exports and trade overseas before they release this stuff out to the farmer and put it in the food chain."

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Pro-neonic scientists stay quiet as debate rages

Canadian scientists who believe insecticidal seed treatments are safe are not contributing to the debate over neonicotinoids over fears of how other researchers and environmental groups will react.

Ontario environment minister Glen Murray and provincial environment commissioner Gord Miller said earlier this month that neonics are a greater threat to Canada’s ecosystem than DDT.

Few, if any, Canadian toxicologists and environmental scientists responded.

Canadian scientists who spoke off the record said that publicly challenging these sorts of comments has become hazardous to their careers.

They said that fellow academics and environmental groups launch verbal assaults to destroy their reputations if they say neonics are safe. Consequently, scientists aren’t speaking up to defend neonics because it’s not worth the hostility.

Neonics, which are applied as a seed treatment to almost all corn and canola in North America and a percentage of soybeans, have been linked to bee colony losses across the United States and Canada.

Beekeepers in Ontario filed a $450 million class action suit against neonicotinoid manufacturers Syngenta and Bayer in September, claiming production losses dating back to 2006.

University of Saskatchewan research suggests neonics are present at detectable levels in sloughs and wetlands in Western Canada. The neonics are possibly killing insects that come in contact with the water. A lack of insects reduces the food supply for birds that rely on the insects.

A highly regarded toxicologist said the environmental risks surrounding neonicotinoids are “overstated.” Data indicates they are present in wetlands and other water bodies, but the concentrations are in the parts per trillion, which is essentially nothing.

He said the true “believers and zealots” hype the neonic risk and use “their research to make an issue where none exists, or make it larger to garner press for the ego and funds for the lab.”

Still, the scientist, and others like him, is reluctant to speak up.

An environmental scientist said this case is more unusual than most because the attackers are often other academics.

May Berenbaum, an entomology department head at the University of Illinois and vice-president of the Entomological Society of America, said fellow academics haven’t attacked her reputation, but when she publicly says neonics are not the sole reason behind honeybee decline, she does receive malicious emails from the public, many accusing her of being in the pocket of industry, which she said is not true.

Berenbaum is more shocked that fellow scientists have lowered their academic standards when it comes to neonics. She said prominent journals are publishing sub-standard science on insecticidal seed treatments and bees.

“There are a lot of papers that aren’t, I would say, scientifically bulletproof, that have appeared in very high profile journals…. It’s the classic line. Why is this in Nature? Why is this in Science?” she said.

“That seems to be all over the place, and there certainly are egregious examples…. It appears to be easier to publish a high profile paper that demonstrates adverse impacts of neonicotinoids, than it does to publish a (no effect) paper.”

A Canadian researcher said most reviewers are hostile to insecticide seed treatments, so research showing neonics are safe is highly scrutinized. Meanwhile, papers concluding insecticidal seed treatments are dangerous to bees are less thoroughly judged.

Berenbaum said claiming that neonicotinoids are worse than DDT is a good public relations strategy.

“Even though it’s been banned in the U.S. since 1972, it’s the one they (people) know. It’s familiar and it’s like DDT is the Hitler of pesticides. If it (neonics) is worse than DDT, then it is worse than Hitler.”

  • About 7,000 beekeepers maintain about 600,000 colonies in Canada. About 80 percent of colonies are owned by commercial operators, while 20 percent are owned by hobbyists.
  • Alberta, Saskatchewan and Manitoba have about 475,000 colonies and produce 80 percent of Canada’s honey. Many colonies are used in pollination of hybrid canola.
  • Prairie beekeepers average 2,000 colonies per operator.
  • Operators in Eastern Canada and British Columbia average 600 colonies per commercial beekeeper. Most commercial beekeepers are involved in pollination services for the horticulture industry, especially blueberries and apples.
  • Canada produces 75 million pounds of honey each year. About one-third of that is produced in Alberta, one-third from Saskatchewan and Manitoba combined, and the final one-third is produced by the rest of the country.
  • Half of all honey Canada produces is exported, about 85 percent of that goes to the United States.
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Farmland values due for a slight decline, Purdue analyst says

WEST LAFAYETTE, Ind. - With crop prices at multiyear lows and interest rates expected to inch up over the next few years, a Purdue University agricultural economist believes the decade-long increase in farmland values might soon be over.

But Michael Langemeier, associate director of the Center for Commercial Agriculture, says any decline should be relatively slight and spread over more than one year.

"We are looking at about a 5-10 percent correction over each of the next three years," he said. "It's normal for a market that has been so strong to take a little breather."

According to the Purdue Farmland Value Survey, Indiana farmland nearly tripled in value from 2003 to 2013, rising from an average of $2,509 per acre to $7,446 per acre.

Langemeier said the rally was due in large part to the increased production of corn-based ethanol and strong export markets for soybeans, which drove crop prices higher and made farmland a more attractive investment.

But corn and soybean prices have been in a tailspin recently, falling to their lowest levels in five years on expectations of a record yield and a large global grain surplus.

"Commodity prices do have an impact on farmland values, but they're not the only factor," Langemeier said. "What happens with interest rates will also help determine the severity and length of any downturn in farmland values."

Interest rates have been held in check for the past five years by a slumping economy.  In periods of recession or slow economic growth, the government tends to keep rates low to stimulate economic activity. Lower interest rates make it less expensive to borrow money for large purchases, such as farmland.

But with the national economy beginning to show signs of recovery, a short-term rate hike is likely sometime in 2015, Langemeier said. Higher interest rates typically mean lower demand for farmland.

"That would put some additional downward pressure on the market," he said, "but federal policymakers are not likely to raise rates too high and risk sending the economy back into recession."

A decline in cash rental rates is also likely, Langemeier said.  If current price projections hold, cash rental rates are expected to drop 5-10 percent in each of the next three years.           

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Potash Corp.: Good Days Ahead

Potash Corp.: Good Days Ahead | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
  • The Uralkali mine incident could lift potash prices.
  • The weakening Canadian dollar will reduce production cost.
  • Higher free cash flow will provide more room for dividend payment in 2015.

This week, Uralkali (OTC:URALL) suspended work at its Solikamsk-2 mine in Russia due to an inflow of salty water. The mine accounts for 20% of the company's capacity and about 3.5% of global output. Solikamsk-2 and the Solikamsk-1 mine are separated by a concrete dam. Under the worst-case scenario, flooding at both the mines will affect Uralkali's capacity by 3 million tons per annum, or 5% of global output. This incident could lift global potash prices, which collapsed after Uralkali broke its trading alliance with Belarus last year. Potash producers are yet to sign contracts with Asian customers for the next year. The potash spot price for China may rise from $305 per ton in 2014 to $340 per ton in 2015. Similarly, the potash spot price for Brazil may rise from $380 per ton to $400 per ton in Q1 2015.

Potash Corp.(NYSE:POT) has annual potash capacity of 12.4 million tons. The company plans to increase its capacity by 2.4 million tons in 2015. We expect Potash Corp. to benefit, since Uralkali's capacity is affected. By the end of 2014, Potash Corp. plans to reduce costs by $15 to $20 per ton compared to 2013. Till now, the company has reduced costs by $18 per ton on a cash cost basis.

(click to enlarge)

The U.S dollar rose sharply in the last few months on account of positive U.S economic data. The Fed could hike short-term interest rates in mid-2015 if the U.S. economy continues to improve and inflation picks up. We expect that the rising U.S. dollar will add further pressure on the Canadian dollar, which will translate to lower production costs for Potash Corp. in Q4 2014 and in 2015.

Higher potash prices plus higher volumes and lower production costs will increase Potash Corp.'s operating cash flow. The company's capital expenditure is intended for potash expansions. The Raconville will be up by 2016, while the Piccadilly will be up by 2017. Potash Corp.'s capex is expected to be around $750 million per year. Thus, the company will have significant free cash flow after capex, which can be used for dividend payments. In 2014, Potash Corp. paid a total dividend of $1.40 per share. We expect the company to maintain that trend in 2015.

Final Thoughts

Higher potash prices, reduced production cost, and lower capex will translate into higher free cash flow, which will be available to the company for dividend payments. We recommend investors buy Potash Corp. at the current levels.

Editor's Note: This article discusses one or more securities that do not trade on a major exchange. Please be aware of the risks associated with these stocks.

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Plan For 2015/16 Marketing Now

Although many 2014 crops are still unpriced, it’s not too early for producers to begin thinking about their 2015 marketing plan. An early read on the 2015 corn crop doesn’t suggest much in the way of a price recovery, with average farm prices of $3.50 per bushel, explains Tim Brusnahan, a vice president of Brock Associates.

“We’re looking at a 2-billion-bushel carryover for at least 18 to 28 months,” putting 2015/16 stocks-to-use at 14.8%, he noted on a webinar earlier this week. His outlook would represent only a slight improvement from USDA’s 2014/15 marketing year estimates of $3.40-per-bushel prices and stocks-to-use of 15.3%.

“We are set up for the potential of a good crop next year,” Brusnahan says. He looks for average or better corn yields based on current conditions. Unlike a year ago in the western Corn Belt, “we don’t have a lack of moisture in Corn Belt states,” he points out. That should set up crops well for April and May, though it’s far too early to make predictions about the critical pollination period.

Still, it’s important for producers to evaluate corn price prospects in the next marketing year to develop risk management strategies, even with a widely anticipated shift to soybean acres in 2015, Brusnahan says.

Demand Lacking For Higher Corn Supplies. Of concern for producers is that “increased supplies aren’t showing robust increases in demand,” Brusnahan cautions. He predicts USDA’s January report will show corn stocks between 11.2 billion bushels and 11.3 billion bushels as of Dec. 1, a new record. It would take a reduction of between 400 million and 500 million bushels in carryover to between 1.4 billion and 1.5 billion bushels for significant price recovery of 50 to 80 cents, and he doesn’t see that happening barring unexpected events. Without carryover reductions, price increases will be limited to about a dime, he projects.

For soybeans, Brusnahan notes the major reason for the rally from October until recently has been speculators combined with net long positions. Longer term, though, he is bearish. For 2015/16, Brusnahan looks for soybean prices of between $7.50 per bushel and $8.60 per bushel. This compares to USDA’s 2014/15 forecast of about $10. Brunahan is bearish on soybeans because he thinks acreage could jump to between 86.5 million and 88 million acres, up sharply from 84.2 million in 2014 and 76.8 million in 2013. He sees 2015/16 stocks-to-use of 22.9%, up from the 14.6% USDA expects for the current marketing year. The recent rally led to increases in farmer selling for spot or January delivery, he says. As a result, soybeans have edged lower.

Ethanol Challenges Persist. For corn demand, Brusnahan projects significant challenges for ethanol growth. In large part, that’s because the U.S. Energy Information Administration projects less gasoline use in four of the next five quarters. That could reduce U.S. ethanol demand, as the blend wall limits the fuel to 10% of gasoline use.

“If ethanol stocks get too high, production will have to come down. Ethanol looks flat to us,” Brusnahan says. To maintain and grow use, ethanol exports are needed. A recent quarterly report from Archer Daniels Midland (ADM) adds perspective. ADM predicts stable U.S. ethanol use next year at 13.5 billion gallons but says exports could increase as much as 25% from an expected 800 million gallons this year.

Another problem for the ethanol industry is that China has “flat-out stopped distillers dried grain (DDG) imports from the U.S.,” he explains. Discussions on lifting sanctions didn’t go well, he adds, though long-term he thinks China could emerge as a major DDG customer.  In the U.S., DDG use is under pressure because corn has become more competitive. “Corn is cheap and its quality is good,” he says.

USDA’s Nov. 10 outlook predicts only marginal increases in exports during the just-begun marketing year, which pins major hopes for increases in corn demand on U.S. feed use. “We’re not seeing strong growth in livestock,” he explains. “Feed use is off to a low start.”

Livestock Expansion Ahead. Although livestock expansion hasn’t occurred yet in a major way, it will start to play out in 2015, says Thomas Elam, Farm Econ. With feed costs down 50% from 2012, low interest rates and an 8% increase in per capita meat and poultry purchases by consumers, “everything is lining up for expansion,” he says. “Cheap feed makes cheap meat.”

Moreover, meat export demand has increased sharply over the past decade, though a stronger U.S. dollar looms as a concern. The only question is how fast demand comes back. For pork, a key barrier to expansion has been the porcine epidemic diarrhea virus (PEDv). Its prevalence this winter will have a major effect on how fast production and feed use bounce back, Elam says.

The recovery will take time because of a smaller breeding herd, brought about by a decline in per capita meat consumption in 2008 and low profitability for producers. Reduced supplies might have created as much as 15 pounds per capita of unmet meat demand, Elam says. Moving forward, he predicts an increase in poultry demand; a flat pork market; and a declining market share for beef, whose production increases won’t occur for several years.

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Continental Grain mulls Wayne Farms IPO | Meat & Poultry

NEW YORK – Based on the high-flying performance of the chicken industry as of late and the cyclical nature of the business, an executive with the parent company of Wayne Farms, Oakwood, Ga., said taking the country’s sixth-largest poultry company public isn’t out of the question. According to a report in the Financial Times, Paul Fribourg, chairman and CEO of Continental Grain Co., discussed in a New York forum how the current commodities cycle for chicken favors consideration of a public offering for the company. Market conditions have shifted dramatically from several years ago when feed prices were high and chicken prices lagged.

“Today the cycle has gone to the other extreme, where you have incredibly high chicken prices and very low grain prices,” Fribourg said in the Times report. “It’s not going to last. So at the top of the cycle we’re now looking at ways to lock in either long-term margins, or possibly, for example, take our chicken company public,” he said.

Wayne Farms reports annual sales of approximately $1.9 billion and operates 11 processing facilities in Mississippi, Alabama, Arkansas, Georgia and North Carolina. Combined, the plants process 5 billion lbs. of poultry products per year.

Continental Grain Co. was founded in 1813 and is one of the largest privately held companies in the world with estimated revenues of $14 billion. It was one of the largest shareholders of Smithfield Foods before Shuanghui International [now known as WH Group] acquired the pork processor in September 2013.   

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Fed Plans to Stiffen Rules for Wall Street Commodity Businesses

The Federal Reserve may force banks to boost capital for their commodities businesses and improve disclosures after a Senate investigation found Wall Street’s role in energy and power markets could threaten financial stability.

In prepared remarks for a Senate hearing today, Fed Governor Daniel Tarullo said banks' control over assets such as oil, coal, aluminum and uranium poses “unique risks” that the central bank is seeking to rein in. The Fed plans to move forward on new regulations next year, he said.

“We are exploring measures such as additional capital requirements, enhanced risk-management requirements, and additional data collection and reporting requirements on physical commodities activities to help ensure that such activities do not pose undue risks,” Tarullo said.

This week, a Senate panel released findings from a two-year investigation that concluded Wall Street’s role in owning commodities provided unfair trading advantages and could threaten the financial system if a bank’s business suffered an industrial catastrophe. Tarullo faces questions today over why the central bank allowed lenders to erode what was once a strict line separating banking from commercial activities.

Weak Oversight

The Fed has drawn criticism from senators who allege it engaged in weak oversight over the last decade as banks expanded into new businesses involving aluminum warehouses, coal mines and trading in electricity and uranium.

“You’ve got to restore the separation,” U.S. Senator Carl Levin, said in an interview yesterday after he grilled executives from Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley (MS) at a hearing in Washington. “It’s gone way too far this integration. I don’t like the idea, frankly, of these banks being in physical commodities.”

The Senate Permanent Subcommittee on Investigations’ 400-page report said the Fed has “a current lack of effective regulatory standards” and an “uncoordinated, incoherent patchwork” of limits on banks.

A bank shouldn’t “ever be able to corner 80 percent of the world’s supply of any commodity and that should have come to the attention of the regulators,” Senator John McCain, the panel’s senior Republican, said in an interview yesterday. “We pass laws that appoint those regulators and obviously they didn’t choose to act.”

Higher Prices

At yesterday’s hearing, Levin sparred with Goldman Sachs (GS) executives for more than two hours over aluminum trading contracts between a bank warehouse subsidiary and clients. Levin said the deals led to long wait times for customers to get their aluminum out of warehouses, leading to consumers paying higher prices for the metal.

Jacques Gabillon, head of Goldman Sachs’s global commodities principal investments group, rejected the accusation.

“When everything is said and done, you can say there is no correlation” between wait times and price, Gabillon said.

Levin, a Michigan Democrat, responded that the executives were “in a very different mathematical world” if they wouldn’t acknowledge the connection.

The Senate report referenced a 2012 Fed study of four banks that found each had capital and insurance shortfalls for commodity units of as much as $15 billion. That meant that if each bank experienced a catastrophe on the scale of BP Plc (BP/)’s 2010 oil spill in the Gulf of Mexico, they couldn’t cover the losses, the report said.

New Limits

The Fed, as part of its consideration of new limits on the businesses, is weighing regulations for extra capital and insurance for banks’ commodity businesses.

Banks have moved to sell commodities units amid the scrutiny and revenue from the businesses has tumbled by two-thirds from peak years.

Goldman Sachs produced $1 billion of revenue from its commodities unit and investments in commodity businesses in 2012, down from $3.4 billion in 2009, according to the Senate report, while Morgan Stanley’s commodity revenue fell for four straight years, from $3 billion in 2008 to $912 million in 2012.

Goldman Sachs said it is looking to sell the warehouse subsidiary and will wind down an uranium-trading unit after the bank didn’t receive acceptable bids when it put the business up for sale. The bank is also considering selling coal mines in Colombia, according to the report. Meanwhile, JPMorgan (JPM) has been selling off large portions of its physical commodities business. 

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Another Year of the Chicken: U.S. Beef Supply Will Fall Again in 2015

Another Year of the Chicken: U.S. Beef Supply Will Fall Again in 2015 | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

It’s been an expensive year to eat beef, and 2015 doesn’t look any cheaper.

The U.S. Department of Agriculture expects (PDF) the beef supply to decline 3.6 percent, or 1 billion pounds, next year as domestic production decreases and imports are constrained by tight global supply. It looks almost certain that beef’s downward trend will stretch at least another year. The retail price of ground beef was up 17 percent in September from a year earlier, and steaks and roasts (PDF) also got pricier, according to the U.S. Bureau of Labor Statistics.

In a Chick-fil-A-worthy twist in the battle of cow vs. chicken, the beneficiary of record-high beef prices appears to be poultry producers. Consumers have traded down to less expensive meats such as chicken. Boneless chicken breast, for instance, is 3.5 percent cheaper per pound compared with the price in September 2013. And poultry prices will likely stay low: The USDA predicts the poultry supply will grow almost 2.8 percent in 2015.

Meat producers have felt the transition. “With consumption shifting away from high-priced beef, we expect chicken demand to increase by at least 3 percent in 2015,” said Tyson Foods (TSN) Chief Executive Officer Donnie Smith on an earnings call on Monday.

The same is happening in restaurants. At Chipotle Mexican Grill (CMG), for example, some customers chose chicken over beef after the chain increased the menu price for steak by about 9 percent, compared with only 5 percent for chicken.

Domestic beef production has been waning for years because of rising feed and energy prices. A drought in 2012 caused feed prices to spike and, in response, farmers thinned their herds. Corn prices have finally started to drop, and ranchers have begun to restock, but prices will stay high for a while. Unlike chicken, which can be ready for slaughter two months after birth, cattle take 16 to 18 months to be ready for market.Tyson’s Smith said the company is forecasting cattle supplies to be down about 4 percent in 2015, “but that should be the worst of it.” By 2016, Tyson expects supplies will be down no more than 1 percent.

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China’s PBOC Cuts Interest Rates for First Time Since 2012

China’s PBOC Cuts Interest Rates for First Time Since 2012 | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

China cut benchmark interest rates for the first time since July 2012 as leaders step up support for the world’s second-largest economy, sending global shares, oil and metals prices higher.

The one-year lending rate was reduced by 0.4 percentage point to 5.6 percent, while the one-year deposit rate was lowered by 0.25 percentage point to 2.75 percent, effective tomorrow, the People’s Bank of China said on its website today.

The reduction puts China on the side of the European Central Bank and Bank of Japan in deploying fresh stimulus and contrasts with the Federal Reserve, which has stopped its quantitative easing program. Until today, the PBOC had focused on selective monetary easing and liquidity injections as China heads for its slowest full-year growth since 1990.

“It’s absolutely the right thing to do,” said Wang Tao, chief China economist at UBS AG in Hong Kong. “Real interest rates have moved up significantly with slowing growth and inflation, which hurts corporate cash flow and balance sheet and threatens to increase non-performing loans.”

The MSCI All-Country World Index advanced 0.2 percent at 11:21 a.m. in London, with the Stoxx Europe 600 Index rallying 1.3 percent and Standard & Poor’s 500 Index futures up 0.5 percent. Oil rose for a second day as copper climbed 1.1 percent.

Prudent Policy

“This interest rates adjustment is a neutral operation and doesn’t mean any change in monetary policy direction,” the central bank said in a statement on its website explaining the rate cuts. As China is still able to keep medium to high growth rates, it “has no need to take strong stimulus measures, and the direction of prudent monetary policy won’t change,” the central bank said.

The cut in the benchmark rates follows liquidity injections and targeted cuts to reserve requirements. Although the PBOC scrapped controls on most borrowing costs in July 2013, banks still use benchmark rates as a guide for loans including mortgages.

The PBOC was said to have added money to the banking system today as a cash shortage stemming from new share sales drove the benchmark money-market rate up by the most since July. On Nov. 6, it confirmed it pumped 769.5 billion yuan ($126 billion) to the country’s lenders via a newly-created tool called the Medium-term Lending Facility, including 500 billion yuan in September and 269.5 billion yuan in October.

Ineffective Measures

“All the targeted easing measures or the mini stimulus measures to cut the cost of financing are in fact ineffective,” said Chang Jian, chief China economist at Barclays Plc in Hong Kong, who correctly forecast one interest rate cut in the fourth quarter of this year. “So the only way to really reduce the cost of financing is through cutting the benchmark rate.”

Data released Nov. 13 showed the economy’s slowdown deepened in October. Factory production rose 7.7 percent from a year earlier, the second weakest pace since 2009, while investment in fixed assets such as machinery expanded the least since 2001 from January through October. Retail sales gains also missed economists’ forecasts last month.

Aggregate financing in October was 662.7 billion yuan, the central bank said Nov. 14 in Beijing, down from 1.05 trillion yuan in September and lower than the 887.5 billion yuan median estimate in a Bloomberg survey of analysts. New local-currency loans were 548.3 billion yuan, and M2 money supply grew 12.6 percent from a year earlier.

‘Positive Move’

The rate cut is “indicating the worsening economic situation and rising deflation risk,” Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong, wrote in an e-mail. “A positive move for the economy, and I expect RRR cut to follow in December,” referring to the reserve ratio requirement for banks.

Today’s move suggests a shift toward pro-growth policies that may fuel even more debt. An unprecedented lending spree from 2009 to 2013 led to a surge in debt on a scale that’s triggered banking crises in other economies, according to the International Monetary Fund.

China’s total debt reached 251 percent of gross domestic product as of June, up from 234 percent in 2013 and 160 percent in 2008, according to Standard Chartered Plc estimates.

The PBOC’s easing comes as Mario Draghi says the European Central Bank must drive inflation higher quickly, and will broaden its asset-purchase program if needed to achieve that. Meanwhile, Fed officials are weighing whether they should communicate more of their views about the probable pace of interest-rate increases after they lift off zero next year.

“Certainly, the divergence between the major economies is going to a major feature of the next few months,” said Mark Williams, Capital Economics’s chief Asia economist in London. “It’s relatively, and historically, unusual for the major central banks moving in different directions like this

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Farmers Resort to Bagging Grain to Cut Costs

Farmers Resort to Bagging Grain to Cut Costs | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

Elevators around the Corn Belt are using temporary and emergency storage to hold this year’s massive crop, but some farmers are trying to cut additional holding and drying costs by bagging their own grain.

Harvest may be over, but the work for Grant Noland isn’t.

“Our model is we try to keep majority of our grain on farm. It’s a risk on our side but it allows us to capture a higher price point at a later point of the year,” said Noland.

For the first time, the central Illinois farmers is storing his grain horizontally in bags, as a way to cut storage and drying costs at the elevator.

“Present point, we are pretty full close to being full of our storage. We put bags out as a means to get us through maybe twenty percent of our harvest,” said Noland.

He’s hoping to take advantage of a possible higher market down the road.

“It’s been nice to try to capitalize and taking those bushels and maximize on them,” said Noland.

He says others in the eastern Corn Belt are going that route, too, something Noland hasn’t seen much of in his area until now.

“At the local facilities, the ground piles, you see those every year with big yields. You don’t see it on the producer level,” said Noland.

Noland estimates he’s saving about 40 cents a bushel by storing in bags instead of a local elevator. The bag loader however is a big expense, ranging in price from $25,000 to $40,000.

“If you load constant grain to it, it will probably fill about 15,000 bu. an hour. It is just keeping grain coming at that pace,” said Noland.

It’s an expense he feels is worth it.

“The local facility levels commercial storage rates increased. Drying rates are not decreasing in costs. So for us, we had to make the decision for an alternative option,” said Noland.

Because he’s trying to capture the carry, his goal is not a long term storage solution, but long enough to do what the market tells him.

“Our plan is to at some point, between now and February, we’re going to have the opportunity to move grain. We will probably move upright storage to the market place and pick up our storage and put in the upright storage,” said Noland.

Noland thinks a new era of bagging may be beginning and hopefully his work is worth it.

“I think it’s something we will do on an annual basis,” said Noland.

Noland says the market gave him a chance to move some grain early because of the October rally. He says he dried all of the grain, so he’s not worried about it spoiling.

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Farmland Partners hikes payout in drive to win over investors

Farmland Partners revealed an 11% hike in its dividend in its latest effort to win over investors it believes are undervaluing its stock in the face of a downturn in US land values.

The group, which buys land with the aim of exploiting capital growth and rental income from farmers, unveiled a quarterly dividend of $0.116 per share, to be paid in January, up from its previous payout of $0.105 per share.

"The significant increase in our quarterly dividend reflects our commitment to deliver positive returns to our stockholders," Paul Pittman, the Farmland Partners chief executive said.

The group was continuing to "generate strong cash flow fuelled by the addition of high-quality assets to our portfolio", he said.

'Not reflected in the shares'

Indeed, the group on Monday unveiled its biggest deal yet since it floated in April, buying seven farms in South Carolina from one seller for $28m, equivalent to some $4,100 per acre all in.

The 6,819-acre deal, plus the $18m purchase of eight farms in Arkansas, Colorado and Nebraska from a range of vendors, takes the Farmland Partners portfolio to 48,600 acres – up more than 40,000 acres since the stockmarket flotation.

However, shares in the group, floated at $14.00 a share, have failed to win investor support, closing at $10.33 on Thursday, down 26% on the IPO price, and by 0.3% on the day, despite the dividend hike.

The group last month unveiled a $10m stock repurchasing programme, which Mr Pittman said "demonstrates our confidence in our ability to generate returns that are not reflected by our current stock price".

The buyback announcement came only three months after the group raised $46.5m from investors.

'Air out of the bubble'

The downturn in its shares come against a backdrop of a weakened US land market - undermined by the dent farm profitability from lower crop prices - with central bank data last week showing price declines in many major agricultural states.

Separately on Thursday, a monthly survey by Nebraska's Creighton University of land prices in top farming states showed values falling in November for a 12th successive month.

A Creighton index of farmland prices came in at 30.0, up from last month's record low of 20.2, but well below the 50.0 level which indicates a flat market.

"Much weaker crop prices continue to take the air out of the bubble in agriculture land prices," Creighton economics professor Ernie Goss said.

However, Farmland Partners points to data,mgoing back to 1992, from real estate agents which shows farmland returns, factoring in rental income, never turning negative for a whole year.

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Rabobank F20 Summit tackles global farming potential

Rabobank F20 Summit tackles global farming potential | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

DESPITE the enormous challenge of skyrocketing global population growth and declining arable farmland and rural water resources, farmers worldwide – particularly in Australia – could be far more productive food producers. 

Speakers and delegates attending last week’s Rabobank-sponsored F20 Summit in Sydney made it clear agriculture can deliver much more production to meet the global food security challenge, but it’s time global leaders started talking with farmers to find out what’s actually needed. 

Visitors at the Rabobank F20 Summit share their thoughts on food security.

The summit attracted about 660 farmers, farm industry and government delegates from across the world in a strategically staged event designed to draw international leadership attention to food security solutions before last weekend’s G20 meeting of world leaders in Australia. 

The world will require double its current food output within 40 years, but already inadequate production, supply networks and infrastructure mean about 2.5 million children die of hunger or nutrition-related illnesses each year. 

Rabobank executive board member Berry Marttin told the summit the challenge was far more complicated than just finding more food to feed a planet which each month adds the equivalent of the entire population of Hong Kong to its number. 

He said food had to be more nutritious and delivered safely and efficiently, and western world consumers must stop discarding as much as 40 per cent of what they buy at the supermarket. 

While Australia had the largest amount of available farmland per capita (but a third less than 40 years ago), Mr Marttin said the world did not necessarily need vast extra areas of arable land, or even particularly high quality farmland. 

Agricultural productivity in many parts of Western Europe was far higher than the US Midwest, Argentina or the Ukraine where the soils were the best on the planet and the climate generally more conducive to higher yields. 

Africa had some of the world’s best soils, yet very low productivity – largely due to poor farming systems and supply chains. 

The Netherlands, with a land area of just 41,000 square kilometres, was the world’s second biggest agricultural exporter earning 10pc of its gross domestic product from farming. 

In stark contrast Japan, with the same population density and 378,000 square kilometres of land, was the world’s biggest food importer. 

Not only was the Dutch farm economy built on land mostly reclaimed from the sea, but deputy director general of agriculture and food in the Netherlands, Roald Lapperre, said leading Dutch farmers were producing greenhouse yields using 15 times less water than equivalent crops grow in fields in other parts of Europe. 

Tomato plants in modern greenhouses were producing 80 kilograms of fruit without using anywhere near the energy or the pesticides required to grow just four kilograms from field grown plants. 

Remarkably, only 20pc of modern generation energy-neutral greenhouses existed outside Holland. 

“I hope today serves as a call to action for farmers and world leaders. Let’s get to work,” Mr Lapperre said. 

“There’s no reason why we cannot sustainably end hunger by 2050.” 


However, the conference also highlighted a host of key concerns shared by farmers and agribusiness players worldwide, notably about the shrinking number of farmers taking on the challenge of producing crops and livestock. 

Despite everybody needing food every day, and hunger prevalent in Africa, Asia, and South America, speakers noted how the global economy generally discouraged potential farmers from agricultural careers, offering better paid rewards elsewhere. 

Former National Farmers’ Federation president, now chairman of Nufarm and Australian Agricultural Company Don McGauchie said governments also had to wake up to the cost of an alarming decline in public spending on agricultural research. 

He said farm productivity had been sliding because Australia had “dropped the ball on R&D”. 

“Let me tell you this is a great concern,” he said, pointing out Australia’s farm productivity had to grow 2.5 per cent annually if we were to double our farm sector output by 2050. 

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Bad weather and parasites batter European olive harvest, may push up olive oil prices

Bad weather and parasites batter European olive harvest, may push up olive oil prices | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

BEJA, Portugal - If your favourite bottle of Mediterranean olive oil starts costing more, blame unseasonable European weather — and tiny insects.

High spring temperatures, a cool summer and abundant rain are taking a big bite out of the olive harvest in some key regions of Italy, Spain, France and Portugal. Those conditions have also helped the proliferation of the olive fly and olive moth, which are calamitous blights.

The shortfall could translate into higher shelf prices for some olive oils and is dealing another blow to southern Europe's bruised economies as they limp out of a protracted financial crisis.

"The law of supply and demand is a basic law of the market," said Joaquim Freire de Andrade, president of growers' association Olivum in Portugal's southern Alentejo region, the country's olive heartland. "It's a tough year."

Olive oil is big business in southern European Union countries. They are the source of more than 70 per cent of the world's olive oil, bringing export revenue of almost 1.8 billion euros ($2.2 billion) last year. The United States imported just over $800 million of that.

For some European growers, this year's harvest is a bust.

In Spain, the world's biggest producer, the young farmers' association Asaja says 2014 is "another disaster" after a calamitous harvest two years ago. Spain's output is forecast to plunge by more than 50 per cent, with a drop of at least 60 per cent in the southern Andalucia region.

Several factors have combined to hurt Spain. Trees are exhausted after last year's bumper harvest. Also, unusually high spring temperatures choked flowering. On top of that, some producers are battling swarms of olive flies and moths.

Consumers are already paying 1 euro a litre more for their olive oil, Asaja president Luis Carlos Valero says, though he doesn't anticipate a hefty price jump.

For celebrated Italian olive oil producers, "this is the worst year in memory," said Pietro Sandali, head of the Italian olive growers' consortium, Unaprol. The group expects a 35 per cent drop in national production this year.

After heavy spring and summer rain, some growers didn't bother to harvest their meagre crop. For some who did, the volume is low and the quality is poor.

"This crop is not to be remembered. This is a crop to be forgotten in every aspect," said Augusto Spagnoli, an organic olive grower from Nerola, about 50 kilometres from Rome, as he stood amid his 10,000 trees, some of which are more than 1,600 years old.

The bulk price for extra virgin oil from the benchmark Bari region has soared to 6 euros a kilogram — up from 2.7 euros this time last year.

French growers say they face their most daunting crisis since a big freeze in 1956 decimated olive groves. This year's harvest was initially expected to fetch some 5,000 metric tons of olive oil but it may reach only 1,500 metric tons, according to the Inter-professional French Olives Association.

The big culprit there is a fly the size of a small ant. The fly pricks olives and places larvae inside, and the maggots tunnel through the fruit. The flies have long been a problem for olive oil producers, but the scale this year has astonished farmers.

"I'd never seen this and the older folks said they'd never seen such a proliferation of flies," said producer Laurent Belorgey, part of a third generation of olive growers at the 19th-century Domaine de la Lieutenante, south of Avignon.

In Beja, 180 kilometres (110 miles) southeast of the Portuguese capital Lisbon, producers deploy satellite technology on their high-tech farms these days but after generations they are still fighting age-old enemies: the olive fly and a fruit fungus that turns olives brown and makes them shrivel like prunes. Both blights have struck hard this year.

Portuguese growers are doing what the French have done: harvesting earlier and faster than usual before any more is lost. Since mid-October, a month earlier than usual, crews have been hurrying through the long ranks of olive trees that stretch to the horizon.

The workers follow a low, agile, space-age-looking vehicle that clamps the tree trunk and shakes it, briefly making the tree shimmer in a silver-green blur. Long black netting on the ground catches the falling olives.

Though less damaged, the younger fruit also yields less oil. "Farmers will be earning less this year," said Freire de Andrade, the Olivum association president.

Greek growers, however, anticipate windfall profits. Greece is the world's third-largest producer and is set to more than double its annual output, to 300,000 metric tons. That is good news for farms in places such as Crete and the southern Peloponnese region where Greece's acute financial crisis in recent years had left growers short of cash for maintenance and investment.

The predicted shrinkage in EU output should also be offset in part, experts say, by Spanish stocks left over from last year's record yield.

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Massive 30-metre-wide sinkhole opens up in Russia after flooding at nearby salt mine

Massive 30-metre-wide sinkhole opens up in Russia after flooding at nearby salt mine | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

An immense hole opened up in the ground on Tuesday in a large Russian city near the Ural Mountains. The 30- to 40-metre-wide sinkhole looks to have swallowed several homes.

Russian geologists are searching the site for clues as to what caused the accident. The sinkhole formed shortly after a nearby salt mine flooded. That, plus a 1994 earthquake that occurred in the same region, seem to have been caused by powerful underground currents of highly-pressurized gas commonly found around salt mines.

The mine, called Solikamsk-2, churns out more than 2 million tons of potash, a potassium-rich salt used industrially as an agricultural fertilizer, each year, the Daily Mail reports.

The company who owns the mine, Uralkali, has halted production at the site, evacuated the mine, and instructed about 1,300 workers to stay home.

The same mine had previously collapsed in January 1995, causing gas explosions in surrounding areas the following day, according to the CDC. Sudden, disastrous events like these are not uncommon in salt mines of this type and can happen even if miners take all the proper precautions.

According to Russian news site V-Kurse, several homes are located nearby the sinkhole, but it remains “unknown whether there were homes in the [sinkhole's] epicentre.”

At least one Russian Twitter-user, however, suggested homes may have been destroyed. In a tweet, Evgeny Andreev writes “Good luck cottagers,” referring to the people living in the residences in the area.

YEC Geo's curator insight, November 22, 11:07 PM

More holes in Russia.  Look closely at the picture--that thing appeared smack dab in the middle of a subdivision.

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Big harvests, poor prices: analysts

Low prices for years is the most reasonable expectation for farmers, analysts said last week at Cereals North America.

It was a dark thread that wound through a conference that contained few hopeful elements. A crop-heavy world situation has exacerbated logistics problems in Canada and the United States, and there are hints that Canada’s quality, consistency and reliability have been undermined in world markets.

“This is going to be a slog, we expect,” said AgResource president Dan Basse, who forecasted corn prices of $2.75 to $4.75 for the coming years unless a major production area suffers an “extreme drought.”

“The world lacks a bullish demand driver.”

Fellow AgResource analyst Bill Tierney said 2014-15 soybean prices will likely drop to $8.50 per bushel for March futures if South America’s crop is as big as expected.

The situation could worsen if the present soybean rally, driven by soybean meal shortages, convinces American farmers to plant an in-creased soybean acreage in spring.

“I think there’s a very strong likelihood we’re going to see soybean prices below the $7 level next year at harvest,” said Tierney.

The Prairies produce only small amounts of corn and soybeans, but those two crops set the price for cereal grains, such as wheat and oats and oilseed crops such as canola.

The grim outlook is based on huge stocks likely remaining at the end of 2014-15.

Tierney said his preliminary analysis of vegetable oil crops and vegetable oil stocks shows that world supplies are at all-time highs, with supply exceeding demand by 24 percent.

“The world’s largest exporters of soybeans and soybean meal are going to see a sharp increase in their ending stocks,” said Tierney.

From 2006-13, crop markets were driven by overall high commodity prices and biofuel-promoting government policies. More corn was required to support the ethanol and biodiesel mandates.

However, that factor has evaporated.

“Corn prices had to rally every year to buy more acres just to meet the ethanol demand that was being built up,” said Basse.

“We don’t need that extra three to seven million acres every year (any longer.)”

The Cereals North America conference also heard that Canada’s west coast ports will likely remain clogged this winter. The U.S. rail system is also becoming backed up.

Derek Sliworsky, a former CWB Asian representative who now works for a miller and food processor in Singapore, said buyers at his company told him Canadian grain was not only late because of rail problems on the Prairies, but also arrived with far less consistent quality than in the past.

He said his company, Prima Group, had to deal with problems such as soybeans mixed into wheat and variable weights of formerly uniform shipments, which at times prompted it to turn to other countries for supplies.

Canada’s quality-damaged crops were also discussed, but CWB’s Bruce Burnett was more positive about the outlook than many have been. He said not all farmers harvested bad quality spring wheat, and that feed grain supplies, while ample because of downgrading, are not burdensome.

“There is quality grain available in Western Canada on the CWRS side,” said Burnett.

Canada Western Red Spring and durum protein levels are adequate for most buyers, even if quality of much durum is low.

Much of the lowest quality wheat, durum and oats will end up in the feed market, but Burnett said there probably won’t be substantial feed grain exports from Western Canada because feed grain demand on the Prairies is good.

“We’re going to basically use most of this up,” said Burnett.

Weather analyst Scott Yuknis of Climate Impact said the world is entering a period that could cause “harsh droughts” in some areas that would last two to three years at a time.

“Once it begins, it lasts,” said Yuknis.

It would be bullish for prices, but obviously only beneficial for prairie farmers if it doesn’t hit them.

Basse said the big picture of world crop supplies and demand is that the long-term commodity bull market is over and that today is more like the 1990-2005 era.

“This will go on for a number of years,” Basse said.

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Asia’s mills eye Canada’s wheat as Australian supply slows

Singapore | Reuters — Asian flour millers are looking at buying Canadian spring wheat for shipment early next year as supplies from drought-hit Australia are likely to remain slow, traders said.

Canadian western red spring wheat is being offered at around $345 a tonne, including cost and freight, nearly unchanged from last week, while Australia prime hard wheat is being quoted at $370 (all figures US$).

“A lot of mills have taken Black Sea wheat in Asia and now they need higher-quality wheat for blending,” said one Singapore-based trader. “Canadian spring wheat is ideal for blending and it can easily replace Australian hard wheat.”

Australian farmers are holding back wheat crop sales as dryness cuts yields in parts of the country’s eastern grain belt that is responsible for producing high-protein hard wheat.

Farmers have sold about a quarter of this year’s crop even as the harvest gathers pace with analysts pegging sales at 50 per cent of output by December-end versus about 70 per cent last year.

“We will be facing competition in bulk vessels as Australia has only limited supply of high-protein wheat, so there will be competition from the U.S. and Canada,” a Sydney-based trader said. “But Australian quality is much better because of the dry finish to the crop and there are concerns over rain damage to the Canadian crop.”

Canadian wheat sales into Asia could be limited on concerns over logistics as winters slow down the movement of cargoes, traders said.

The Taiwan Flour Millers’ Association has purchased 82,050 tonnes of milling wheat to be sourced from the U.S. in a tender this week, for shipment between January and February.

Chicago Board of Trade soft red winter wheat futures have dropped 2.8 per cent this week, while higher-quality spring wheat traded on the Minneapolis Grain Exchange has fallen by just around one per cent this week.

For lower quality wheat, buyers are likely to turn to India next year as supplies from the Black Sea region slow down, traders said.

“There are not many offers of Black Sea wheat, we have only a few offers from Ukraine but nothing much from Russia,” a second trader said in Singapore.

Ukrainian wheat with 11 per cent protein is being offered at $275-$280 a tonne, C+F, but not many deals have been reported this week in Asia.

– Naveen Thukral reports on crop commodity markets for Reuters from Singapore.

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Argentina’s national bank blocks credit for farmers that retain soybeans

Argentina’s Banco Nación, the main source of agricultural credit in the South American country, confirmed that it will not lend money anymore to farmers who keep their soybeans stored waiting for a better payment. The measure was called an extortion by rural leaders.
“These restrictions are part of a discriminatory practice of this government that wants to force producers to sell the last grain of our harvest with stocks at the same level of last,” Argentina’s Rural Society stated.
The issue has been a subject of conflict of Argentinean farmers and the government for several years because of the extreme need of foreign reserves in the country and the Kirchner administration’s ideology.
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Russians (And Others) Coming to Chicago

Competitors from the Black Sea to Brazil added enough new corn and soybean acres to nearly match the U.S. Midwest between 2006 and peak grain prices in 2012. Speakers at the DTN-The Progressive Farmer 2014 Ag Summit will offer attendees an intimate analysis of this new grain frontier. In addition, the program will focus on how U.S. agriculture can refine its own business practices to compete now that commodity prices are coming back to earth.

The 2014 Ag Summit Dec. 8-10 will focus on how to manage for profits in the post-$7 corn era and the impact of new competitors on grain markets. (DTN logo)

Speakers headlining the Dec. 8-10 event at the Chicago Fairmont Millennium Hotel are:

-- Derek Boudreau, John Deere's country manager for Russia, who will share the scale and potential for Black Sea farm operations in light of global sanctions. Not just 5,000 acre farms, but XL and XXL farms are shaping Russian industrial farming.

-- Yelto Zimmer, an economist for Germany's Thuenen Institute, who will share how $7 corn led to on-farm profits for the world's major grain and soybean producers.

-- Brian Schouvieller, senior vice president for CHS Inc., who will give a status report on North America's nitrogen fertilizer construction boom and U.S. energy independence.

-- Ken Eriksen, Informa Economics senior vice president for transportation, who addresses untangling rail and river bottlenecks here and abroad.

-- Doug Stark, CEO of Farm Credit of America, who believes U.S. agriculture can pass the stress test.

-- Kirk Lippold, former commander U.S. Navy, USS Cole, who shares how to train for leadership under fire.

Three pre-event DTN University workshops on Sunday, Dec. 7, help growers refine their marketing, financial and tax strategies in daylong sessions:

-- "Master Marketing 201: Adopt a Country Elevator Mindset," recognizes how expanded on-farm storage capacity changes marketing practices and concentrates on tactics to optimize marketing and crop insurance moves.

-- "Young Farmers: Risk Management for Rookies" focuses on how beginning operators can assess their financial exposure, using the same ratios lenders measure. Speakers from Texas A&M, Minnesota's Center for Farm Financial Management and AgStar Financial share lessons on how to mitigate risks.

-- "Over 55: Make Your Retirement Less Taxing" recognizes that exiting agriculture can become a bigger tax event than estate taxes. An expert panel of CPAs from CliftonLarsonAllen and family business mediator Lance Woodbury address how to structure equipment buyouts and farm transfers without breaking the bank.

The conference attracts an expected audience of 700 to 800 of North America's leading farm and agribusiness leaders for the three-day event. Other highlights include a festive dinner on the 80th floor of the Mid-America Club and a reception with specialty wine tasting and a Frank Sinatra impersonator

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Canada Dollar Rises to November High as Inflation Tops Forecasts

The Canadian dollar rose to the highest level this month after inflation rose faster than all economists’ forecasts in October, boosting speculation the Bank of Canada will signal it’s closer to raising interest rates.

The currency jumped the most in almost two months as the consumer price index climbed 2.4 percent compared with the same month a year earlier, following the September pace of 2 percent, Statistics Canada said from Ottawa. The central bank meets Dec. 3 after leaving its benchmark lending rate at 1 percent last month. Canada’s dollar gained earlier with global stocks and commodities after China cut interest rates for the first time since 2012.

“This is an input to the Bank of Canada potentially hiking rates,” Jack Spitz, managing director of foreign exchange at National Bank of Canada, said by phone from Montreal. “It does suggest there is some inflation potentially coming forward and as a result of that the Bank of Canada may take less of a dovish view going forward.”

The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, added 0.6 percent to C$1.1241 per U.S. dollar at 12:06 p.m. in Toronto. It reached C$1.1192, the strongest since Oct. 31, and increased as much as 1 percent, the most since Oct. 6. One loonie buys 88.96 U.S. cents.

With today’s advance, Canada’s currency is up 0.4 percent since Nov. 14, headed for a second weekly gain.

Oil Surges

Futures on crude oil, Canada’s largest export, leaped as much as 3 percent to $77.83 a barrel in New York before trading little changed. The MSCI All-Country World Index (SPX) advanced 0.7 percent and the Standard & Poor’s 500 Index was up 0.6 percent.

Canada’s benchmark 10-year government bond was little changed today and this week, yielding 2.02 percent. The price of the 2.5 percent debt maturing in June 2024 was C$104.16. The five-year security yielded 1.52 percent.

The loonie extended gains as core inflation rate, which excludes eight volatile products, accelerated to 2.3 percent, the fastest since February 2012.

“It’s certainly another print that would suggest that we do have those inflationary pressures building,” said Camilla Sutton, chief foreign-exchange strategist at Bank of Nova Scotia in Toronto. “It will give pause for thought at the bank, and that could create some additional volatility in the currency.”

Rates Forecast

Bank of Canada Governor Stephen Poloz has said inflation will be held down by economic slack that persists for about two years. Policy makers have kept their benchmark overnight lending rate steady for more than four years, and economists surveyed by Bloomberg predict that rate won’t increase until the fourth quarter of 2015.

In contrast, the U.S. Federal Reserve ended a bond-buying program as scheduled last month and is now debating when to raise interest rates for the first time since 2006 as the world’s largest economy gathers momentum.

The dollars of New Zealand and Australia advanced with the loonie as China, the world’s second-largest economy, cut the one-year lending rate by 0.4 percentage point to 5.6 percent, while the one-year deposit rate was lowered by 0.25 percentage point to 2.75 percent, effective tomorrow, the People’s Bank of China said on its website.

‘Stronger Growth’

“If it works out the way the Chinese government intends, it could put further domestic demand in the Chinese economy, which should translate into stronger growth for a lot of these commodity currencies,” Bipan Rai, director of foreign-exchange strategy at CIBC World Markets Inc., said by phone from Toronto.

The Aussie surged 0.6 percent and the kiwi, as New Zealand’s currency is known, added 0.1 percent. China is the largest trading partner of both South Pacific nations.

The euro slid versus all of its main peers after European Central Bank President Mario Draghi, speaking at a conference in Frankfurt, strengthened his pledge to provide monetary stimulus to boost inflation in the euro area after calling expectations for consumer price gains “excessively low.” The ECB’s next policy meeting is Dec. 4.

The yen was headed for a fifth weekly decline as Japanese Prime Minister Shinzo Abe dissolved parliament ahead of elections in which he is seeking a mandate for his policies to end two decades of deflation with unprecedented monetary stimulus.

“Higher inflation is an unusual issue for central banks -- it leaves the Bank of Canada as one of the only major central banks that’s not struggling with too-low inflation,” said Shaun Osborne, chief currency strategist at Toronto-Dominion Bank, by phone from Toronto. “Relative to other central banks, there’s no risk of rates moving lower.

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China to overhaul grains import quota system

BEIJING (Reuters) — China plans to revamp the scheme it uses to allocate quotas for agricultural imports, as part of efforts to stamp out corruption and to rein in record state grain stockpiles, according to government and industry sources.

The low-tariff quotas, which are sanctioned under China’s membership of the World Trade Organisation, are allocated to state-owned and private firms in the world’s top grain consumer.

With Chinese grain prices among the highest in the world, these import allocations have become a cash cow for well-connected companies.

Fang Yan, a deputy director of the National Development and Reform Commission’s  rural economy department, told Reuters this month that there would be changes to the import quota allocation system but declined to elaborate.

But industry sources say proposed changes include bringing in a more transparent tender process for quotas, while Beijing is also looking into awarding quotas only to companies that agree to buy grains from state reserves.

“The system allows officials to trade their power for money. Companies are able to pay bribes to obtain quotas, while mills and other end-users that are in need of cheaper imports are shut out,” said Ma Wenfeng, an analyst at Beijing Orient Agri-business Consultant Co Ltd.

Experts say the process of obtaining quota allocations is opaque and complex. The NDRC, which issues the quotas, does not publish the names of firms receiving import allowances or volumes.

Ma’s firm, which consults the government, has proposed the current scheme be replaced by a public tender process that allows firms to bid for quotas.

Plans to overhaul the quota system have already led to delays in issuing 2015 grains and cotton import quotas, which are typically announced by the end of September each year.

“The process is definitely going to be changed,” said Li Qiang, chief analyst with Shanghai JC Intelligence Co Ltd, a private consulting firm, adding that a series of corruption scandals surrounding the NDRC underscored the need for change.

The NDRC, the nation’s top economic planner, has been a target of investigations since President Xi Jinping launched an anti-graft campaign in late 2012. The body’s former deputy head Liu Tienan was sacked in September for taking US$5.81 million in bribes.

An investigation also found 11 officials in various departments of the NDRC taking huge bribes, China’s Supreme People’s Procuratorate told state media last month.

According to Beijing’s WTO pledge, annual wheat import quotas are capped at 9.6 million tonnes, corn at 7.2 million tonnes, rice at 5.30 million tonnes and cotton at 894,00 tonnes. State-owned companies are given the bulk of the allowances, with the rest distributed amongst private traders.

Imports under the WTO quota have low tariffs of just one percent, while to protect its farmers China places higher duties on shipments above that fixed volume. In the case of wheat, firms without import quotas could end up paying tariffs as high as 180 percent.

The gap between the global price of agricultural commodities – with Chinese cotton prices for example 40 percent more expensive than imports – has encouraged a black market where companies sell their quotas for a profit.

Companies with cotton import quotas were selling their allocation to other processing firms for as much as 4,000 yuan ($654) per tonne, according to a Chinese media report in March, citing the China Federation of Industry and Commerce.

Struggling with huge grain stocks, Beijing is also considering linking the WTO import quotas to purchases from the state reserves, said a manager at an animal-feed mill, which was allocated import quotas this year.

The manager said discussions were under way for feed mills to buy 10 tonnes of grains from the state reserve in exchange for a tonne of import allowances.

“That means private feed mills will need to buy a total of 28.8 million tonnes of expensive state corn in exchange for the import quotas. That will help to cut state reserves,” said the manager, who declined to be identified as he was not authorised to speak to the media.

China does not publish its grain reserves, but corn stockpiles over the past two years are estimated by traders to have increased to nearly 100 million tonnes, or more than half of the country’s annual consumption.

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Soybeans Advance as Demand for U.S. Supplies Seen Sustained

Soybeans slipped, headed for a third weekly drop, on expectations wet weather in South America will help boost crops being planted. Corn and wheat declined.

Rain in Brazil will increase in coming days and become widespread early next week, covering 90 percent of corn and soybeans, MDA Weather Services wrote in a report yesterday. The rain will ease much of the dryness across southern Goias, Minas Gerais, Sao Paulo and Parana in Brazil, the forecaster said.

Soybeans for January delivery fell 0.1 percent to $10.1925 a bushel on the Chicago Board of Trade by 5:18 a.m. Prices are 0.3 percent lower this week, and a third straight weekly loss would be the longest such run since the period to Sept. 26.

“Forecasters are predicting that South American rainfall will leave all but a few minor areas with ideal moisture conditions for planting and establishment,” Commonwealth Bank of Australia wrote in an e-mailed note today.

Output in Brazil, the second-biggest producer, may climb 8.4 percent to 94 million tons, the U.S. Department of Agriculture predicts. The area planted in Argentina may total 20.1 million hectares in 2014-2015, 2 percent more than the previous season, the Agriculture Ministry said yesterday.

Farmers in Parana, Brazil’s second-biggest soybean growing state, are finalizing soybean planting after the pace picked up following rain last month, Michael Cordonnier, the president of Soybean & Corn Advisor Inc., wrote in an online comment.

“While the recent rains have generally been enough to ensure planting, they have not been heavy enough to fully recharge the depleted soil moisture,” Cordonnier wrote. “Farmers are hoping that they will receive rain in time for adequate germination.”

Corn for March delivery fell 0.4 percent to $3.8475 a bushel, heading for a weekly loss. Wheat for delivery in March declined 0.7 percent to $5.485 a bushel, also set for a drop this week, while milling wheat for January delivery rose 0.1 percent to 175 euros ($217.55) a metric ton

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BNSF to Spend $6 Billion in 2015 to Ease Rail Gridlock

BNSF to Spend $6 Billion in 2015 to Ease Rail Gridlock | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

BNSF Railway Co., the railroad owned by Warren Buffett’s Berkshire Hathaway Inc., plans to spend a record $6 billion next year to help speed trains and improve service crimped by surging grain and oil shipments.

Almost $1.5 billion will go for expansion projects, BNSF said today, with a third of that for the northern U.S. region where the carrier collects oil from North Dakota’s Bakken shale formation and grain. BNSF said this year’s capital budget will be $5.5 billion, up from $5 billion announced in February.

The spending plan shows regulators and customers that BNSF is committed to remedying delays that have left grain farmers and coal shippers without rail cars, said David Vernon, an analyst at Sanford C. Bernstein & Co. in New York. The U.S. Surface Transportation Board has convened hearings on rail service and ordered BNSF to report delays on a weekly basis.

“If you have service problems, you need to throw capital at the problem to make it go away,” Vernon said. “You’ve probably got another build season before you can address some of those remaining capacity bottlenecks.”

Service for Fort Worth, Texas-based BNSF and other major U.S. railroads, including Union Pacific Corp. and CSX Corp., deteriorated after a harsh winter slowed trains just as freight volumes rose more than expected.

Railroads hauled 12 million carloads in the third quarter, the most since at least 2006, according to Association of American Railroads data compiled by Bloomberg. This year through mid-November, shipments rose 14 percent for grain and 13 percent for petroleum products, which are mostly crude oil, the data show.

Slower Speeds

Train speeds have fallen to about 22 miles per hour in November, slower by 2 mph from a year earlier and 4 mph from 2012. The time that shipments sit in terminals awaiting continued movement rose to 23 hours in mid-November from 20 hours a year earlier.

The capacity constraints have been caused by changes such as greater-than-expected increases in intermodal cargo and the sudden growth of rail shipments of crude oil, said Ed Hamberger, chief executive officer of the industry trade group. Expanding a rail network to meet increased demand takes time and capital, he said.

“It is true that in 2013 and 2014 here we have not been giving the level of service to which our customers have become accustomed,” Hamberger said in an interview today at the RailTrends conference in New York. “It’s an adjustment to the market.”

BNSF has boosted spending to build double tracks and sidings, mostly in the northern region, and to increase terminal capacity.

‘Great Progress’

“We have made great progress in expanding the segments of our railroad that have been most constrained by rapidly increasing demand,” CEO Carl Ice said in a statement. The new program will give BNSF the ability to “manage the periodic demand surges,” he said.

BNSF also plans to buy 330 new locomotives in 2015. The carrier said earlier this year that it intended to acquire about 500 new engines in 2014 after harsh winter weather began gumming up its network.

Berkshire, based in Omaha, Nebraska, acquired BNSF in 2010. The railroad competes with Union Pacific in the western U.S.

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Harvest Report: Elevators Pile Millions of Bushels on the Ground

Harvest Report: Elevators Pile Millions of Bushels on the Ground | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

While states like Michigan are struggling to get the crop out, Illinois is nearly done. According to the latest Crop Progress report, 94% of corn and 95% of soybeans have been cut in that state. With bushels coming in, the challenge may be where to put all that grain. The state of Illinois has the largest permanent storage capacity space in the nation, capable of storing about 1.4 billion bushels. Yet this year, millions of bushels are ending up on the ground.

A mountain of grain sits at the The Andersons elevator in Champaign, Ill.

“Obviously, when you have a record crop to handle, it’s very challenging, but it’s also very rewarding to see the big yields the farmers talk about as they come into the elevator,” said The Andersons regional sales manager Brian Stark.

Because of the big yields, elevators have piled grain in either temporary or emergency storage. Temporary is covered, usually with a tarp. Emergency isn’t. This elevator will pile over 3 million bushels of uncovered grain on the ground this season.

“We pile corn every year, but this is the most we have piled on the ground in quite some time,” said Stark.

Stark says they have maxed out this ground space, but there should be enough room in the grain bins to accommodate to the rest of harvest.

They’re not the only facility.

As of Nov. 13, the state of Illinois has nearly 119 million bushels of temporary storage and about 11 million bushels of emergency storage, both requested or approved.

The state requires The Andersons to remove the uncovered grain within 90 days.

“Obviously we have options. As we wrap up harvest, we will get better from the truck and rail side, and we’ll be able to get the grain picked up in a quick fashion, in permanent storage, moved into quick space,” said Stark.

Stark says over 95% of this elevator ships by rail. The rest is by truck.

“We’ve shipped some units throughout the harvest season to help maintain space, but it’s been few. It’s hard to develop a pattern to how timely they’ve been. We will say the ones we did sell, showed up prompt,” said Stark.

He’s confident the rail system will pull through into next year.

“I think we’ve got a good plan in place to maintain good quality of grain and get it done in a timely fashion,” said Stark.

Stark says the facility has seen more grain on the ground than this, and this year they haven’t had to cut hours.

“We haven’t had many delays. For that, we can be thankful,” said Stark.

This year’s weather breaks helped, too. As combines stayed parked, it allowed days for farmers and elevators to move grain.

“To go six to eight weeks straight with this size of crop, I don’t know if anyone would be able to handle the pressure you would see from that,” said Stark.

A scene to remember, as 2014 may be the biggest crop we’ve ever had.

Illinois Bureau of Chief of Warehouses Stuart Selinger says historically, this isn’t the biggest grain pile the state has seen for emergency and temporary storage. Selinger says grain stocks were down early, leaving lots of permanent storage available before harvest.

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Why Wall Street investors and Chinese firms are buying farmland all over the world

As the world's population soars past 7 billion, farmland and freshwater are becoming increasingly valuable resources.


And, in response, a growing number of companies and investors — Wall Street traders, Chinese state corporations, Gulf sheiks — have been buying up farmland abroad. The trade has been booming since 2007, when a spike in grain prices got everyone fretting about shortages. The purchases help countries like China and Saudi Arabia secure food supplies and conserve water domestically. But critics worry that the trade has also spurred a rise in "land grabs" — when sellers in countries like Ethiopia or Cambodia forcibly acquire the farmland from locals in the first place.

So how big is the trade? A new study in Environmental Research Letters finds that at least 126 countries are now involved in purchasing or selling global farmland. The most active buyers are investors in the United States, China, Britain, Germany, India, and the Netherlands. They're typically seeking out land in South America, Africa, and Asia — particularly Brazil, Ethiopia, Philippines, Sudan, Madagascar, Mozambique, and Tanzania. The trading map looks like this:

The researchers — Jonathan Seaquist, Emma Li Johnansson, and Kimberly Nicholas — also broke things down by country, shown below. Chinese investors, for instance, bought farmland in 33 different countries abroad ("imports"), while Ethiopia sold land to people in 21 different countries ("exports"):

It all adds up: In 2013, a separate study in the Proceedings of the National Academies of Sciences estimated that between 0.7 percent and 1.75 percent of the world's agricultural land was now being transferred to foreign investors from local landholders. That's an area bigger than Germany and France combined.

Why are people buying farmland abroad?

The PNAS study found that foreign investors frequently buy tracts of land that have ample supplies of freshwater, through either local rainfall or underground aquifers. Water has become especially valuable given that supplies are increasingly under strain in countries like China, India, and the United States.


But why land? Why not just import food from these countries directly? In part because there are potential gains from buying up and improving underdeveloped land in places like Africa.

"This is often good agricultural land that isn't yet fully utilized," Paolo D'Odorico, one of the PNAS study's co-authors, told me when that study came out. "It was being used by local farmers without modern technology, without irrigation, without fertilizer."

Once the land is purchased, large commercial farms will often come in and improve production to cultivate their own crops. A 2010 World Bank paper estimated that 37 percent of this newly acquired land is used to grow food crops, 21 percent to grow cash crops and 21 percent to grow biofuels. (Roughly 27,400 square miles of land land have been bought up in Indonesia, largely to grow palm oil, which can be turned into biodiesel.)

One big problem? Violent land grabs.

The Ken Chathas family is the only family left near the Boeung Kak lake near Phnom Penh after other houses were demolished by land grabbers. Land grabbing has become a serious issue in Cambodia in recent years. Thousands of people get evicted from their homes and receive no compensations. Jonas Gratzer/LightRocket/Getty Images

In theory, these land trades can be mutually beneficial — if foreign investors are coming in and squeezing more productivity out of the farmland than the locals can, everyone should win. And, in many cases, these trades do appear to go off without a hitch.


But in some regions, there are real concerns about how the land gets acquired in the first place. These are the "land grabs." In 2012, Human Rights Watch released a report alleging that the Ethiopian government was forcibly relocating tens of thousands in order to lease land to foreign investors from China and the Gulf states. "The first round of forced relocations occurred at the worst possible time of year — the beginning of the harvest," the group warned. "Government failure to provide food assistance for relocated people has caused endemic hunger and cases of starvation."

Human-rights activists have raised similar concerns about land grabs in Cambodia. Government officials frequently take advantage of the country's weak property rights system to evict poorer farmers from their land. By some estimates, the state has now leased or sold off two-thirds of the country's most fertile land to large agricultural firms overseas

Even in places where there's no violence involved, some observers have warned that these land deals can raise troubling questions. A 2010 World Bank report argued that farmers in poorer countries often lack the ability to make fair trades with overseas investors — because of weak property rights, say, or poorly enforced contracts. (In some parts in Africa, village chiefs might be making deals on behalf of the community, without their knowledge.)

Other critics have argued that it seems perverse for countries that are struggling to feed themselves to give up control of their soil and freshwater. The PNAS study, for instance, points out that Sudan is leasing much of its best farmland on the banks of the Blue Nile to overseas investors who are exporting food out of the country. Meanwhile, much of the population in this otherwise dry country has become increasingly dependent on food aid and subsidies.

The farmland trade is likely to become more popular

The pros and cons of the farmland trade are still an area of much dispute — in part because there's so little data on the actual specifics here. Only recently have researchers estimated how much land and freshwater was actually being bought and sold. And there are plenty of questions remaining: Where do the crops grown on traded land actually go? How much do yields improve when foreign investors move in? What happens when locals became laborers for foreign commercial farms rather than small farmers?

Land-trading is only likely to become more popular in the years ahead — especially if grain prices ever spike again or if more governments get nervous about securing food supplies. And many onlookers are worried about a corresponding rise in land grabs. Fred Pearce, who investigated the practice for his 2012 book The Land Grabbers, put it this way in an interview with the Guardian: "Land grabbing is having more of an impact on the lives of poor people than climate change."

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