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Global grain reserves tighten even as food prices fall

* FAO food price index falls 3 points to 211 points in Nov* FAO trims cereals output forecast for 2012, sees tightstock levels* Price volatility set to continue-FAO senior economist (Adds senior economist...
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StatsCan confirms small crops, but reaction subdued

CNS Canada – Canada’s grain and oilseed production will be much smaller than the record crops of 2013-14, according to survey results Statistics Canada released Thursday — but a lack of reaction in futures markets was seen as a sign that the trade is already looking beyond the report.

“All of the numbers came in at the low end of trade expectations, which is bullish on the surface,” said Mike Jubinville, of ProFarmer Canada.

However, the immediate reaction in the futures market was subdued, with ICE Futures Canada canola contracts only up $1-$2 per tonne and U.S. wheat futures narrowly mixed.

“Wheat, durum, canola, barley, oats, peas, lentils… everything with the exception of flax looks bullish in this report,” said Jubinville.

“It should be friendly,” added Chuck Penner of LeftField Commodity Research on the smaller production numbers, but “everybody is more focussed on the (U.S.) soybean crop and what it will do.”

Penner expected the smaller Canadian crops would likely have more of an impact on basis levels than the futures going forward, with Canadian cash bids for wheat, canola, and oats likely showing some strength relative to their U.S. counterparts, and barley performing strongly relative to corn.

StatsCan pegged Canadian canola production for 2014-15 at 13.91 million tonnes, which compares with the record 17.96 million-tonne crop grown in 2013-14. The number was at the low end of trade estimates, but would be in line with historical averages and the crop grown in 2012-13.

The smaller canola production should see ending stocks tighten for 2014-15, and may also reduce the transportation issues over the upcoming season, said Jubinville.

All-wheat production (including durum) was pegged at 27.7 million tonnes by StatsCan, which was at the low end of trade guesses and nearly 10 million tonnes below the 37.53 million grown the previous year. Of that total, durum was estimated at 4.95 million tonnes, which compares with 6.51 million in 2013.

Oats were estimated at 2.64 million tonnes, from 3.89 million the previous year, while barley was pegged at 7.16 million tonnes, well below the 10.24 million harvested in 2013.

Peas, at 3.56 million tonnes, were down slightly from the 3.85 million-tonne crop the previous year, while lentils were up slightly at 1.93 million tonnes, from 1.88 million.

Flaxseed was another of the few major crops to see increased production on the year, with StatsCan forecasting a 908,100-tonne crop. That compares with 712,300 tonnes in 2013-14.

– Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

Table: A quick summary of Statistics Canada’s crop production estimates for 2014-15, in millions of tonnes, released Aug. 21, 2014. Pre-report estimates are included for comparison.

StatsCanPre-reportFinal2014-15ideas2013-14Durum4.9535.000 – 6.0006.505All wheat27.70427.800 – 29.90037.530Oats2.6392.760 – 3.1003.888Barley7.1647.500 – 8.20010.237Flax0.9080.800 – 0.9000.712Canola13.90813.800 – 15.00017.960

 

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Canadian Farmers May Harvest Less Wheat and Canola in 2014

Canadian wheat growers will probably reduce output by 26 percent this year and canola production will also fall, the government’s statistics agency said today.

Wheat production will drop to 27.7 million metric tons from a record 37.5 million in 2013, Statistics Canada said in a report from Ottawa. The average estimate of 10 analysts surveyed by Bloomberg News was 29.1 million. The canola harvest in Canada, the world’s largest grower, will fall 23 percent to 13.9 million tons. Analysts had forecast 14.8 million.

Growers on the prairies said excessive rains in late June were likely to limit harvests, after flooding prompted local governments in Saskatchewan and Manitoba to declare states of emergency. Canadian farmers see output at “more normal levels” in 2014 after record spring-wheat, durum and canola crops last year, Statistics Canada said.

“The report in general is below the trade’s estimates,” David Reimann, a market analyst at Cargill Ltd. in Winnipeg, Manitoba, said in a telephone interview. “It’s a bit supportive to the canola market.”

The report is “mildly bullish” for canola as there may not be enough supplies to maintain the current level of exports and domestic processing, John Duvenaud, the publisher of Wild Oats Grain Market Advisory, said today on a conference call.

Limited Rallies

At the same time, any rally in canola prices may be limited by the “landslide” of soybeans expected from the U.S., Reimann said. Output will rise to an all-time high of 3.82 billion bushels this year, the U.S. Department of Agriculture said on Aug. 12.

Canada’s spring-wheat output will drop 27 percent to 20 million tons, while durum will fall 24 percent to 4.95 million tons. Soybean production is expected to increase to 5.9 million tons, surpassing the all-time high of 5.2 million tons a year earlier, the government agency said.

Statistics Canada said it interviewed about 12,850 farmers from July 23 to Aug. 4.

While planting in many parts of Western Canada was delayed this spring by cool weather and excess rain, warmer, drier conditions have helped fields recover, reports from Alberta, Manitoba and Saskatchewan show. More warm weather is needed as crops are 10 days to two weeks behind normal development in many areas in Saskatchewan, Canada’s largest producer of wheat and canola, the province said in an Aug. 14 report.

“The crops in general are average at best,” Wayne Palmer, a senior market analyst with Agri-Trend Marketing in Winnipeg, said in an e-mailed statement before the report. It’s “a total different story this year with crop production.”

Farmers collected record supplies of wheat and canola in 2013 amid higher average yields. Yields are expected to stay above average in 2014 even after the delayed planting and flooding in parts of the prairies, CWB said after a July tour.

Wheat futures on the Minneapolis Grain Exchange slid 2.6 percent this year through yesterday, and canola prices declined 5.7 percent on ICE Futures Canada in Winnipeg. 

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No Brie for Moscow as Cheeses Stack Up in France After Ban

At Alexander Krupetskov’s one-window cheese store in central Moscow, sales of products from France have tripled in the past two weeks.

Shoppers are stocking up on foods set to become scarce after Russia banned a range of products from the European Union and the U.S. in retaliation for sanctions over Ukraine. The nation of 143 million has been one of the fastest-growing export markets for French cheesemakers as Moscovites acquire a taste for creamy brie, pungent camembert and spicy Roquefort.

“The very foundation of the shop has been cast into major doubt,” said Krupetskov, who has four weeks of inventory left.

Waging Financial War

French cheese exports to Russia climbed 29 percent to 49.5 million euros ($66 million) last year, beating a 4.4 percent increase in total exports to 3 billion euros. Brie shipments to Russia rose 37 percent, while sales of stronger-tasting Roquefort advanced 13 percent, Eurostat trade data show.

At the Rungis food market outside Paris, a 30-hour drive west of Moscow, Nicolas Medard, deputy director of Thomas Export, says 100,000 rounds of brie headed for Russia are stranded after the ban announced on Aug. 7, with no new destination for now.

“All these cases were for Russia,” Medard says, pulling a tin of Pere Toinou brie from one of 2,000 plastic-wrapped cardboard boxes. “We’ll lose about 120,000 euros.”


Photographer: Andrey Rudakov/Bloomberg

Cheeses imported from the European Union, including brie from the President Cheese brand.


Russia’s blacklisting of $9.5 billion of agricultural products and food from the U.S., the EU, Norway, Canada and Australia is likely to accelerate annual inflation to 8 percent in 2015, above a target of 4.5 percent, according to government officials.

Specialty Store

Thomas Export may lose about 1.3 million euros in total sales due to Russia’s ban, around 4 percent of the company’s revenue, according to Medard. Sales to Ukraine are also in decline, he said.

In addition to Roquefort, Krupetskov displays French cheeses such as Fol Epi and Saint Agur. At the specialty store, which the cheesemonger says is the first of its kind in Moscow, French varieties accounted for 60 percent of the selection, with the remainder Swiss.

Swiss exporter Intercheese AG said last week it’s been contacted by Russian buyers looking for cheeses they can no longer get from the EU, such as mozzarella, Gouda and Edam.

Krupetskov, who says he panicked when he heard about the import ban, is looking to sample cheese from Latin America or Israel that might help restock his shelves.



.


Production Halt

The EU exported 257,000 tons of cheese to Russia last year, accounting for 33 percent of shipments outside the bloc and 2.6 percent of production. Cheese and curd shipments to Russia had a value of 985 million euros, with the Netherlands, Germany and Lithuania the biggest suppliers.

Dutch dairy producer FrieslandCampina said yesterday it halted production of cheese specifically for the Russian market. The company said it exported about 190 million euros of dairy products to Russia last year, and said the ban is adding to pressure on dairy markets.

While Germany and the Netherlands mostly sell bulk varieties such as yellow Edam to Russia, France and Italy ship higher-value specialty cheeses, said Bart Van Belleghem, managing director of the European Association of Dairy Trade, or Eucolait.

Export prices for French cheese were an average 4.30 euros per kilogram (2.2 pounds) last year, while Italy got 6.39 euros per kilogram, trade data published by Eurostat show. That compared with 3.36 euros a kilogram for Germany, the EU’s biggest cheese exporter.

Price Pressure

France and Italy ranked eighth and ninth among EU cheese exporters to Russia last year, meaning “the effects will be felt less harshly than in, say, Lithuania,” Van Belleghem said by telephone from Brussels on Aug. 14. “It could result in some price pressure, but I expect it to be less than for Gouda-type cheeses.”

At Societe Fromagere de la Brie, a cheesemaker in Saint-Simeon in the Brie region southeast of Paris, director Philippe Bobin saw no direct impact on earnings. He was concerned that falling milk prices will hurt the farmers who supply his company, making it tempting to drop dairy for growing grain.

The company, one of the last two artisanal brie makers in the region, makes the traditional variety from raw milk as well as a pasteurized version for exports. Societe Fromagere de la Brie lifted sales 8 percent last year to about 10 million euros.

Milk Prices

“The impact of the Russian embargo may be more violent and quicker than we think,” Bobin said. “As of this week, milk prices in the trade are starting to fall. We risk selling our cheeses at a lower price, but recompensed by the lower purchasing price of the raw material.”

The average milk price paid by 13 French dairies in August was 38.154 euro cents a liter, compared with an average base price of 38.021 euro cents in July for 19 dairies, according to data published online by milk producers.

Russia may have trouble finding a cheese supplier to replace Europe, Van Belleghem said. The country was 51 percent self-sufficient in cheese last year, while imports from the EU accounted for 29 percent of supply and Belarus supplied 12 percent, according to data from the European Commission.

“For milk powder and butter, I don’t expect any problems, there’s sufficient availability,” Van Belleghem said. “For cheese from Europe, there aren’t too many alternatives.” 

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Huge crop or early frost: Race is on - Farm and Dairy

Huge crop or early frost: Race is on - Farm and Dairy | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

When I walked into Dr. Waid’s office a few days ago, he greeted me as the farm boy he once was: “How do you like this autumn?”

I laughed. He was right. It has felt like autumn all summer.

September is my favorite month, and I have had three months of it already. If you are a corn grower, you wonder if you could just get a little of this global warming so many people are talking about!

Today it is supposed to be 82 degrees, and most days in the seven-day forecast are supposed to be 80 or so for highs. Finally!

I would get excited that we have a chance to catch up some heat units, until I remember that this is August. This is the month we normally see high 80s and worry that the temperatures are too high.

The farmers in the Western Corn Belt are happy. There, the crop is ahead of normal and the temperatures are mild for them, which means they are not triple digits and they are not worried about hurting their record crops.

Not so in Ohio, where even some normally great ground in the northwest part of the state has late, short corn. In Northeast Ohio, the temperatures have been lovely for soybeans and much too cool for corn.

The beans have sucked up the generous rains and flourished, but they need less sunlight. The corn is green and lush and looks great, although with some drowned spots and some up and down. It just looks like the end of July instead of the last third of August.

Field reports

Some of this is appearing in the early returns from what we call the Crop Tour, sponsored by Pro Farmer. The eastern leg started in Columbus Aug. 18, and is in Indiana and Illinois today (Tuesday). The early impressions are contradictory.

The tour participants are estimating the Ohio corn yield at 182 bpa versus 172 last year. However, they note that the maturity is lagging. This is credited to the late spring, but if they had lived here this summer they would have thought more about the cool weather.

USDA, meanwhile, is shaving the crop rating to 72 percent good and excellent, down just 1 percent from last week. That is still a near-record, but the same observers are conflicted about the stage of growth.

They say 70 percent of the U.S. crop is in the dough state, ahead of the five-year average of 63 percent. However, they report 22 percent of the crop dented, while 27 percent is the average.

I confess, this confuses me a bit. Which is it? Are we ahead or behind? How can we be ahead in dough stage and behind in dent?

The Pro Farmer tour puts the pod counts in both the east and the west as better than last year. They counted 1342.42 in Ohio versus 1283.61 last year. I have forgotten what size the square is they are counting.

(Add that to the long list of things I have forgotten. I am still hanging on to my anniversary, but maybe that was because I got a major reminder this year when that milestone hit 40. I have so far resisted parking in the “Senior Only” spot in the church lot, but one day when my knee is particularly ouchy I might give in.)

Exports lagging

It is not helping prices that the market thinks the crops are great and that exports have lagged. This last week we exported 38.2 million bushels of corn, but we need to do 64.2 million to maintain the USDA-projected pace.

Soybeans were reported at only 2.1 million bushels exported versus a need 18 million. That is a little ugly, and in the case of beans probably reflects the processor demand, which still keeps prices for the old crop beans more than $2 premium to the new crop.

December corn futures have spent five days above the last low. That came at 3.58 on Aug. 12. This morning (the 19th) we are trading just under 3.71.

The November soybean futures put the low in on the 14, at 10.38-3/4. They bounced off the low, getting to 10.69 the next day.

However, based on the high yields observed in the Crop Tour as much as anything, they are down almost 7 cents this morning at 10.51.

Crunch time

There are a lot of hard decisions to be made in the next month or so. Farmers have old crop corn to move, and some are planning to carry it over rather than sell at these prices. It is hard to argue against that if there is space to be had. If the crops get to maturity and yield well, space may be tight.

If we confirm a huge crop with early harvest, the lows are not yet in. If we have an early frost, we will feel like suckers for selling anything and will scramble to find #2YC to fill contract.

Keep a good supply of Tums on hand…

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Monsanto Profit Growth to Slow Next Year on Corn Prices

Monsanto Co. (MON), the biggest developer of genetically modified crops, said profit in fiscal 2015 may increase less than in recent years because lower corn futures will probably constrain its ability to raise seed prices.

Earnings-per-share in the fiscal year that begins Sept. 1 will increase by between 10 percent and a “mid-teens” rate, Chairman and Chief Executive Officer Hugh Grant said today. That’s “a little bit lower” than prior years, when “mid-teens” growth was targeted, because of declining grain prices and less corn planting, he said.

“It’s meaningful growth but it’s realistic,” Grant said on a webcast from the company’s Whistle Stop presentation in Huxley, Iowa, that was closed to media.

Monsanto will raise average prices for corn seed, its largest business, by a “mid-single digits” percentage, less than the 5 percent to 10 percent price gains targeted in prior years, Chief Operating Officer Brett Begemann said on the webcast. The price increases will come from replacing about 20 percent of older seed varieties with new offerings, he said.

Monsanto earnings are expected to increase 17 percent next year to $6.13 a share, from $5.22 in the current fiscal year, according to the average of 25 analysts’ estimates compiled by Bloomberg.

The St. Louis-based company plans to issue its formal earnings forecast in October, Grant said.

To contact the reporter on this story: Jack Kaskey in Houston at jkaskey@bloomberg.net

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U.S. biodiesel industry suffers as biofuel rule delays drag on

Aug 20 (Reuters) - The long wait for final 2014 federal biofuel use targets has compounded troubles for U.S. biodiesel producers already hit by the Obama administration's preliminary plan to slash renewable fuel requirements.

Nearly nine months behind schedule, 2014 targets from the Environmental Protection Agency could arrive in September at the earliest.

In the meantime, biodiesel producers have been squeezed by falling prices, as refiners and blenders delay purchases until they see a final mandate.

Debate about the future of the Renewable Fuel Standard has mostly focused on ethanol. But the smaller biodiesel industry has arguably been hurt more by proposed production cuts, said Anne Steckel, vice president of federal affairs at the National Biodiesel Board.

"The longer we wait, the worse the biodiesel industry is impacted," Steckel said.

The RFS requires increasing amounts of renewable fuels - including ethanol, produced mostly from corn, and biodiesel, often made from soybeans - to be blended into U.S. gasoline and diesel supplies each year through 2022.

The preliminary 2014 rule, announced in November, held the biodiesel target at the 2013 level of 1.28 billion gallons.

Producers had asked for a target of 1.7 billion gallons after producing nearly 1.8 billion gallons in 2013, and warned in a letter to President Barack Obama that a lower target would imperil billions of dollars in investments and thousands of jobs.

Renewable Energy Group, one of the few publicly traded biodiesel producers, reported a 13 percent drop in second-quarter revenues as lower prices offset an 11 percent increase in volume. Its shares have languished.

The company said the average price per gallon of biodiesel sold in the second quarter was $3.67, 21.4 percent lower than the same period in 2013.

A recent NBB survey found that nearly 80 percent of producers had cut back output this year and more than half had idled production or shut down a plant for a time. Many have cut their workforces as well.

"It's more difficult for smaller producers who don't have as much capital to take the risk of producing, not knowing what the consequences are," said Pete Moss, president of Frazier, Barnes and Associates, a biofuel consulting firm in Memphis.

Although the industry is confident it could meet a higher target, the EPA's delay means producers would have to quickly ramp up production late in 2014.

Cramming production into the final weeks of the year disrupts the market, Moss said.

The market is in "disarray," Moss said. "We are fully capable of producing higher numbers, but we really can't without some guidance."

Without the export market enjoyed by corn ethanol producers, or built-in demand from refiners that use ethanol as a cheap source of octane, some biodiesel makers have already been forced out of business.

More could shut if persisting delays leave the industry guessing at the future direction of U.S. policy, said Jeff Haas, chief executive of Seattle operations for General Biodiesel, which produces fuel from recycled cooking oil.

"We've been sailing across an ocean without a compass," Haas said.

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Corn Drops as Tour Samples Indicate ‘Fantastic’ Harvest

Corn Drops as Tour Samples Indicate ‘Fantastic’ Harvest | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

Corn and soybean futures fell in Chicago as field observations from a crop tour in the U.S. Midwest this week bolstered optimism that production will climb to a record.

Analysts assessing fields on the Pro Farmer Midwest Crop Tour reported yield potential that was higher than last year for corn in Indiana, Nebraska and Ohio. Yield outlook for soybeans was larger in Indiana, Ohio and South Dakota, while lower in Nebraska. The tour moves into Iowa and Illinois today, the top two growing states. Crops benefited from cool temperatures in many areas this summer, and much of the Midwest is forecast to see rain this week, National Weather Service data show.

Field observations show “the record-breaking potential of this season’s crop,” Chris Gadd, an analyst at Macquarie Group Ltd., said in an e-mailed report today after the bank completed its own tour of Midwest fields last week. “Corn and soybean prices are likely to weaken into harvest if the current positive weather picture remains the same.”

Corn for December delivery fell 1.6 percent to $3.6625 a bushel by 10:40 a.m. on the Chicago Board of Trade. The price has dropped 13 percent this year and touched $3.58 a bushel on Aug. 12, a four-year low. Soybeans for November delivery fell 0.9 percent to $10.435 a bushel, down 19 percent in 2014.

Corn production in the U.S., the world’s top producer, may rise to a record 14.032 billion bushels this year, the U.S. Department of Agriculture said Aug. 12. Soybean output was pegged at 3.816 billion bushels, also an all-time high.

Corn yields in Indiana may average 185.03 bushels an acre, up from 167.36 bushels a year earlier, while yields in Nebraska may average 163.8 bushels, up from 154.9 bushels, according to results from the crop tour yesterday. Preliminary estimates in Illinois showed higher yield potential for both corn and soybeans, based on 10 samples taken today before a tally of the day’s findings is released tonight.

“Things clearly are looking fantastic,” Wayne Gordon, an analyst at UBS AG in Singapore, said of the tour results.

Wheat for delivery in December fell 1.9 percent to $5.48 a bushel in Chicago. In Paris, milling wheat for November delivery dropped 0.7 percent to 171.25 euros ($227.56) a metric ton on Euronext. 

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Argentina Farmers Struggle to Finance Crops After Default

After Argentina failed to reach an agreement with 7% of the U.S. creditors that did not accept a debt restructure plan introduced in 2005, New York arbitration judge Thomas Griesa ordered that the country pay the total of US$ 1.3 billion to all creditors in the case. The South American country did not accept the order because it could bring a precedent for new claims from the other 93% creditors, and that could lift the total debt up to US$ 17 billion. Therefore, since July 31 the country went into a technical default - the second default in 13 years.

As a result, Standard & Poor's downgraded Argentina from CCC- to SD (stands for Selective Default). This means that the country will have even less access to international markets. And what this would mean for grain farmers?

In an environment of an annual inflation of 30% to 40% and a government entering a default, interest rates are likely to go up, and farmers tend to have difficulties financing the next crop, according to most experts.

The Argentinian Association of Experimental Regional Agricultural Consortium (CREA) says that the farm business in the country already pays an average of 40% annual rates. CREA also forecasts that the corn acres would fall up to 25% in the next season from the current 10.62 million acres. Corn is the most expensive crop, while the current price does not seem to be attractive.

As an alternative to banks, nearly 50% of Argentina's farmers use the local stocks exchanges and about 25% use grains as a currency and the "silo-bags as savings accounts" - keeping most of the grain in the field until it reaches the highest price, according to the Rosario Board of Trade.

Approximately 39% of grain farmers in Argentina will need to finance the next crop. The trend is that soybean stocks start to be sold faster soon, so that they get can the money to buy the inputs.

"The indebted farmers and the least capitalized would sell it soon. Just the most capitalized would still keep waiting for the best soybean price", explains to Agriculture.com Lorena D'Angelo, an independent analyst from Rosario, a port city in the Northeast of the country.

D'Angelo also said that the harder access to credits combined with lower commodity prices and inputs inflation are a growing problem. "This is a ticking bomb," she concludes.

Sales of inputs in the province of Buenos Aires, one of the major producing regions in Argentina, plummeted 30% in the year so far compared to 2013, according to the Chamber of Agrochemicals and Seeds Businesses of Buenos Aires. The chamber says that the low is related to commodity prices, climate factors, and higher costs in the country.

Government help does not seem to be on the way. Argentina's government did not give any sign that the policy of a delayed dollar value would change anytime soon. On exports, farmers have received the official dollar value (AR$ 8.30 as of today), while the parallel dollar is worth over AR$ 13, and have been taxed at rate of 20% for corn and 35% for soybeans.

As Argentina's government does not consider itself on default, the Ministry of Agriculture declined to speak with Agriculture.com on future perspectives. But situationist representative Luis Basterra, president of the Agricultural Commission of Argentina House of Representatives, revealed that he would fight for lower taxes on corn exports.

"I would like to protect our land. One of the ways I can do it is to fight the monoculture of soybeans. I think that, as the value of corn is so low, we could lower the retentions [taxes] on it. I will fight for that," he told Agriculture.com after the Congress of the Association of Non-Tillage Farmers of Argentina.

Brazilian machinery

Brazil is seen as not having as harsh an environment for the farm business as Argentina. However, credit issues were seen this year. The Brazilian National Bank of Economic and Social Development (BNDES), which subsidizes bank loans for machinery purchases in the country, have pumped less money for those purposes this year.

From January to April of this year, the bank lent R$ 3.7 billion (US$ 1.64) billion approximately) for the purchase of agricultural machinery made in Brazil, while in the same period of 2013, BNDES have pumped R$ 5.7 billion in the financial sector for the same purposes. An official statement sent to Agriculture.com by the bank says that the reduction happened because it "was the final stretch of the crop at the time."

Earlier in the year, the long wait for credit approval surprised a lot of farmers that used to access those funds without a meticulous background check. Those difficulties, on the other hand, were denied by financial institutions such as Banco do Brasil.

As a result, machinery sales in Brazil plummeted 20% in the first semester compared to the record of 41,100 unities sales in the same period of 2013. Porto Alegre newspaper Zero Hora reported recently that some John Deere dealerships reduced profit margins to attract more buyers.

Agricultural machinery produced in Brazil with 60% of the components coming from domestic manufacturers are financed through interest rates of 4.6% to 6% a year. BNDES finances the other financial institutions who offer the credit lines

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Corn Drops as Tour Samples Indicate ‘Fantastic’ Harvest

Corn Drops as Tour Samples Indicate ‘Fantastic’ Harvest | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

Corn and soybean futures fell in Chicago as field observations from a crop tour in the U.S. Midwest this week bolstered optimism that production will climb to a record.

Analysts assessing fields on the Pro Farmer Midwest Crop Tour reported yield potential that was higher than last year for corn in Indiana, Nebraska and Ohio. Yield outlook for soybeans was larger in Indiana, Ohio and South Dakota, while lower in Nebraska. The tour moves into Iowa and Illinois today, the top two growing states. Crops benefited from cool temperatures in many areas this summer, and much of the Midwest is forecast to see rain this week, National Weather Service data show.

Field observations show “the record-breaking potential of this season’s crop,” Chris Gadd, an analyst at Macquarie Group Ltd., said in an e-mailed report today after the bank completed its own tour of Midwest fields last week. “Corn and soybean prices are likely to weaken into harvest if the current positive weather picture remains the same.”

Corn for December delivery fell 0.7 percent to $3.6975 a bushel by 7:14 a.m. on the Chicago Board of Trade. The price has dropped 12 percent this year. Soybeans for November delivery fell 0.2 percent to $10.5025 a bushel, down 19 percent in 2014.

Corn production in the U.S., the world’s top producer, may rise to a record 14.032 billion bushels this year, the U.S. Department of Agriculture said Aug. 12. Soybean output was pegged at 3.816 billion bushels, also an all-time high.

Corn yields in Indiana may average 185.03 bushels an acre, up from 167.36 bushels a year earlier, while yields in Nebraska may average 163.8 bushels, up from 154.9 bushels, according to results from the crop tour yesterday. “Things clearly are looking fantastic,” Wayne Gordon, an analyst at UBS AG in Singapore, said of the tour results.

Wheat for delivery in December rose 0.4 percent to $5.605 a bushel in Chicago. In Paris, milling wheat for November delivery dropped 0.1 percent to 172.25 euros ($228.83) a metric ton on Euronext. 

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Monsanto opens learning center in Huxley

Agribusiness giant Monsanto has opened the doors to a new agricultural learning center in Huxley.Located at Monsanto’s corn and soybean breeding facility on Iowa Highway 210 southeast of Huxley, the learning center includes a series of instructional videos and displays about the company’s research, development and farm data analysis.“For 15 years, we’ve (had) a need for a learning center in Iowa, now we’ve got that,” said Dave Tierney, Monsanto’s government affairs director for the upper Midwest, during the ribbon-cutting ceremony Tuesday morning.“We can talk about some of the great work we’re doing, some of the challenges we’re facing and can bring in the community to talk about those things,” Tierney said.The St. Louis-based Monsanto also has learning centers in Illinois, Mississippi and Nebraska, each one focusing on a different aspect of the company’s work. The Huxley center concentrates on data science or “maximiz(ing) yield potential through maximum analysis.”Deputy Iowa Secretary of Agriculture Mike Naig, who attended the open house, said it is “entirely fitting and appropriate that we have a learning center in Iowa.”Naig said it makes sense for Monsanto to have a “huge presence” in Iowa, citing the state’s credentials of being the leading producers of corn, soybeans, pork and ethanol in the country.“Now that the doors are open, keep them wide open … please also keep these doors open for non-customers,” Naig said to the group of about 40 gathered for the ribbon-cutting.Tierney said the learning center, which will have 65 full-time employees, will mostly be used for customers, employee training, visits by government officials and school groups and clubs such as 4-H and FFA.Brent Schwenneker, Huxley Learning Center lead, conducted a tour during an open house of the learning center, which includes a series of short videos and displays about seed science, farm technology and data science.Monsanto began the vision and plans for the 18,000-square-foot learning center about two years ago, Schwenneker said, and just finished work on the center in the last week. Monsanto opened its Huxley facility in 2006.Schwenneker said the center was a “lofty investment” for the company, but did not say how much the learning center cost.Iowa Lt. Gov. Kim Reynolds spoke to the crowd during a lunch following the tour, and tied the learning center’s opening into the work the governor’s STEM Advisory Council is doing to encourage students’ interest in science, technology, engineering and math.Reynolds said one of the best outcomes she’s seen in the first three years of the governor’s STEM Advisory Council has been “the collaboration between educators and business and industry.”“With learning centers like this, there’s tremendous opportunity for us to do outreach, to tell our story” and to get kids into STEM learning, Reynolds said.She also plugged the new “Connect Every Acre” initiative Gov. Terry Branstad announced during a debate with State Sen. Jack Hatch, the Democratic challenger in November’s gubernatorial election, at the Iowa State Fair last week. The initiative, which builds off Branstad’s Connect Every Iowan initiative that failed to pass the state Legislature this year, is meant to expand broadband access into rural areas to help farmers utilize “data-driven technologies” in the field.“A lot of rural areas don’t have the capacity to do precision farming,” Reynolds said. “It’s the right thing to do if we’re going to keep seeing the advancements in farming — technology is a key part of that.” - See more at: http://amestrib.com/news/monsanto-opens-learning-center-huxley#sthash.RCM4kymv.dpuf
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Russia boost to send Brazil chicken exports flying

The boost to Brazilian broiler meat exports from Moscow's sanctions on rival origins will drive volumes above 4.0m tonnes next year, cementing the country's status as the world's top shipper.

Brazilian chicken meat exports will hit 4.02m tonnes in 2015, a jump of 11.8% on the record volumes of 3.60m tonnes expected for this year, the US Department of Agriculture bureau in Brasilia said.

Indeed, the increase will strengthen the country's grip as the top exporter, which had appeared to be weakening, with the gap over second-ranked US foreseen narrowing below 200,000 tonnes this year.

The prospect of a jump in exports is being underpinned in part by a weak Brazilian real, and lower feed costs which are supporting chicken producers' margins.

However, the bureau also flagged "higher world demand for Brazilian product, especially from the Russian Federation", which has turned to the South American country for supplies after imposing bans on food products from the likes of the European Union and the US, which have censured Moscow over its role in the Ukraine crisis.

'Additional market opportunity'

The bureau, highlighting "additional market opportunity for higher sales to the Russian Federation", said that, according to sources, 38 Brazilian slaughter plans were eligible to export broiler meat to Russia.

"This would allow Brazilian poultry processors to increase their supplies up to 30,000 tonnes per month early in 2015," the bureau said in a report.

This implies a potential for exports to Russia well ahead of the 60,000 tonnes shipped last year, and even the extra 150,000 tonnes outlined by Abpa, the Brazilian meat industry association.

It would also promote Russia to one of the top export markets for Brazilian chicken, behind the likes of Saudi Arabica, to which volumes in the first half of the year reached 319,000 tonnes, and Japan, at 194,000 tonnes.

Brazil has previously exported 300,000 tonnes of chicken in a year to Russia, according to Abpa.

Output surge

The extra exports would be backed by Brazilian broiler meat production seen rising 5.0% to a record 13.3m tonnes next year.

Brazil ranks third in world broiler meat production, behind the US and China, although output in the latter country has been badly affected by bird flu fears, and is seen by the USDA falling this year by 650,000 tonnes to 12.7m tonnes.

Brazilian producers "are likely to benefit from reduced production costs due to higher soybean and corn crops in the 2014-15 season", the USDA bureau said.

"The only constraint affecting next year's forecast is the slowdown in the growth path of domestic consumption due to the high level of indebtedness of Brazilian consumers, higher inflation, and higher competition from beef and pork."

The comments follow an estimate by JBS - the world's biggest meatpacker, which has expanded into Brazilian chicken through a series of acquisitions – that Russia's ditching of meat imports from the likes of Australia and the US would lift sales from the groups South American operations by $600m-800m.

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Frank Backx Aug 20, 2014 -A.M. Grain Comment

Aug 20, 2014 -A.M. Comment

 

Dec C 3.69 -3 Nov S 10.50 -3 Sep W 5.49 +3. Spring planted crops slipping again on benign weather forecasts. Only threat now would be an early frost. CD -5, 91.27

 

Sincerely,

Frank Backx
HDC Forest Location Manager 
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Ukraine harvest clouds spark wheat price revival

Wheat futures bounced 3% amid fresh concerns over the impact of Ukraine's crisis on its supplies of the grain, with the country confirming crop losses and - unconfirmed – market talk of potential export curbs.Wheat futures for September recovered from early losses to stand 2.5% higher at $5.56 a bushel in morning deals in Chicago.The bounce was attributed initially to report on the Interfax news agency that Arseny Yatseniuk, the Ukraine prime minister, had forecast a loss of 15% in the Ukraine harvest – a sum which would be equivalent to more than 9m tonnes.The prime minister's office later clarified that the 15% losses referred only to the harvests in the Donetsk and Luhansk regions, where tensions with pro-separatist rebels are worst.Neither region is actually a major wheat grower, and Luhansk one of the smaller grain-growing areas overall, although Donetsk is a major producer of corn and spring barley, as well sunflower seed, according to INTL FCStone.A figure of 15% losses would likely equate to less than 600,000 tonnes of grain.While nearly 3m tonnes of grains have already been harvested in Donetsk and Luhansk, "a certain percentage of fields in these regions continue to be dangerous for harvesting", the Ukrane farm ministry said.'Hard to believe'Nonetheless, Chicago wheat futures at midday local time (18:00 UK time) remained well in positive territory, at $5.49 ¾ a bushel, a gain of 1.3%, amid talk that Ukraine is poised to implement some form of export curbs.However, the rumours - which are unconfirmed – were viewed with great scepticism by commentators including Terry Reilly, senior commodity analyst, grain and oilseeds at Chicago-based Futures International.While Ukraine does have a history of curtailing grain shipments, "I find it hard to believe that when people have been talking of a record 63m-tonne harvest they will see the need to limit exports," Mr Reilly told Agrimoney.com, terming the rise in prices a selling opportunity."We do not see why they could do this, especially when producers need to collect whatever cash they can" to pay for autumn sowings, with credit hard to come by, and expensive, in Ukraine.A European trader reported periodic rumours of Ukraine clampdowns on exports, but said that "none have come true. I would be sceptical about this one too".Businesses affectedHowever, Mr Reilly said that he was increasingly concerned over Ukraine harvest prospects for 2015, given the continued unrest in Ukraine, and the knock-on effects on credit availability and, through a tumbling hryvnia, on the affordability of imported farm inputs.Separately, egg producer Avangardco on Tuesday raised the potential for a legal challenge to a move by Crimea's Russian-backed government to compulsorily purchase a poultry farm in the peninsula.Avangardco has also seen an eastern Ukrainian feed mill overtaken by rebels, and has cut back operations at egg production plants in the area.Other groups affected include Cargill, which said on Tuesday that it had received reports of a fire at a Donetsk sunflower-seed crushing plant, reportedly after a missile attack, while poultry-to-grains group MHP reported this month it has suspended operations at a hatching egg farm in Donetsk.
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Corn Futures Rise on Speculation U.S. Yields Won’t Top Estimate

Corn futures rose in Chicago on speculation that yields will be in line with government estimates in the U.S., the world’s biggest grower.

Yields in eastern Iowa and southern Minnesota have fallen from 2013, preliminary samples taken today on the Pro Farmer Midwest Crop Tour show. National yields probably won’t top 170 bushels an acre, within market expectations, Societe Generale analyst Christopher Narayanan said yesterday on the tour. The U.S. Department of Agriculture estimated yields at 167.4 on Aug. 12.

“The big question I think is whether or not the crop is appreciably bigger than the USDA forecast last week,” Bryce Knorr, a Chicago-based senior grain market analyst for Farm Futures magazine, said in a telephone interview. “The dry area of eastern Iowa hasn’t picked up any rain out of this week’s storms. We really have just gotten stuck in a consolidation pattern.”

Corn futures for December delivery rose 0.3 percent to $3.685 a bushel at 11:34 a.m. on the Chicago Board of Trade. Trading was 24 percent above the 100-day average for this time of day, data compiled by Bloomberg show.

Iowa was the largest U.S. producing state last year, while Minnesota was fourth, USDA data show.

Soybean futures for November delivery rose 0.5 percent to $10.4275 a bushel.

Wheat futures for December delivery climbed 1.2 percent to $5.565 a bushel. 

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China tightens checks on U.S. sorghum imports -traders

* China stepping up checks on U.S. sorghum cargoes -traders

* Could slash imports of the corn-substitute

* Has already rejected more than 1 mln T of U.S. corn

By Niu Shuping and Dominique Patton

BEIJING, Aug 21 (Reuters) - Chinese authorities are stepping up checks on U.S. cargoes of sorghum, traders said, potentially curbing shipments from the world's largest exporter of the corn-substitute.

Four traders with direct knowledge of the matter said the country's quarantine office last month asked local authorities to tighten checks of sorghum and barley, looking for impurities such as pesticide residues and heavy metals.

A quarantine bureau spokesman declined to make immediate comment.

The move comes after China has already rejected more than 1 million tonnes of U.S. corn due to the presence of genetically modified strain that has not been approved by Beijing.

Chinese feed mills have increasingly been turning to U.S. sorghum as a cheap substitute for domestic corn <0#DCC:>, which has seen prices inflated as Beijing supports the country's rural population.

"There are worries in the market, which should reduce imports of sorghum in later months," said Zhang Yan, an analyst at Shanghai JC Intelligence Co. Ltd (JCI).

JCI cut its forecast for sorghum imports to 1.6 million tonnes for the 2014/15 marketing year, down from 3.9 million tonnes predicted earlier.

China is the world's largest importer of U.S. sorghum, with its feed mills buying almost all their sorghum from the country.

"Shipments already booked or on the way to China may have no problem, but bookings after the notice may face trouble," said another industry source, who declined to be named as he is not authorised to speak with media.

"Some of the major buyers have already been informed of strict checks," said the source.

Sorghum is traditionally used to make alcohol in China but use in animal feed surged last year as the industry sought to diversify ingredient supplies and replace expensive domestic corn.

Some big buyers contacted by Reuters said they were adopting a 'wait-and-see' approach to any further sorghum purchases.

"It is still unclear if quarantine authorities are testing every shipment. They could really make things go crazy as they did for DDGS," said a trader with a large buyer in south China.

China has stopped issuing import permits and demands certification that imported distillers' grains (DDGs), a by-product of corn-based ethanol, do not contain the MIR 162 GMO strain.

Another large buyer in the southern province of Guangdong said it had stopped placing new orders but declined to say why.

China's quarantine authority has also asked ports to step up screening of alfalfa imports this month after cargoes of hay from three U.S. suppliers were found to contain unapproved GMO varieties, according to a notice on a government website.

U.S. alfalfa imports have seen rapid growth in recent years to meet demand from China's fast expanding dairy herd.

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McCain vend ses pizzas surgelées à Dr Oetker

McCain vend ses pizzas surgelées à Dr Oetker | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

McCain Foods a indiqué mercredi avoir signé un accord au sujet de la vente de ses activités nord-américaines de pizzas surgelées à Dr Oetker GmbH.

Les détails financiers de l'entente n'ont pas été dévoilés immédiatement.

L'accord porte sur la marque Ellio's aux États-Unis et comprend une licence de deux ans pour l'utilisation de la marque McCain au Canada.

Selon McCain, le secteur de la pizza ne représente qu'une petite portion de ses activités nord-américaines et sa vente permettra à l'entreprise de se concentrer sur d'autres secteurs.

La transaction comprend les activités de Grand Falls, au Nouveau-Brunswick, et de Lodi, au New Jersey. Les employés de McCain à ces deux installations se verront offrir un emploi chez Dr Oetker, a précisé McCain.

L'entente est assujettie à l'approbation des autorités réglementaires canadiennes.

McCain Foods a annoncé, plus tôt en août, la fermeture d'une usine de patates frites à l'Île-du-Prince-Édouard à la fin octobre, une décision qui entraînera la perte de 121 emplois.

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Glencore credits Canada (Viterra) for 'striking' ag results


GlencoreXstrata revealed hopes of holding on to its "striking" improvement in agriculture despite acknowledging a one-off boost from last year's bumper Canadian grains harvests.

The copper-to-cane giant - unveiling an 8.1% rise to $2.01bn in earnings for the first half of 2014, and a share buyback of up to $1bn - highlighted the performance of its, relatively small, agriculture division in the improved performance.

The division recovered from an operating loss of $20m in the first half of 2013 to an operating profit of $473m, led by an improvement in the crop marketing business, which focused on more lucrative business.

Profits in crop marketing jumped from $15m to $473m, overtaking the group's takings from energy trading.

This rise came despite a 25% drop in revenues, a reflection of lower crop prices and lower oilseed and grain volumes, down 13% and 11% respectively - although not, it appears, in Canada, where the group bought grain handler Viterra two years ago.

'Striking performance'

"The performance of agriculture was striking," Ivan Glasenberg, the GlencoreXstrata chief executive, said flagging the performance of Viterra in what was a "challenging price environment in our core commodities of barley, canola and wheat".

Viterra, which also came with an Australian business, the former ABB, made a "robust contribution" achieved a on the back of a record crop in Canada and an above-average crop in South Australia," the group said

Chris Mahoney, the group's head of agricultural products, said that "Canada was good, primarily because of the large crop in Canada which was a crop record by about 25% larger than the previous crop".

Canada achieved record canola and wheat harvests last year, of 17.96m tonnes and 37.53m tonnes respectively, supporting bumper 2013-14 exports of 8.1m tonnes for the oilseed and 21.55m tonnes for the grain, on farm ministry estimates.

'Good demand growth'

Mr Mahoney acknowledged that the "Canadian situation probably is a little bit exceptional", with harvests this year expected to prove less bountiful.

Statistics Canada will tomorrow unveil fresh crop estimates expected at 28.5m tonnes for wheat,  although up from a forecast of 27.74m tonnes in July, and 14.5m tonnes for canola, nudged up from 14.45m tonnes.

However, he also flagged improved performances in soft seed processing in Europe, and soybean crushing in Argentina.

"In fact, the trading generally was better in the first half, particularly the oil seed trading," he told investors.

Looking ahead, "we still have good demand growth.... The crush margin situation looks okay - I would say it looks good in South America.

"I don't know that the earnings will come in the same way that they came in the first half from the same bits of the division, but without making a hard and fast prediction, I would say it looks okay.

"And longer term, the outlook I think is pretty positive for the industry."

Sugar improvement

In oilseed crushing, volumes soared 73% to 2.68m tonnes, a reflection of an improved performance at the Timbues plant in Argentina, and of GlencoreXstrata raising from 33% to 50% its stake in the operation.

The group also highlighted a 42% rise to 723,000 tonnes in sugar cane processed at its Brazilian mill, Rio Vermelho, a reflection of an "ongoing expansion" programme.

The group also revealed a 31% drop to 232,000 tonnes in volumes from its farming operations, which stretch from Australia to the former Soviet Union, but failed to comment on the decline.

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Monsanto Expects 2014 U.S. Approval for New Soybean Seeds

Monsanto Co. MON +0.91% expects to begin selling new soybean seeds resistant to a broader range of herbicides in 2016 pending regulatory approvals in major agricultural countries, executives said Wednesday.

The seeds, which Monsanto intends to pair with a new and stronger weedkiller, are "on track for U.S. regulatory approval toward the end of the year" and are expected to earn international approvals in 2015, according to Robert Fraley, Monsanto's chief technology officer.

"That will allow us to do large-scale seed production next spring and next summer," Mr. Fraley told analysts and investors Wednesday at an event Monsanto hosted in Iowa.

Monsanto, the world's largest seed company in terms of sales, has sought U.S. Agriculture Department approval for the seeds since 2010, but the review has moved more slowly than the company anticipated amid stiff pushback from environmental groups. Opponents fear that broader use of harsher chemicals will make people sick and damage more-delicate crops such as grapes that may be planted nearby.

The St. Louis company bills the seed-and-weedkiller combination as a vital tool for farmers in the U.S. and elsewhere who confront growing numbers of weeds that have developed resistance to commonly used herbicides, such as glyphosate, which Monsanto markets under the Roundup brand. The so-called Roundup Ready 2Xtend soybeans that Monsanto hopes to sell are designed to withstand sprayings of glyphosate as well as dicamba, a long-used herbicide that can wipe out weeds that have developed resistance to glyphosate.

The USDA earlier this month issued a draft review for the Monsanto soybean seeds as well as cotton seeds also resistant to dicamba, marking a step forward in the review process, though not a final approval.

The new products "will become the next global soybean platform," Mr. Fraley said Wednesday.

Monsanto already has licensed the genetics that enable the seeds to resist the weedkillers to North American seed companies representing 90% of all U.S. farmland planted with soybeans, Mr. Fraley said. Those companies will pay to incorporate Monsanto's genetics into their own seeds.

Monsanto also plans to incorporate the technology into soybean seeds it sells in South America, Mr. Fraley said. A new formulation of dicamba makes it less likely to drift to other fields, he said.

USDA officials in early August wrote in a notice that broader use of dicamba ran the risk of more weeds developing resistance to that herbicide, but that farmers could balance this with a broader range of tactics to kill weeds. The agency's preference is to approve the product, according to the USDA notice, and its analysis now is open to public comment.

Bolstering soybean sales, which are smaller than Monsanto's corn seed business, is among the company's efforts to double its earnings over the next five years.

Monsanto and other seed companies have become more reliant on soybean seed sales as farmers this year trimmed acreage devoted to corn, after last year's record harvest drove down prices for the main U.S. grain. The prospect of another record corn crop this year has raised the prospect among analysts that farmers could further cut acreage dedicated to the grain next year.

Write to Jacob Bunge at jacob.bunge@wsj.com

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US too low on corn, soy yield but overstating area

The US may be underestimating its corn and soybean production prospects on yield, but is overestimating plantings, Macquarie said, adding to the evidence of crop tours released to the market.

The bank backed the consensus that the US Department of Agriculture is underestimating US corn and soybean yield potential, even after upgrading its forecasts last week to 167.5 bushels per acre for the grain and 45.4 bushels per acre for the oilseed.

"Our tour showed, as expected, the record-breaking potential of this season's crop," Macquarie analyst Chris Gadd said, flagging in particular prospects for eastern Corn Belt such as Illinois, where crops appeared "unbelievably good".

Factoring in some potential for disappointment in Minnesota and northern Iowa, where dryness has curtailed potential, Macquarie forecast the corn yield at 170.3 bushels per acre, and the soybean result at 45.8 bushels per acre, both record highs.

'Very high assessment'

The result comes amidst a series of Midwest crop tours, with Lanworth on Monday estimating the US corn yield at a record 174.8 bushels per acre, and soybean yield at 46.4 bushels per acre, after a tour which took in Illinois, Indiana and Iowa, and parts of Minnesota, Nebraska and Ohio.

Allendale is undertaking a survey due for release in two weeks' time, while the ongoing ProFarmer tour, one of the most widely followed, is showing corn yield potential and soybean pod counts broadly ahead of last year, with many states looking on course for record highs.

The ProFarmer tour has "given a very high assessment of the yields that can be expected," Commerzbank said, adding that "many observers therefore expect the US Department of Agriculture to upwardly revise its yield estimates for the US corn and soybean crops again".

'More abandonment'

However, Macquarie cautioned over levels of crop abandonment in some states, such as Iowa and Minnesota, but also Nebraska where even though crop prospects are "excellent" the east of the state has been hit by "greater volumes of hail storms", besides high winds.

"There are likely to be higher-than-normal volumes of abandonment in the east," Mr Gadd said.

Furthermore, analysis of data on Friday from the Farm Service Agency, which collects data from insurance policies against lost crops, to those which could not be planted, indicates that the USDA may be too generous in its corn and soybean sowings estimates.

The data "in our view suggest the USDA's area has overestimated plantings in some states", Mr Gadd said.

Macquarie estimated corn area at 90.5m acres, 1.125m acres below the USDA figure, and soybean plantings at 84.4m acres, some 400,000 acres below the official guess.

The impact on the soybean balance sheet was to offset the impact of highest yield expectations, and in corn to curtail the US harvest at 14.017bn bushels, 15m bushels below the USDA forecast.

Data interpretations

Brokers have in fact revealed different interpretations of the FSA data which, in not including only farms eligible for insurance, do not cover the complete US sector.

Doane said too that the FSA report "suggests that corn planted acreage at 91.6m acres may be too high".

US Commodities said that the FSA suggest that the USDA corn sowings estimate is 1.5m acres too high, with the soybean number optimistic by 500,000 acres.

However, another broker said that the data were "incomplete" and "should be disregarded", while, at Futures International, said that "we don't see the number this year as a major market factor, unlike recent years such as the drought in 2012".

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U.S. crop growers face sell or store conundrum: Maguire

U.S. crop growers face sell or store conundrum: Maguire | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

(Reuters) - With corn and soybean prices languishing at their lowest levels in years under the weight of projections for record-large harvests this fall, American growers look set to try to store rather than sell as much of this year's supplies as possible.

And with U.S. on-farm storage capacity at over 13 billion bushels at its highest level in 25 years, farmers theoretically have plenty of room to squirrel away large chunks of this year's production until higher prices prevail.

Yet as abundant as storage options may be, this year's corn and soybean crops are likely to be so large that they will surpass total on-farm storage capacity by several billion bushels, even if no other crops such as wheat, sorghum or barley take up space in on-farm silos.

In fact, national corn and soybean output will likely surpass total on-farm storage capacity by a record 4.84 billion bushels this year to suggest that farmers will need to sell off a meaningful portion of their crops at harvest whether they want to or not.

But not all growers will be in the same position, as Eastern Corn Belt producers are likely to face larger overhangs of fresh supplies than growers located farther West due to less storage capacity out East.

This means that growers will need to take into account local and regional storage tendencies as well as their own storage capabilities when trying to calculate whether they should sell now or store for later.


MAKING ROOM

Recent reports from cash grain brokers suggest that growers throughout the Midwest have recently been clearing out any crop supplies left over from last year to make room for the upcoming projected record haul.

And while such house cleaning takes place this time every year, growers seem to be especially committed to storing this year's crops because of the prevailing low price of both corn and soybeans, which have fallen below the cost of production in some areas.

What's more, the current forward structure of the corn futures market rewards growers who are able to hold off from selling their grain over the near term by offering higher prices for deferred delivery slots. This contrasts with the forward price curve of the U.S. soybean futures market, where nearby prices are trading at a premium to later dates.



But this does not necessarily mean that those growers who can store their crops in the West will be guaranteed higher prices later on.

Growing states dotted along the fringes of the Midwest such as Kansas and South Dakota are also projected to have more crops than they can store this year, and will likely filter any resulting crop sales to consumers located on the Western half of the county, and thereby steal market share from core WCB growers.

The growers who can hold off from selling into the currently depressed markets have a chance of receiving higher prices down the road in the event of some as-yet-unexpected rally.

But at the same time, there is also a risk that crop prices may slip further going forward, which could leave growers holding large stockpiles and ruing the fact that they did not fire off more sales when they had the chance.

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Russian Grain Trader Beating Cargill to Olam as Exports Surge

Russia’s OOO Trading House RIF beat international competitors from Olam International Ltd. (OLAM) to Cargill Inc. to become the country’s second-largest grain exporter after it boosted shipments more than eightfold.

RIF shipped 1.95 million metric tons of grain in the season ended June 30, giving it an 8 percent share of Russia’s exports, data from the National Association of Exporters of Agricultural Products show. Glencore Plc (GLEN) was the top exporter with a 13 percent share, Olam ranked third and Cargill fourth.

The company’s shipments surged more than any of Russia’s top 20 exporters after the terminal on the Don River it uses trebled capacity last year, according to Petr Khodykin, who owns RIF and has a controlling stake in the southern Russian port. The country’s grain exports rose 62 percent to 25.4 million tons last year, the Agriculture Ministry said July 7.

“It was completely unexpected,” said Sergei Balan, the association’s president. “It’s really a new player. It came out and seized a dominant position,” he said of RIF.

Glencore’s Russian unit International Grain Co. shipped 3.17 million tons last season, up 33 percent from the previous 12 months, according to the association. RIF’s exports surged from 231,000 tons in the 2012-2013 season, when it ranked No. 14, according to the data posted on the association’s website this month. Glencore and Cargill declined to comment on shipment volumes in Russia and Olam had no immediate comment.

Founded in southern Russian city of Rostov-on-Don in 2010, RIF exported all its grain through the terminal owned by OOO Promexpedition, which increased capacity to 250,000 tons a month after an upgrade that ended last August, Khodykin said in a phone interview Aug. 8. The port ships about 2.25 million tons a year as it’s covered in ice for three months, he said.

Stake Disclosed

Khodykin, 44, who said he disclosed for the first time his ownership in RIF and Promexpedition, said the original plan for the port was to ship grain for other exporters.

After getting no commitment from trading companies by the start of last season because the outlook for Russia’s harvest was unclear, Khodykin said he decided to increase RIF’s exports to load the terminal as much as possible. RIF plans to remain the only user of the terminal this season, he said.

RIF’s advance in the ranking follows Olam becoming No. 2 exporter from No. 13 in 2012-2013 season after it bought a terminal in Azov and more than doubled shipments. Olam exported 1.85 million tons of grain from Russia last season, or 41 percent more year-on-year, the association’s data show.

Having the same owner as the terminal probably lowered RIF’s costs compared with some other traders, according to Vladimir Petrichenko, director of market researcher OOO ProZerno. It also didn’t have to compete with others for port capacity, he said.

Wheat Shipments

RIF mostly exports to Egypt, Saudi Arabia, Turkey and United Arab Emirates, with wheat accounting for about 60 percent of the shipments, Vadim Sarkisov, the company’s chief executive officer, said in a phone interview from Rostov.

The company started by selling grain to larger traders before exporting on its own account, according to Khodykin. He said he entered cereals trading in 2004 with construction of the initial Promexpedition terminal, in which he had a 20 percent stake. He bought control of the port in 2011.

Promexpedition plans to expand the terminal’s capacity to 350,000 tons a month and add as much as 30,000 tons of storage, Khodykin said. The sanctions that the U.S. and European Union put on Russian banks because of the conflict in Ukraine may get in the way, he said.

“It’s not easy to make a guess about the timeline for the project, given the latest political events,” he said. “Access to credit is being clipped all around the place.” 

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Low Commodity Prices Could Affect 2014 Equipment Purchases

Low Commodity Prices Could Affect 2014 Equipment Purchases | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

With fall right around the corner, farmers are gearing up to harvest one of the largest crops in history. Corn production for 2014/15 is forecast 172 million bushels higher at a record 14 billion bushels. USDA’s first survey-based corn yield forecast, at a record 167.4 bushels per acre, is up 2.1 bushels from last month’s trend-based projection.

In Mid-June, more than 581 farmers across the country took part in AgWeb’s 2014 Equipment and Machinery Research survey. Participants were surveyed on product questions across eight categories, including: tractors combines, sprayers, irrigation, grain storage, implements, tillage and financial sectors.

With a bumper crop on the way, commodity prices are predicted to continue falling. As a result, according to the survey, agriculture industries could see the affects, including the machinery sector.

More than 70% of the participants answered that the recent decline in commodity prices would affect their willingness to buy machinery in 2014. More than 17% remained unchanged and more than 10% answered that prices will not affect their purchase decisions.

Even with the forecast bumper crop and low prices, participants said if they were to purchase equipment before the end of the year, a planter would be at the top of their lists, with a corn head following in close second.

Here are other highlights from the survey:

Irrigation

  • 82% do not own irrigation equipment, 17% do own irrigation equipment
  • 83% are not likely to purchase irrigation equipment, 10% plan to purchase new irrigation equipment within the next 3-5 years


     

Spraying

  • 44% own or lease one pull-behind, 23% own or lease one self-propelled 
  • 31% are likely to buy a self-propelled in 2016 or beyond, 29% are likely to buy a pull-behind in 2016 or beyond


     

Tillage

  • 36% conventional tillage, 34% partial no-till, 17% no-till
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Ukraine talk helps wheat. Palm dips again

Wednesday opened on a negative note, although less so for wheat, amid some continued market talk over restrictions, some say temporary, on Ukraine exports.

The rumour has gathered some support on ideas that any limitations would be down to the reduced quality of this year's harvest in Ukraine, as in the neighbouring European Union, and a desire to keep tabs on milling supplies.

At Iowa-based broker Market 1, Mike Mawdsley flagged "talk of Ukraine's flour millers asking their government to halt exports until this year's crop can be better assessed".

At Benson Quinn Commodities in Minneapolis, Brian Henry put the speculation in terms of "Ukraine potentially taking a step back from the export market to audit quantities of milling quality wheat".

The idea is of Ukraine "having to back away from an export market they haven't been very involved in to date.

"There's concern about their overall supply of milling quality wheat and a study of what they have a milling quantities makes sense."

'Too much rain'

The talk followed a report on Tuesday that Ukraine's prime minister, Arseny Yatseniuk, had estimated at 15% losses to the country's grains production from turmoil in the east of the country, although a later clarification established that the losses referred only to the troubled Donetsk and Luhansk regions.

And Ukraine is not the only factor offering some support to the wheat market, with continued concerns over the impact of rain in at least delaying, and potentially damaging the quality, of the US spring wheat harvest.

"Harvest remains delayed in the northern states as too much rain dampens efforts," CHS Hedging noted.

Data ahead

As far as Canada's spring wheat crop goes, Agrimoney.com is hearing talk of average yields and quality in Manitoba, but the market will gain more of an insight on Thursday with the release of a Statistics Canada crop report.

This is expected to peg the Canadian all-wheat crop at 28.5m tonnes, well below the high-yielding 2013 result of 37.53m tonnes, but an upgrade from StatsCan's July forecast of 27.74m tonnes.

Within that, the durum crop is pegged at 5.2m tonnes, up from 5.04m tonnes in July.

Hopes have also improved for Australia, where some dry eastern areas have received rains, as has Western Australia, where moisture concerns had been ticking up a bit.

In Chicago, wheat dropped, if modestly, by 0.1% to $5.45 ½ a bushel for September delivery, as of 09:45 UK time (03:45 Chicago time).

Tour results

Indeed, losses were greater in corn, where the December contract, dropped 0.6% to $3.70 a bushel, attempting to cling on to its 20-day moving average.

The ProFarmer Midwest crop tour overnight came out with more in the way of strong corn yield data, pegging the Nebraska result at 163.77 bushels per acre, above the 154.93 bushels per acre estimated a year ago.

For Indiana, the yield was put at a record 185.03 bushels per acre, up from an estimate of 167.36 bushels per acre from last year's tour.

(The US Department of Agriculture foresees a yield of 170 bushels per acre for Nebraska and 177 bushels per acre for Indiana, after results last year pegged at 173 bushels per acre and 179 bushels per acre respectively.)

'Smoking hot margins'

Still, there could be strong data on the demand side too today, with weekly US data on the production of ethanol, for which corn is the country's default feedstock.

"Smoking hot ethanol margins and robust ethanol exports for the first six months of the year have helped keep a floor under the corn market in the face of this large crop," CHS Hedging said.

As for China, where dryness which could cause a drop in corn production this year is being monitored by the market, some rain is expected in parts of the Yangtse valley and parts of the North East this week.

"Showers will improve moisture a bit in far south western North East China, but dryness will continue to stress corn and soybeans in south central North East China," MDA said.

"Dryness will also continue in south central and northern North China Plains, and north central Yangtse valley."

Five-year low

For soybeans, China is mainly a concern in Chicago on the demand side, with the country the top importer of the oilseed.

A 0.7% drop to 4,530 yuan a tonne in January soybean futures on China's Dalian exchange was hardly a help,

And staying abroad, the Kuala Lumpur palm oil market, which has become reliably bearish, saw a 0.9% drop to 2,050 ringgit a tonne in the November contract, which earlier hit 2,049 ringgit a tonne, the lowest for a benchmark lot since October 2009.

The market was depressed this time by data from cargo surveyor Intertek showing a drop of 5.4% in Malaysian palm oil exports in the first 20 days of the month, although that actually represented an improvement, after the 15% fall for the first 15 days of August.

And it has to be said there is some upbeat talk in Kuala Lumpur, in terms of crude oil prices giving the palm oil market help, following on from supportive comment elsewhere on Tuesday.

Supply tightness

Still, the US crop tour was not all bearish, with the Nebraska pod count put at 1,103.26 per  square yard (ie 3 feet by 3 feet), below last year's finding of 1,138.94.

For Indiana, an improvement was seen, to 1,220.79 pods per square yard, up from 1,185.14 last year.

And there is some concern over the tightness in near-term US soybean supplies causing market ripples.

"We have to concede that the stocks-to-use ratio is extremely low for 2013-14," one US broker said.

"This may be what is holding the November contract back from collapsing like corn did."

CHS Hedging said: "Rain remains in the forecast across the Midwest this week and should limit new crop rallies.

"However, if old crop explodes there's no telling what may happen next."

In fact, the November lot shed 0.6% to $10.47 a bushel, while the old crop September contract eased 0.1% to $11.18 ¾ a bushel.

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Bunge speeds Australia re-entry with port project

Bunge accelerated its efforts to regain scale in Australia – where it once owned assets from flour milling to steel – by revealing plans for a second port grain terminal, less than a month after opening its first.

Bunge – one of the ABCD group of big agriculture traders, with Archer Daniels Midland, Cargill and Louis Dreyfus – said that its Australian subsidiary was to build a bulk grain export terminal at Geelong, in the state of Victoria.

The terminal, which will handle 450,000 tonnes of grain a year, will comprise a grain receival facility and three storage silos, and link to an existing woodchip loading facility at the port.

Chris Aucote, the Bunge Australia general manager – who is also president of the Australian Grains Exporters Association, and was formerly grains representative of the Victorian Farmers Federation – said that the company had received "very good co-operation" from Geelong's port managers.

"We see this investment as being strongly positive," Mr Aucote said.

Return to Aus

The announcement comes less than a month after Bunge loaded the first cargo – of 18,000 tonnes, bound for the Philippines - at its Aus$40m-50m Bunbury port in Western Australia, Australia's top grain-growing state, which has for export facilities been the fiefdom of co-operative CBH.

Indeed, CBH itself until the 1980s operated at Bunbury, where Bunge has developed storage capacity for 50,000 tonnes of grain, and received permits to ship up to 500,000 tonnes in its first two years.

The Geelong site will further mark Bunge's return to an Australian market which it first entered in 1923, 16 years before the creation of the Australian Wheat Board, with a monopoly for the country's grain marketing.

Bunge over the next 50 years attempted to boost its profits in Australia through expanding into flour milling, buying operations in New South Wales, Queensland and Victoria, baking, through the acquisition of Herbert Adams Holdings, and steel, in 1959 becoming a distribution agent for Broken Hill and John Lysaght.

The group also expanded into pig rearing, owning Fidelity Meat Industries at Albury in New South Wales.

However, Bunge said it sold "all the assets" it owned Australia in 2001 – only to return six years later when Australian grains marketing was deregulated and the Australian Wheat Board (AWB), for which Mr Aucote once worked, stripped of its monopoly.

Foreign investment spree

The deregulation has lured a series of foreign investments in the grains industry in Australia which, as a large wheat producer, but relatively small consumer, is seen as a key source for crops to meet food demand in nearby Asia.

However, unlike many of its peers, Bunge has thus far grown through investing in its own operations rather than through acquisition.

US-based Cargill has bought the trading operations of AWB, and CHS a 50% stake in Agfarm, while Archer Daniels Midland last year failed in an attempt to buy GrainCorp, of which it owns 20%.

In June, Japan's Mitsubishi Corporation's purchase of control of Olam International's Australian grains business. In February, Japan-based Sumitomo Corp bought control of Australian cereals handler Emerald Grain.

Growing competition

Nonetheless, the Australian government has remained cautious over the market share held by some grains businesses, rejecting ADM's takeover of GrainCorp in November in part on grounds that it might stifle competition.

Bunge's Geelong plans represent the second announcement since then of a new port facility within GrainCorp's stronghold of eastern Australia.

Noble Group has joined with logistics operator to develop facilities at Port Kembla, New South Wales, in which Cargill and Emerald Grain may also invest,

In Western Australia, Bunge has already held talks with rival grain traders over access to the Bunbury site, and CHS said last month that it was "no secret that a lot of companies have been looking at investment options [in the state], whether in Kwinana, Geraldton, Albany or Esperance".

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Frank Backx Aug 19, 2014 - Closing Grain Comment

Aug 19, 2014 - Closing Comment Dec C 3.72 +1 Nov S 10.53 -5 Sep W 5.47 +4. Mixed day yet again. Pro Farmer tour finding big yields. Maybe too many people leaning to the short side? CD -.49 on weak CDN economy vs US. Sincerely,Frank BackxHDC Forest Location Manager
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