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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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United States Drought Monitor > February 9, 2016

United States Drought Monitor > February 9, 2016 | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

From February 2-3, a major low pressure system moved from the central Great Plains northeastward across the Great Lakes region and southern Ontario, accompanied by a variety of hazardous weather conditions to the central and eastern contiguous U.S. These hazards included heavy snowfall and blizzard conditions generally to areas north and west of the storm track, and severe weather to the Southeast. Straight-line and tornadic winds were responsible for most of the severe weather damage. Over the weekend, an area of low pressure developed off the Southeast Coast, accompanied by heavy rain over coastal areas, including most of Florida. This ocean storm tracked to the northeast, well off the Atlantic Coast, bringing heavy snow (generally 6-12 inches) to New England and eastern Long Island, NY. Some locations on Cape Cod also experienced high winds and blizzard conditions, with preliminary reports indicating peak wind gusts near 65 mph in Nantucket.

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Vilsack unveils USDA budget proposal

Vilsack unveils USDA budget proposal | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
Proposal cuts crop insurance premium subsidy, increases funding for conservation, calls for increased presence in Cuba.
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Weekly Outlook: Exports of Ethanol and Distillers' Grains Remain Strong

Weekly Outlook: Exports of Ethanol and Distillers' Grains Remain Strong | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

U.S. exports of fuel ethanol were generally small prior to 2010. For 2010, the U.S. Energy Information Administration (EIA) estimated exports at 398.5 million gallons. Exports peaked at just under 1.2 billion gallons in 2011 when Brazilian ethanol supplies were in short supply. Exports declined to 619 million gallons in 2013, but recovered to 846 million gallons in 2014.

EIA data are not yet available for December 2015, but based on EIA data through November and Census data for December, it appears that fuel ethanol exports in 2015 were near 844 million gallons, about equal to exports in 2014. Canada is the largest importer of U.S. ethanol, accounting for about 30 percent of the total in 2015. Other large importers in 2015 included Brazil (14 percent), the Philippines (9) percent, China (8 percent), and South Korea (7 percent). In all, 77 countries are identified as importing some U.S. ethanol in 2015.

Imports of fuel ethanol, as reported by the EIA, totaled less than 16 million gallons in 2010, reached a peak of 494 million gallons in 2012 when the U.S had a relatively small corn crop and high corn prices, and declined to just under 75 million gallons in 2014. Based on EIA data through November and Census data for December, it appears that imports of fuel ethanol were near 93 million gallons in 2015. Almost all of those imports were from Brazil.

Based on EIA monthly data for January through November and weekly EIA data for December, domestic ethanol production in 2015 was record large near 14.76 billion gallons, about three percent more than the previous record production in 2014. Based on weekly ethanol stocks estimates, it appears that domestic inventories grew by about 95 million gallons during 2015. Based on these estimates, and the estimates of exports and imports described above, domestic ethanol consumption totaled about 13.914 billion gallons in 2015. That calculation is about 3.5 percent larger than consumption in 2014. Monthly EIA data for December is scheduled for release on February 29 and that data will allow for a more accurate estimate of production, trade, stocks, and consumption for 2015.

Exports of U.S distillers grains first exceeded one million short tons in 2005. Exports grew to about 9.9 million tons in 2010, declined in 2011 and 2012, but reached a record 13.8 million tons in 2015. China was the largest importer of U.S. distillers grains in 2015, accounting for 50 percent of the total. Other large importers included Mexico (13 percent), Vietnam (5 percent), and South Korea (5 percent). A total of 45 countries are identified as importing some U.S. distillers grains in 2015.

The USDA began estimating ethanol co-product production in October 2014 with the release of the first Grain Crushings and Co-Product Production report in February 2015. The report released on February 1, 2016 contained production estimates for December 2015 and provided the first full calendar year of dry mill and wet mill co-product production estimates. Those co-products include a number of categories, including distillers dried grains (DDG) and distillers dried grains with solubles (DDGS). Production of those two products in 2015 is estimated at 27.7 million tons. Based on Census estimates, exports (13.8 million tons) accounted for about half of total production of distillers grains in 2015 with the other half accounted for by domestic consumption. Domestic consumption also included large quantities of other co-products, including distillers wet grains (DWG), corn germ meal, corn gluten feed, corn gluten meal, and wet corn gluten feed.

Exports of fuel ethanol accounted for about 5.7 percent of estimated U.S. ethanol production in 2015, representing about 300 million bushels of ethanol feedstock, mostly corn. The recent sharp decline in gasoline prices that has resulted in ethanol prices being much higher than gasoline prices has raised concerns about the demand for ethanol in both the domestic and export markets. We argued in a recent farmdoc daily article that domestic ethanol consumption will be supported by the RFS mandate even with ethanol prices at a premium to gasoline prices. In fact, with expanding domestic gasoline consumption, the enforcement of the RFS mandate will likely result in growing domestic consumption of ethanol. What about exports? Several importers of U.S. ethanol, including Canada and Brazil, also have mandates for domestic biofuels consumption which will support ethanol consumption in those countries. In addition, the role of ethanol as a low cost octane enhancer (see the recent farmdoc daily article) is likely to support consumption of ethanol even with low gasoline prices. As a result, U.S. ethanol exports are expected to remain large in 2016.

Exports represent a large share of the market for U.S. distillers grains and the export market is dominated by China. U.S. distiller grains represent a low cost feed ingredient for Chinese livestock producers given the high domestic price of corn and restrictions on corn imports. However, as experienced during the period from September 2014 through February 2015, Chinese imports can be influenced by unpredictable import restrictions. Such restrictions could become an issue again in 2016 if China pursues policies to protect domestic interests. Restrictions on Chinese imports, along with expanding 
U.S. production of distillers grains associated with expanding ethanol production, would increase the domestic supply of distillers' grains and could provide some downward pressure on prices.

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Syngenta Agrees to Chinese Takeover

Syngenta Agrees to Chinese Takeover | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
Syngenta has approved a $43 billion takeover by the state-owned ChemChina, making it the largest foreign purchase by a Chinese firm, Reuters reports. The acquisition follows Dow Chemical Co. and DuPont’s merger, which was announced late last year. Monsanto pursued Syngenta throughout 2015 with a final takeover offer of approximately $47 billion, but was unanimously rejected by the Board of Syngenta.  According to Reuters, ChemChina — short for China National Chemical Corp. — made the offer to increase food security for its population. “This is . . .
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Chart of the Day - Tyson Foods

Chart of the Day - Tyson Foods | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

The Chart of the Day belongs to Tyson Foods (TSN).  I found the poultry processing stock by using Barchart to sort today's All Time High list for the highest technical buy signals, then used the Flipchart feature to review the charts.

Tyson Foods, Inc. is the world's largest fully-integrated producer, processor and marketer of chicken and poultry-based food products. Tyson is a comprehensive supplier of value-added chicken products through food service, retail grocery stores, club stores and international distribution channels. Although its core business is chicken, in the United States Tyson is also the second largest maker of corn and flour tortillas under the Mexican Original brand and through its subsidiary Cobb Vantress, the top chicken breeding stock supplier.

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Monsanto and BASF may reap more from partnership after Syngenta...

Monsanto and BASF may reap more from partnership after Syngenta... | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
FRANKFURT - Monsanto could seek to expand in agricultural chemicals by deepening its partnership with Germany's BASFafter losing out to ChemChina in its bid to buy seeds and pesticides firm Syngenta.

A growing world population, limited farm land, higher meat consumption and biofuel use are driving demand for anything that improves agricultural productivity and BASF is also keen to expand in the normally high-margin growth market.

But while the Ludwigshafen, Germany-based company is not willing to sell its pesticides unit, recent consolidation in the industry means it is now seen by bankers and analysts as a likely partner in a deeper alliance with Monsanto, with whom it is already collaborating.

Monsanto has long argued it needs to buy or team up with a large crop chemicals maker because farmers will increasingly look for one-stop shops offering seeds, pesticides and digital services, such as satellite-guided spraying and harvesting which enable them to optimize their work in the field.

But after its failed swoop on Switzerland's Syngenta last year, the U.S. company is under greater pressure to strike a deal, with three of the six global power houses in agrochemicals and seeds now out of play.

"Apart from Monsanto, the remaining players are relatively relaxed," said an investment banker with insight into the chemical industry.

Closer collaboration between Monsanto and BASF would be a likely outcome, the banker said, although this would not extend to BASF sharing ownership of its agriculture business, which is ranked third in the global pesticides market.

Based on the multiple that ChemChina offered for Syngenta, BASF's crop chemicals unit would be worth 21 billion euros, or up to 15 billion euros, based on median trading multiples of major sector peers over the last two years.

State-owned ChemChina's agreed deal to buy Syngenta for $43 billion on Wednesday and a deal by DuPont and Dow Chemical in December to combine their pesticides and seeds units as part of an all-stock merger, has dramatically changed the agricultural landscape in a matter of months.

There is a consensus among analysts and investment bankers that Syngenta is now off the table, with no company willing to top ChemChina's offer, which amounts to a multiple of 16.4 times Syngenta's 2015 times core earnings including net debt.

That compares with a median trading multiple of 11.2 and 11.7 for Syngenta and Monsanto, respectively, over the past two years, Thomson Reuters Starmine data shows.

"Removing Syngenta from the M&A board leaves Monsanto with few options to achieve an integrated portfolio," said Jonas Oxgaard, senior analyst with Bernstein.

BASF and Monsanto could form a stronger alliance, with shared research and sales organizations, which could be the first step towards a jointly-owned company, he added.


BASF, the world's largest chemicals group by sales, is developing improved plant characteristics such as drought tolerability but relies on partners, the biggest being Monsanto, to bring finished seed products to market.

The two groups have been collaborating in plant research and development since 2007, with BASF contributing about 150 million euros in expenditure per year.

Chief Executive Kurt Bock is under pressure to better position the chemicals giant, which is facing weaker growth and pressure from emerging market rivals in chemicals and plastics, and agricultural chemicals offers one way to do so.

Current weakness in agricultural markets notwithstanding, the crop chemicals unit at BASF has over the last four years made core earnings margins that have been roughly 10 percentage points above the group average.

For BASF, deepening its alliance with Monsanto could offer a welcome opportunity to increase its exposure to agriculture as it is comfortable as a partner and not owner of seed firms.

"This is a very flexible model which allows us to participate in the seed market without having to own seed assets in the portfolio," the group said in a written statement, without commenting on the future development.

Monsanto said in a statement its business and development pipeline makes it the "the innovation partner of choice"

"We have a strong stand-alone growth plan and our shareowners can be assured we will continue to remain disciplined."

Bayer, a close second in the global pesticides market after Syngenta, is likely to seek a major life sciences M&A deal in the next few years, but is not seen as going after Monsanto, whose corporate culture and business strategy is regarded as largely incompatible.

Bayer has ruled out a sale of its crop protection business.

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DTN Fertilizer Outlook: World Price Downtrend Continues

DTN Fertilizer Outlook: World Price Downtrend Continues | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

International ammonia prices were under pressure through January. The Yuzhnyy export price range dropped from $279-$310 early to $270-$280 late. Both the Black Sea and Baltic spot markets remained quiet. At month’s end the price of Trinidad export ammonia into Tampa dropped $40 to $310 mt. Demand from Far East industrial users continues weak and bearish conditions in world phosphate markets seem likely to discourage world ammonia price increases in the short term....

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Chine: les réserves de devises fondent | International

Chine: les réserves de devises fondent | International | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

Les réserves de devises de la Chine ont fondu à des niveaux inédits depuis près de quatre ans, Pékin vendant des dollars pour soutenir le yuan, a annoncé dimanche la Banque centrale chinoise (PBOC).

Les énormes réserves de devises de la Chine ont fondu de 99,5 milliards de dollars en janvier pour tomber à 3200 milliards de dollars, soit leur plus bas niveau depuis mai 2012, a dit la PBOC sur son site internet.

Les inquiétudes quant à l'état de santé de l'économie chinoise ont affaibli la devise nationale, qui a touché elle son plus bas niveau en cinq ans.

La PBOC vend des dollars américains pour soutenir le yuan alors que le pays cherche à enrayer les fuites massives de capitaux hors de Chine.

Certains analystes estiment que la monnaie nationale n'a pas fini de glisser et s'interrogent sur les capacités de Pékin à réagir.

« Si les réserves [de devises] représentent un trésor de guerre non négligeable, le rythme auquel elles sont en train de fondre ces derniers mois est tout simplement insoutenable », a déclaré Rajiv Biswas, analyste chez IHS Global Insight à Bloomberg News.

Cette baisse des réserves est toutefois inférieure à celle enregistrée en décembre -108 milliards de dollars -, qui représentait un record.

Pour tenter de limiter l'hémorragie, la Chine a resserré certains mécanismes de contrôles des capitaux.

« La baisse plus faible du niveau des réserves fait penser que certaines restrictions imposées aux sorties de capitaux en janvier ont porté leurs fruits », a déclaré Shen Jianguang, analyste chez Mizuho Securities.

La Chine s'est donnée pour 2016 un objectif de croissance économique « entre 6,5 % et 7 % », a expliqué une semaine auparavant la NDRC, la puissante agence de planification du pays.

Les investisseurs du monde entier suivent de près le ralentissement dans la deuxième économie du monde, qui a provoqué des turbulences sur les places financières.

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Argentine farmers slow to sell 12m-tonne soy hoard - ADM

Argentine farmers slow to sell 12m-tonne soy hoard - ADM | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

Argentine farmers have defied expectations by failing to sell down their 12m-tonne soybean hoard, the head of Archer Daniels Midland said, as he revealed the agricultural trading giant was investigating "options" for ethanol assets.

Argentine growers have, since Maurico Macri became president in December and ushered in a more ag-friendly regime, proven willing to sell grain inventories, Juan Luciano, the ADM chief executive, said.

"We saw a little bit more [Argentine] farmers' selling of corn and wheat," said Mr Luciano, who was born in the South American country, echoing comments last week from US-based Ingredion, a rival in the corn processing market.

However, they have been reluctant to sell down soybean stocks which were, like grain inventories, built up during the time of the previous regime largely as a dollar-denominated hedge against a tumbling peso.

One of Mr Macri's first moves as president was free up trading in the Argentine currency, which tumbled by more than one-third against the dollar in one day, and has been on a more gentle decline since, standing on Tuesday at 14.117 to $1.

'Disappointing selling'

Mr Luciano - estimating Argentine growers' soybean hoard at "12m tonnes, something in that range" - said that "farmers' selling in soybeans has been disappointing for what everybody was expecting".

He attributed the reluctance he potentially to Mr Macri's reduction of only 5 points to 30% in export taxes on soybeans, so keeping pressure on farmers' returns from shipments, in contrast to the scrapping of levies on corn and wheat.

"The farmer maybe was not that happy with that reduction in [soybean] export retentions," he said.

The impact of the continued hoarding has been to keep Argentine soybean crushers operating at levels well below the highs that were expected after Mr Macri took charge.

While Argentine processing are crushing "about 3m tonnes per month, capacity is maybe 4.5m tonnes", Mr Luciano said.

"We haven't seen the explosion" in volumes that was forecast.

Buyers hang on

However, crushers abroad, in countries such as the US, have struggled to exploit the shortfall as buyers of products are proving keen to await the release of supplies from Argentina – the top soyoil and soymeal exporter, and one whose competitiveness has been enhanced by the falling peso.

Mr Luciano flagged an "expectation in a lot of the buyers that maybe Argentina will increase crush and will become a bigger player in meal worldwide, and maybe it was wise to wait a little bit and wait for all that to come to market".

US exporters of soy products have "lost that ability to sell aggressively to non-traditional destinations" that they were able to when Argentina was not viewed as such a promising origin.

'Strategic options'

He made the comments following ADM's release of below-forecast results which sent its shares down 8.7% to close at $32.36 in New York on Tuesday.

Mr Luciano also revealed that ADM was "undertaking a study of the strategic options" of its corn dry mills, which process the grain into ethanol and distillers' grains, a high protein feed ingredient.

ADM has hired an unnamed advisor to help "run through the different scenarios" for the plants, which have struggling against "pricing pressures" stemming from weak crude oil values and elevated US output levels of the biofuel.

"Production in the industry has kept this industry margins very, very low and we are really surprised by that," Mr Luciano told investors.

 "We continue to be implementing our cost reductions in the dry mills… but margin continues to be historically low,"

 "And even with our improvements in cost, we are concerned about the long term."

Export hopes

One potential fillip for the US industry could come from exports, which Mr Luciano saw being enhanced on environmental grounds.

"In terms of growing exports, we do see places like India and China that are dealing with environmental issues, due to smog, that how they are increasing the use of ethanol to fight their… air issues, air pollution issues. We see that demand growing.

"We see how demand has grown in China. And we expect for next year to be even bigger."

For the US, net exports for 2016 will come in "between 50m-100m gallons higher than what they were in 2015, driven by all these two main markets".

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Grains See Gains from TPP

Grains See Gains from TPP | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

In early October, the United States and 11 other Pacific Rim nations — Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam — reached final agreement on the landmark Trans-Pacific Partnership (TPP) trade agreement. The full text of the agreement was then released to Congress, and the public, in early November. 

TPP is the largest regional trade agreement ever, comprising nearly 40% of the world’s economy. It is expected to increase world incomes, which in turn, will increase the demand for U.S. agricultural products across the board. According to the U.S. Department of Agriculture (USDA), TPP countries accounted for 42% of U.S. agricultural exports in 2014, contributing $63 billion to the U.S. economy. Economists suggest that the TPP agreement could expand U.S. agricultural exports by billions of dollars. During the negotiations, key sectors of U.S. agriculture urged the U.S. Trade Representative (USTR) to secure increased market access to the TPP countries for exports of their products. This was particularly true for Japan, currently the third-largest export market for U.S. agricultural products, who entered the TPP negotiations in May 2013. 

Key trade barriers lifted

Japan has agreed to lower or phase out tariffs on most U.S. products. Tariffs on soybean meal of 4.2% will be eliminated immediately. Tariffs on soybean oil as high as 13.2 yen/kilogram will be eliminated within six years. For beef products, most tariffs will be phased out in 16 years — tariffs for fresh, chilled or frozen beef will be phased down from 38.5% to 9%. For pork, most tariffs will be phased out over 11 to 16 years, in addition to a reduction in the mandatory gate price specific duty from 482 yen/kg to 50 yen/ kg over 11 years. For dairy, cheese tariffs will be eliminated in 16 years and whey tariffs in 21 years, and Japan will create quotas for several dairy products. Japan will establish a new duty-free quota of 50,000 tons for U.S. rice, which will grow to 70,000 tons in 13 years. 

Some U.S. agricultural exports, including corn and wheat, are already duty-free into many TPP countries under existing free trade agreements. However, the agreement will lift a number of trade barriers in these other TPP countries. The following are some highlights for key sectors of U.S. agriculture in the other TPP countries:

  • Corn: In Vietnam, tariffs as high as 30% will be eliminated in four to seven years.
  • Soybeans: Tariffs as high as 30% in Vietnam will be eliminated within 11 years; and all tariffs will be eliminated immediately in Malaysia and Brunei.
  • Wheat: Tariffs as high as 35% in Vietnam will be eliminated within four years; and all tariffs in Malaysia and Brunei will be eliminated immediately.

Notably, the agreement also includes provisions that will improve sanitary and phyto-sanitary (SPS) measures to establish and preserve stability in the global trade of commodities and food products. TPP is also the first trade agreement to include a chapter on regulatory coherence, which emphasizes good regulatory practice among TPP countries, coordination among regulators and fact-based decisions. The regulatory coherence and SPS chapters do a number of things helpful to the food and agriculture industry:

  • Provides that SPS measures be based on science and that individual countries’ regulations are consistent with World Trade Organization (WTO) obligations
  • Limits requirements for import certification to strictly SPS issues and commits TPP countries to base import checks on the actual risk of the import 
  • Allows countries to take emergency measures they deem necessary to protect food safety and public health, but requires that the scientific basis be disclosed
  • Establishes a consultative mechanism to find science-based solutions to SPS issues and a dispute settlement mechanism to enforce such SPS commitments
  • Promotes transparency by including commitments from TPP countries to incorporate public comment on proposed SPS measures, similar to the U.S. rule-making process

Congressional outlook

The approval and implementation process for the TPP agreement is set out in the Trade Promotion Authority (TPA) legislation that Congress passed earlier this year. TPA is a grant of authority to the President to negotiate trade agreements according to congressional directives, and allows for the trade agreements to be passed by simple majorities in Congress, without the possibility of amendment. The process requires the President to notify Congress of his intention to sign the agreement at least 90 days before doing so, which he did on Nov. 5. 

Given the timeline, the earliest the President could sign the agreement is roughly Feb. 3. Once he does so, the President must submit to Congress the final text which he and the other TPP countries signed. 

This must be done 30 days before he submits to Congress a bill that would implement the agreement. The timing for the introduction of the implementing legislation is at the complete discretion of the President. Once it is introduced, Congress has a maximum of 90 legislative days to consider the legislation. Legislative days are days in which Congress is in session, not in recess. If and when the legislation is approved by Congress, the President then takes the final step of implementing the agreement by issuing a presidential proclamation.

It will be months from now before Congress acts on the trade agreement, due to the timing and process mentioned above, and also to a host of other variables. These include the timing of the introduction of implementing legislation, the existing congressional calendar, and the notion that other pressing issues may arise at any time. Congressional approval of TPP in 2016 will be difficult, particularly since the presidential election season has already begun in earnest and early primaries will take place around the time TPP could be brought up in the Congress. 

In addition to the normal tendency of Congress to lose focus on legislative activities as an election draws closer, the political climate is even more partisan and negative than it has been with previous trade agreements. 

In the Democratic race for President, front-runner, former Secretary of State Hillary Clinton is opposed to approval of  TPP although she earlier supported TPP when she served as secretary of  state. Bernie Sanders, Democratic presidential candidate, is strongly opposed to TPP, and the leader of the polls in the Republican race, Donald Trump, has been very vocal about President Obama’s failure to negotiate successfully with other countries, particularly on trade.  

Only 28 House Democrats voted for TPA this past summer, and perhaps even less will be inclined to vote for TPP during election season, particularly if the candidates battling for the top of their ticket are opposed to it. Congressional approval of TPP will require disproportionate numbers of Republicans, and though a large majority of Republicans are likely inclined to vote for the agreement, a growing number may opt not to vote for an agreement negotiated by the Obama Administration. 

Several members of Congress critical to gaining approval have voiced their opposition to major provisions in the TPP agreement. 

Senate Finance Committee Chairman Orrin Hatch (R-UT) is reported to be concerned with the provisions that dramatically shorten the time period for intellectual property right protection for biologic drugs. 

Senate Majority Leader McConnell and other tobacco-state senators are unhappy with tobacco being excluded from Investor State Dispute Settlement (ISDS) provisions, which otherwise would have protected tobacco against new laws or regulations in TPP countries. 

House Agriculture Committee Chairman Conaway is also concerned about the provisions on dairy, rice and sugar. 

Moving forward

Clearly, there is much to be gained for U.S. agriculture from Congressional approval and the implementation of this trade agreement. Beyond satisfaction or dissatisfaction with the agreement itself, there are a number of challenges that are strictly political in nature. 

A national election with its high-level politics and negative statements on initiatives of the Obama Administration, such as this, will complicate the path forward. The later the timeline slips into 2016 and past spring, the greater the likelihood Congressional consideration is pushed back either into a lame-duck session of Congress following the 2016 elections, or even into a new Presidential Administration in 2017. Indeed, two high-level congressional staffers recently stated in a public appearance their belief that a TPP vote would have to wait until after the November 2016 elections.

Nonetheless, President Obama is expected to continue to make this a priority in his final year in office, and will work to secure support from those who helped pass TPA. Furthermore, trade groups representing U.S. agriculture and key sectors have been evaluating the merits of the agreement and most have stated their support for early passage. The path forward is murky, to be sure, but not impossible. U.S. agriculture has a role to play, and much to be gained. 

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South Africa faces record imports of wheat, as well as corn

South Africa faces record imports of wheat, as well as corn | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

South Africa faces record imports of wheat, as well as of corn, as it seeks to underpin food supplies in the face of "one of the worst droughts on record" - which has left the country looking at a 25% slump in output this year.

The US Department of Agriculture bureau in Pretoria pegged at 3.0m tonnes South Africa's corn imports in the year starting in May 2016, twice the figure that the USDA has officially pencilled in.

The figure, while below some other market estimates, would represent a record for country which is typically a net exporter of corn to other southern African countries, but has seen its crop prospects slashed by extended drought blamed on El Nino.

The country is "battling one of the worst drought ever records that already started in early 2015", the USDA bureau said, forecasting the forthcoming harvest at a nine-year low of 8.0m tonnes.

That would represent a drop of 25% on last year's result, which was itself drought affected, although represents a more upbeat figure than that from other commentators.

South Africa's official Crop Estimates Committee (CEC) last week pegged the crop at 7.44m tonnes, a figure above the 5.5m-6.5m tonnes that private analysts had been factoring in.

Producers' group Grain SA, factoring in the CEC figure, lowered its forecast for South Africa's corn import needs by 1.2m tonnes to 3.8m tonnes.

Record wheat imports

However, the USDA bureau also forecast the knock-on effects of the drought sending South Africa's wheat imports to a record high of 2.0m tonnes in the year starting in May 2015, as high prices drive consumption from white maize – the regional food staple – to other grains.

The bureau, whose estimate for wheat imports is 200,000 tonnes above the official USDA estimate, highlighted "an increase in demand due to the expected shortage of white corn.

"White corn prices are currently trading higher than wheat prices as white corn is not freely available on the world market," with Mexico among the few origins of white maize in bulk.

"Consumers can substitute white corn products for wheat or rice products on price preference."

Rice imports for the year starting in May last year were estimated at 1.10m tonnes, 150,000 tonnes above the official USDA estimate, but remaining a little below the 2013-14 record of 1.14m tonnes.

'Severely weakened crop prospects'

Separately, the United Nations food agency, the Food and Agriculture Organization, forecast that South Africa faces a weak wheat harvest this year too, forecasting that "preliminary indications point to a 25% likely cut in production".

South Africa's last harvest was, at 1.50m tonnes, down 14.2% year on year, reflecting a lower yield, on CEC estimates.

"Conditions are mostly unfavourable in Southern Africa where El Niño-associated dry and hot weather has severely weakened crop prospects, especially in South Africa," the FAO added.

North, east African dryness too

The USDA bureau's elevated wheat import forecast is the latest in a series of increased estimates for African countries, with US foreign offices also within the last two weeks pegging Morocco's 2015-16 purchases at 3.0m tonnes, 200,000 tonnes above the USDA's official forecast.

Abnormally dry weather has affected the country, and Algeria and Tunisia too.

In east Africa, Ethiopian imports were pegged at a record 2.5m tonnes, 500,000 tonnes above the USDA's official forecast, thanks to "the ongoing drought, which is said to be one of the worst in decades".

'More imports needed than expected'

Meanwhile, in the south, fears for corn supplies have spread from South Africa to other regional countries, with the Zambian Farmers' Union warning of a 30% tumble in Zambia's harvest this year from the 2.6m tonnes produced last year which was itself a drought-reduced crop.

Namibia this week said it needed 120,000 tonnes of maize imports, while Zimbabwe has secured $200m in loans from African Export-Import Bank (Afreximbank) to import grain.

Grain SA, noting reports that Zimbabwe's maize harvest may come in at only 200,000 tonnes, said that the "negative effects of the current drought in Zimbabwe seem to be more than most analysts had expected.

"The country's annual maize consumption is roughly 2.7m tonnes.

"With 400,000 tonnes of estimated stocks, this means that imports would have to be around 2m tonnes to satisfy their annual needs, which is well above the previous estimate of 1.2m tonnes."

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China clears Monsanto's Xtend soybeans for import

China clears Monsanto's Xtend soybeans for import | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

Monsanto’s Xtend soybeans are available for farmers in the United States and Canada for the 2016 season following import approval in China.

“After a decade of development, the new and elite germplasm in Roundup Ready 2 Xtend soybeans can provide growers with outstanding performance in their efforts to produce the best crop possible,” said Brett Begemann, Monsanto president and CEO, in a media statement.

Monsanto’s Asgrow, Channel and regional brands, along with corn states licensees, expect to introduce more than 70 soybean products across eight maturity groups with agronomic traits including resistance to nematodes and phytophthora root rot. Roundup Ready 2 Xtend soybeans are broadly licensed to more than 100 seed brands.

Although Roundup Ready 2 Xtend soybeans are tolerant to both glyphosate and dicamba herbicides, the use of dicamba herbicide over the top of Roundup Ready 2 Xtend soybeans remains in Environmental Protection Agency review and is not currently approved by the EPA.

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China seeks food security with $43 bln bid for Syngenta

China seeks food security with $43 bln bid for Syngenta | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

China made its boldest overseas takeover move when state-owned ChemChina agreed a $43 billion bid for Swiss seeds and pesticides group Syngenta on Wednesday, aiming to improve domestic food production.

The largest ever foreign purchase by a Chinese firm, announced by both companies, will accelerate a shake-up in global agrochemicals and marks a setback for U.S. firm Monsanto, which failed to buy Syngenta last year.

China, the world's largest agricultural market, is looking for ways to secure food supply for its population. Syngenta's portfolio of top-tier chemicals, fertilizers and patent-protected seed varieties will represent a major upgrade of its potential output.

"Only around 10 percent of Chinese farmland is efficient. This is more than just a company buying another. This is a government attempting to address a real problem," a source close to the deal told Reuters.

Years of intensive farming combined with overuse of chemicals has degraded land and poisoned water supplies, leaving China increasingly vulnerable to crop shortages. The deal fits into Chinese government plans to modernize its agriculture over the next five years.

With growth slowing at home, Chinese companies are looking abroad for deals that can boost their businesses. If completed, the Syngenta acquisition would be more than double CNOOC's $17.7 billion purchase of Canadian energy company Nexen in 2012.

Shares in Syngenta rose on news of the deal, but at around 412 Swiss francs, were some way below the agreed offer price of $465 per share, equivalent to 480 francs, reflecting market concerns that the deal could yet stumble over regulatory hurdles and limited expectations of a counter-offer.

Regulatory Issues

Syngenta CEO John Ramsay, who described the ChemChina offer as "very appropriate and attractive," said he saw no major barriers and noted that ChemChina had secure financing in place.

A source with knowledge of the deal said the funding would come from a range of Chinese players, as well as HSBC and China CITIC Bank International.

"I think the overall regulatory approvals will not be very challenging," Ramsay told Reuters, adding he expected antitrust regulators to acknowledge the limited overlap.

The Committee on Foreign Investment in the United States (CFIUS), whose mandate is U.S. national security, would not pose a major hurdle, Ramsay said.

Swiss regulators said their conditions were largely met by the terms of the deal, although they want Swiss retail investors to receive the ChemChina offer in Swiss francs and warnings to be given on foreign exchange risks.

Syngenta's board would still have to consider any rival offers, Ramsay said.

But ChemChina, short for China National Chemical Corp., has agreed to pay about $3 billion in fees should it fail to meet all requirements for the deal, while Syngenta will owe ChemChina about $1.5 billion if the deal falls through for any reasons the Swiss group is accountable for.

"The discussions between our two companies have been friendly, constructive and cooperative, and we are delighted that this collaboration has led to the agreement," ChemChina Chairman Ren Jianxin said.

In a hint of what may be in store for the enlarged group, Syngenta's chairman said ChemChina will be on the lookout for more deals as China strives to improve its food supply.

"ChemChina has a very ambitious vision of the industry in the future. Obviously it is very interested in securing food supply for 1.5 billion people and as a result knows that only technology can get them there," Michel Demare said.

China Calling

ChemChina's move on Syngenta may be the biggest, but it is not the first as Chinese corporates shift offshore.

Similar deals include last year's buyout of Italian tire maker Pirelli by ChemChina. In January, ChemChina announced the acquisition of German industrial machinery maker KraussMaffei Group for about $1 billion.

Beijing is keen to boost farming productivity as it seeks to cut reliance on food imports amid limited farm land, a growing population and higher meat consumption. China's combined consumption of pork, beef and poultry has grown by an average 1.7 million tonnes a year for the past decade, placing further stress on feed grain supplies.

Meanwhile, a global glut of corn and soybeans has depressed grain prices for the past three years, prompting U.S. farmers to reduce spending on everything from equipment to seeds and pesticides. The cutbacks, along with pressure from investors and a desire to bolster profit, have sent many of the world's largest agricultural companies scrambling to cut deals.

DuPont and Dow Chemical Co agreed in December to combine in an all-stock merger valued at $130 billion in a first step towards breaking up into three separate businesses, a move that was seen as a trigger for further consolidation.

Syngenta was advised by Dyalco, the one-man business of former Goldman Sachs M&A head Gordon Dyal, alongside JP Morgan, Goldman Sachs and UBS while HSBC and China CITIC Bank International advised ChemChina. (1 Swiss franc = $0.9824)

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Monsanto to pay $80 million civil penalty for Roundup-related accounting violations : Business

Monsanto to pay $80 million civil penalty for Roundup-related accounting violations : Business | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

The Securities and Exchange Commission slapped Monsanto with an $80 million civil penalty for violating accounting rules and misstating past earnings related to rebates on its flagship weedkiller Roundup. Two accounting executives and a retired sales executive also agreed to pay penalties to settle the charges.

And while the SEC found no personal misconduct by Monsanto CEO Hugh Grant, the biotech seed giant disclosed Tuesday that Grant already had reimbursed the company $3.2 million in pay due to the restatement of corporate earnings in fiscal years 2009 through 2011.

The penalty is another black eye for the Creve Coeur-based company, which has had a number of high-profile setbacks in the past year.

During fiscal years 2009 to 2011, Monsanto booked “substantial” amounts of revenue from Roundup sales that had been spurred by the rebate programs, but the company failed to recognize all of the related costs in the proper year, the SEC said Tuesday.

By pushing costs into another year, the company boosted its profitability — on paper.

Corporations must be truthful in their earnings releases to investors to prevent misleading statements, SEC Chair Mary Jo White said in a statement.

“This type of conduct, which fails to recognize expenses associated with rebates for a flagship product in the period in which they occurred, is the latest page from a well-worn playbook of accounting misstatements,” White said.

As part of the settlement, Monsanto also agreed to retain an independent compliance consultant. Though settling the charges, Monsanto did not admit or deny the SEC allegations that it broke the law, according to the regulator’s press release.

Monsanto began the accounting shenanigans in 2009, when Roundup was facing intense competition. In that year, a flood of inexpensive, generic, Chinese-made glyphosate, the key ingredient in Roundup, hit the market.

Facing the prospect of a sharp decline in Roundup profits, Monsanto unleashed the rebate program to bolster sales.

Anthony Hartke developed and Sara Brunnquell approved talking points for the sales force to use when encouraging retailers to take advantage of the rebate program in the fourth quarter of fiscal 2009, the SEC said.

Both were accounting executives at the time, and the SEC said the two knew or should have known that the costs must be recorded that same year. But Monsanto delayed recognizing the costs until the following year, according to the regulator.

The company also offered rebates to distributors that hit agreed-upon volume targets that year, but then didn’t record those costs until 2010. Under one scheme, Monsanto sales executive Jonathan Nienas arranged payment of $44.5 million in rebates to two of its largest distributors.

Monsanto repeated the rebate program in 2010, and again improperly deferred the costs until 2011, the SEC said.

The SEC first began investigating the company for the accounting irregularities in 2011. Later that year, company restarted its earnings for the fiscal years 2009 and 2010, and the first three quarters of 2011.

“We have taken this matter very seriously and quickly moved in November 2011 to restate our financial statements … following an independent review of our accruals for customer incentive programs,” Monsanto said Tuesday in an emailed statement. “Today’s announced settlement does not require any changes to the company’s historical financial statements due to our proactive efforts.”

The company added that it fully cooperated with the SEC in its investigation.

The securities regulator also announced Tuesday that Hartke and Brunnquell were suspended from appearing and practicing before the SEC as accountants. Hartke also was fined $30,000, while Brunnquell was fined $55,000. Nienas was fined $50,000.

Hartke and Brunnquell “have been reassigned to different roles within the company,” while Nienas retired years ago, Monsanto told the Post-Dispatch.

The restatement led Grant and former CFO Carl Casale to reimburse the company for cash bonuses and certain stock awards they received during the restated periods.

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Grant paid back $3.2 million and Casale returned $728,843. The company declined to say when the money was paid back.

During that three-year period, Grant earned $33.4 million in executive compensation, according to regulatory filings.

If the two executives hadn’t paid back the money, the SEC said it could have sued to invoke a “clawback” provision under Sarbanes-Oxley that requires executives to pay back compensation during periods when accounting misstatements occurred, even if the executives didn’t engage in misconduct.

Edward Jones equity analyst Matt Arnold said civil penalties by the SEC for accounting violations aren’t uncommon.

“It happens surprisingly often,” Arnold said. “It reflects the flexibility that exists with accounting rules — it’s as much a science as art, and it’s subject to interpretation when it comes to reporting these items.”

Wall Street appeared indifferent to the news. Monday’s stock edged up following the SEC’s announcement, closing Tuesday at $91.70 a share, up 0.5 percent from Monday’s closing price of $91.25.

“There will be no financial implications for shareholders to worry about,” Arnold said.

The company already had recorded the $80 million cost in its 2015 fiscal year.

Still, the penalty comes when Monsanto already hit a rough patch in the past 12 months.

In March, the cancer research arm of the World Health Organization declared glyphosate, Roundup’s key ingredient, as a probable carcinogen, a finding that the company is fighting. Five months later, Monsanto gave up on its efforts to take over Swiss rival Syngenta.

And as agricultural prices continue to tumble, the company announced the start of an aggressive cost-cutting program that will eventually slash 16 percent of its workforce over the next two years.

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Egypt Decides to Send French Wheat Cargo Back Home After Fungus

Egypt Decides to Send French Wheat Cargo Back Home After Fungus | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

Egypt, the world’s largest wheat importer, issued a decision to send 63,000 metric tons of French grain back home after it was found to exceed the allowed level of ergot, a potentially toxic fungus.

The wheat is being sent back because it exceeded the allowed 0.05 percent level of ergot, Supply Minister Khaled Hanafy said at a press conference in Cairo Sunday. Egypt still has enough grain stockpiles to meet domestic demand until mid-May, Hanafy and Agriculture Minister Essam Fayed said.

Egypt is looking for alternative sources of wheat beyond tenders, Hanafy said, without providing details. The nation on Friday canceled its second grain tender in a week after traders raised prices amid uncertainty over shipping requirements. Both Fayed and Hanafy said shipments can’t exceed ergot levels of 0.05 percent, in line with international standards.

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Baltic index touches new record low on muted vessel demand

Baltic index touches new record low on muted vessel demand | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

Feb 8 The Baltic Exchange's main sea freight index, which tracks rates for ships carrying industrial commodities, registered a new all-time low on Monday on muted vessel demand.

The overall index, which gauges the cost of shipping dry bulk including iron ore, cement, grain, coal and fertiliser, fell four points to 293 points. The index slid below the 300 mark for the first time on Feb. 4.

The index is yet to rise in a single session this year, tumbling nearly 40 percent and touching fresh lows in 24 of the 26 sessions.

A slowdown in the Chinese economy, which expanded at its slowest pace in a quarter of a century in 2015, and a huge over-capacity in vessels has hit the index hard. Chinese markets are closed from Feb. 8 to Feb. 12 for the Lunar New Year holiday.

"The fundamentals that we are experiencing now are unlikely to change much in the first half of this year so owners and charterers should not expect too much recovery post Chinese New Year," shipping services firm Braemar ACM said in a note Monday.

The capesize index fell five points to 207 points.

Average daily earnings for capesize vessels, which typically transport 150,000-tonne cargoes such as iron ore and coal, fell $43 to $2,781.

The panamax index rose three points at 298 points.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, rose $29 to $2,390. (Reporting By Nallur Sethuraman in Bengaluru, editing by David Evans)

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Idle Argentine soy-crushers ramp up as Macri ending crop logjam

Idle Argentine soy-crushers ramp up as Macri ending crop logjam | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
For much of the past decade, soybean processors in Argentina including Bunge and Cargill couldn't get enough of the crop to crush, as farmers clashed with the government over agricultural policies.
Now, with newly elected President Mauricio Macri cutting taxes and ending an import ban, processors...
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The Spring Fertility Outlook For 2016: Lots Of Questions

The Spring Fertility Outlook For 2016: Lots Of Questions | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

As the calendar turns to late winter, many in the agricultural marketplace are busy getting ready for another planting season. By now, grower-customers have made their seed type decisions (hopefully) and many ag retailers are beginning the work of prepping their custom application/spreading equipment for the busy months just around the corner.

Of course, the one question on virtually everyone’s mind this time of year is how well, or poorly, will the demand for fertilizer be in 2016? Based upon the feedback from ag retailers in-the-know, this is currently a hard to answer query.

Many ag retailers remain optimistic. “The fertilizer outlook is very favorable,” says Dave Coppess, Executive Vice President, Sales & Marketing for Heartland Co-op, West Des Moines, IA. “We’re seeing a shift to more corn acres for 2016 driven by market economics.”

Still, other ag retailers aren’t so certain 2016 will be a positive year for spring fertilizer demand. “We are somewhat negative,” says Tim McArdle, COO and Vice President for BRANDT, Springfield, IL. “Farmers cash flow will be less and fertilizer may move to the bottom of their priority list.”

Finally, there is a group of ag retailers that believe 2016 will end up being a mixed bag for fertilizer sales, at best — especially at the retail level. “With operating budgets tight or negative at the farmgate, the retail sector is feeling the pressure,” says Spencer Weir, a Certified Crop Adviser and head of the Plant Nutrition Department for Asmus Farm Supply (AFS), Rake, IA. “My best guess at this time is fertilizer volumes will be flat or down across our trade area.”

A Disappointing Trend

Part of the reason for all this across-the-board predicting for fertilizer trends in 2016 can be traced back to the category overall performance during the past few years. Following the economic downturn in 2008 that impacted virtually every crop input category, fertilizer revenues for the nation’s top ag retailers bounced back nicely in 2009, and kept growing through the 2012 growing season. By the end of that year, fertilizer sales represented more than 55% of all crop inputs/services sales for CropLife 100 ag retailers.

However, between 2013 and 2014, the category’s sales dipped 3%, dropping from $15.3 billion in 2013 to $14.8 billion in 2014. And during 2015, this percentage dropped even further, declining another 2% to $14.6 billion. Market share for the fertilizer category now stands at 48%. According to most market watchers, this usage dip was a result of numerous factors, including an exceptionally wet spring across many of the corn crop-heavy Midwestern states, steadily falling commodity prices, and high fertilizer prices.

Furthermore, going into the 2016 growing season, many of these factors remain in place. According to USDA figures released in late 2015, grower-customer incomes dropped almost 50% between 2014 and 2015. And commodity prices that were in the $7 and $19 range for corn and soybeans, respectively, just a few years ago have fallen back into the $3 and $8 ranges for the upcoming year.

This, says Weir, has significantly changed his outlook for fertilizer demand going into the new season. “Originally, I would have said in the late summer [of 2015 that] less dry fertilizer would again be spread during the fall and there would be an increase in starter fertilizer use in the spring as a short-term and less expensive option,” he says. “[But] prepay sales for fertilizer are slow to come for 2016 and some customers have dropped starter fertilizer out of the mix because of tight budgets. My feeling is that less dry fertilizer was spread again in general across our trade area.”

No matter what way the market is viewed, Weir believes price — be it for the crops produced or the fertilizer itself — is the biggest challenge facing the agricultural industry right now. “This isn’t 2008-09,” he says, harkening back to the infamous market price crash that occurred during that year’s summer season. “But it’s not going to be a good year for most retailers sitting on fertilizer products that have devalued anywhere from $60 per ton to more than $100-plus per ton.”

On the flipside, however, lower fertilizer prices should help some grower-customers when they are making their application decisions, says Heartland Co-op’s Coppess. “Many farmers expected fertilizer prices to drop over the winter,” he says. “They were correct, and we are now writing spring prepays at these lower prices.”

Typically in lockstep with price uncertainty in the fertilizer market is logistics. As many ag retailers point out, the application windows for applying fertilizer to the field during the spring season have been severely compressed in recent years, and 2016 promises more of the same. According to BRANDT’s McArdle, this could present some major challenges to ag retailers when it comes to storing fertilizer at their outlets.

“Retailers will be cautious of holding inventories if prices continue their recent volatility,” he says. “This may impact supply unless some kind of creative solutions are established with fertilizer suppliers beforehand.”

AFS’ Weir agrees. “With the extreme volatility in certain market segments, I feel that being upside down on product that has been secured and delivered is also not a comforting feeling for managers,” he says. “Throw in the slow grower prepay situation on top of all of this and it equals a lot of risk and uncertainty on the retailers. I believe that the retail market will adjust much more slowly than the wholesale market has over the past couple of months. I would tend to think there will be a higher amount of spot purchasing moving forward for spring and summer, especially for nitrogen (N) inputs compared with previous years.”

N Up, P&K Not So Much

While most ag retailers are uncertain which direction the overall fertilizer market will head this spring, they all agree that among macronutrients, N will perform the best. “N is required annually for corn production and it will not be affected much as the other macronutrients,” says BRANDT’s McArdle.

AFS’ Weir agrees with this view, but thinks the forms of N being used by grower-customers in 2016 might be different than the historic norms. “Producers need N above all else to raise a crop and that is the one input that I could say should stay flat,” he says. “But the forms of N used will change due to the cost per unit. There was in places a huge carryover of anhydrous ammonia tons that will need to be moved during the spring to avoid terminal storage and carrying costs. But if I had to make an educated guess, urea use will increase the most in 2016 because of its cost point. However, custom applicators will struggle to keep pace if there are huge swings from UAN to urea.”

As for phosphorous and potash (P&K), the outlook in 2016 is a little less certain. Some such as Weir believe the price points on phosphate fertilizers are still overpriced vs. where commodity levels are, “so I predict those volumes will be down,” he says.
And as always, other ag retailers think that grower-customers will continue to hope that their P&K applications during the previous few years will hold up crop yields for at least one more season. “Farmers are still mining the soil reserves for P&K,” says Heartland Co-op’s Coppess.

Whether The Weather Cooperates

As ag retailers are quick to point out, the economic factors driven by grower-customer incomes and commodity prices tend to be known will in advance of the upcoming growing season. The one major wildcard, however, is weather. As Weir reminds market observers, predicting this part of the annual growing season equation is haphazard at best.

“The weather is going to play a huge role in price and the types of N that is used come spring,” he says. “Weather will drive the demand for N use or the amounts being used during the sidedress timing as well. The weather will also have an effect on certain input prices because of rivers opening in time to get cheaper product moved to plants across the region in time for spring application.”

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Fertilizer prices, now and into spring

Fertilizer prices, now and into spring | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

The time to buy fertilizer is now, if you don’t have enough stored up on the farm. December and January, if you look at numbers from the last ten years, is the best time to buy fertilizers if you have the resources and space, says Todd Bergen-Henengouwen, project assistant at Alberta Agriculture and Forestry, because that’s when prices tend to be at their lowest. It’s common to see prices increase as we move into March, April, and May because that’s when demand starts to get higher. Prices can start to creep up even as early as February, says Bergen-Henengouwen, because even though farmers in the prairies aren’t seeding yet, those down south in the United States are.

Now that we know the overall trend, where are prices at the current moment for the two most prominent types of fertilizers, the nitrogen-based (ammonia and urea) and the phosphorus-based products? When I spoke to Bergen-Henengouwen on January 6, 2015, the provincial price averages for Alberta (rather than for any particular retailer) were as follows: phosphorus was at 11 51 0 (the first number is the percentage of nitrogen, the second number is the percentage of phosphorus, and the third number is percentage of potassium) and the average price for this product was $807 per tonne. For urea, at 46 0 0, the average price was $551 per tonne. For ammonia, at 82 0 0, the average price was $944 per tonne.

“Nitrogen-based fertilizers are currently below 5-year averages,” says Bergen-Henengouwen, while “phosphorus-based fertilizers are above average.” The nitrogen-based fertilizers are lower in price partially due to the “lower oil and natural gas prices than we’ve seen historically, as well as the lower commodity prices,” says Bergen-Henengouwen. Since natural gas is a major feedstock for nitrogen fertilizers, the fact it’s low means that the cost of producing nitrogen-based products falls.

Fertilizer prices tend to follow the price of corn, says Bergen-Henengouwen, because if corn is selling really high farmers will want to grow as much as possible, but when the price of corn is lower then people will skimp a bit on fertilizer on their corn crops because it’s too expensive. Here in the prairies, where canola is a huge crop, Bergen-Henengouwen has looked at the price of urea divided by the price of canola over the last 10 years and found that right now we’re just below the 10-year average in terms of the nitrogen-based fertilizers and just above the 10-year average for the phosphorus-based fertilizers, which means that, relatively speaking, phosphorus-based products are a little more expensive and nitrogen-based products are a little less expensive, based on what farmers have been able to sell canola for.

Part of the reason that the prices of phosphorus-based products are a bit higher at the moment is because “phosphorus is brought in from outside of Canada,” so the United States-Canadian exchange rate, with the current Canadian dollar being so low, plays a role. Additionally, demand for phosphorus-based fertilizers have also been higher in the last year, which has also driven up the price. Some good news, says Bergen-Henengouwen, is that phosphorus prices out of New Orleans have been falling in the last two months, so there’s hope that decrease will filter down into our local markets.

Ammonia and urea are most often used on the farm, while phosphorus is secondary, though it’s still vital to plant growth, says Bergen-Henengouwen. With the current high phosphorus prices, then, some farmers might make the choice to reduce the usage of the phosphorus-based fertilizers while prices are running high. Though the 10-year trends are known, it’s really hard to definitively predict what prices will be at any given point in the future. But Alberta Agriculture and Forestry keeps the most up-to-date information on their website under the Alberta Farm Input Monitoring System. Check out this page on the Alberta Agriculture and Forestry website where you’ll find, in addition to current fertilizer prices and prices from the last five years, average prices for feed, farm machinery and other common expenses.

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Traders: Cargill buys soymeal from ADM, slows Indiana crush

Traders: Cargill buys soymeal from ADM, slows Indiana crush | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

CHICAGO, Feb 4 (Reuters) - Cargill Inc has slowed the crush at its soybean processor in Indiana and instead bought soymeal from rival Archer Daniels Midland Co to ship railcars to feed markets in the southeastern United States, cash traders with knowledge of the deals said on Thursday.

Crush margins that measure the profitability of buying soybeans, then selling soymeal and soyoil have declined for months. Average margins <CRUSH-1=R> bottomed out at a 17-month low of 23 cents per bushel last month, before rebounding this week to 50 cents, seen by traders as a break-even point, Chicago Board of Trade data shows.

Cargill deemed it more profitable to buy soymeal from ADM to meet at least a portion of its trade commitments instead of boosting the crush at its Lafayette, Indiana, facility.

The companies declined to comment on the deals. A Cargill soymeal broker in the Indiana truck market said she was not buying any meal.

Cargill and ADM are two of the biggest U.S. agribusiness companies.

Minnesota-based Cargill bought dozens of soymeal railcars, each of which can hold roughly 100 tons, for shipment out of ADM's processor in Frankfort, Indiana, according to four cash traders who deal with both companies.

The railcars were sold at prices even with CBOT March soymeal futures which have hovered between $267 and $275 per ton in recent weeks, the traders said. Futures are up from multiyear lows hit on Jan. 4.

"Cargill has been a steady buyer domestically," a soymeal trader said of the deals which occurred during the past few weeks.

Cargill earlier this week also cut its bid to buy soybeans from farmers at Lafayette, changing the differential to a 5-cent discount from a 5-cent premium to CBOT March futures. Competitors in the area were bidding at a 3-cent or more premium to futures prices of $8.74-1/2 per bushel - a move likely to encourage farmers to sell elsewhere.

ADM, Bunge Ltd, Cargill and Louis Dreyfus Commodities each have a soy processor in northern Indiana, and typically compete for business to states including North Carolina and Georgia, where poultry and hog producers need massive volumes of soymeal and corn to raise their flocks and herds.

The companies already face lower export volumes of corn and soymeal due to larger global supplies. ADM this week cautioned that tough market conditions were likely to persist.

Processors crushed 157.711 million bushels in December, the smallest total for that month since 2011, according to the National Oilseed Processors Association.

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ChemChina propose d’acheter Syngenta pour 43 milliards de dollars

ChemChina propose d’acheter Syngenta pour 43 milliards de dollars | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
En achetant l’agrochimiste suisse Syngenta, ChemChina deviendrait le producteur numéro un mondial de pesticides et de produits agrochimiques, rapporte leFinancial Times.

La superficie des terres cultivables en Chine se réduit inexorablement. Le géant de la chimie chinoise veut devenir propriétaire de technologies qui peuvent contribuer à rapprocher la plus importante population de la planète (1,3 milliard d’habitants) de l’autosuffisance alimentaire.

Si elle se concrétisait, cette acquisition serait la plus importante jamais réalisée par une entreprise chinoise à l’étranger, rapportent l’Agence France-Presse et Le Devoir. « Notre mission visera à répondre aux intérêts des agriculteurs et des consommateurs dans le monde », souligne par voie de communiqué le président de ChemChina, Ren Jianxin.

Si elle se concrétise, la transaction devrait se conclure d’ici la fin de l’année 2016. Pour y parvenir, dit Le Devoir, l’entreprise chinoise devra obtenir le feu vert des autorités de régulation, notamment aux États-Unis où Syngenta réalise une bonne partie de ses ventes.

L’année dernière, le géant américain Monsanto avait proposé de racheter la compagnie suisse en mettant 47 milliards de dollars sur la table. Syngenta avait énergiquement refusé, car pour obtenir le feu vert des autorités de la concurrence, elle aurait dû se séparer d’une partie de ses activités, explique le quotidien français 20 minutes. Or, un rapprochement avec ChemChina « permettra de développer de manière notable le potentiel de croissance de notre activité de semences », explique le directeur général de Syngenta, John Ramsay, par voie de communiqué.

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US drought coverage down to least amount in 5+ years

US drought coverage down to least amount in 5+ years | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
US drought coverage down to least amount in 5+ years
Feb 4, 2016

By Brad Rippey, USDA Meteorologist, Office of the Chief Economist, World Agricultural Outlook Board, Washington, D.C. 

During the four-week period ending Feb. 2, 2016, contiguous U.S. drought coverage fell to 15.48 percent—a decrease of 2.91 percentage points. This also represents the smallest areal coverage of U.S. drought in more than five years, since Oct. 26, 2010. Perhaps not coincidentally, the U.S. drought minimum of 2010 occurred in the wake of the most recently completed El Niño, which lasted from the summer of 2009 to the spring of 2010.

Since mid-October 2015, stormy weather in many parts of the country—in part driven by a strong El Niño—has significantly reduced U.S. drought coverage from 34.78 to 15.48 percent—a drop of 19.30 percentage points.

Where drought remains, mostly in the Far West, there has been incremental improvement. Although long-term concerns still include below-average reservoir storage, groundwater shortages, and tree mortality, winter precipitation has boosted spring and summer runoff prospects, improved rangeland and pasture conditions, cut irrigation demands, and reduced the need for supplemental feeding of livestock. California’s intrastate reservoirs held just 54 percent of their normal water volume on Dec. 31, and that number may not appreciably improve until high-elevation snow begins to melt in the spring.

On Feb. 2, more than one-third (38 percent) of the western U.S. remained in drought, down from 57 percent in early October 2015. Most (95 percent) of California was still in drought on Feb. 2, down 2 percentage points from the beginning of the water year on Oct. 1, 2015. However, California’s coverage of exceptional drought (D4) has fallen from 46 to 39 percent since Oct. 1. Farther north, coverage of extreme to exceptional drought (D3 to D4) since Oct. 1 has decreased from 67 to 4 percent in Oregon and from 68 to 0 percent in Washington.

On Feb. 2, drought was affecting just 11 percent of the U.S. cattle inventory, down from an autumn 2015 peak of 27 percent.

On Feb. 2, the portion of the U.S. winter wheat production area in drought stood at 7 percent, down from an autumn peak of 29 percent on Oct. 20. At the end of January, USDA’s National Agricultural Statistics Service rated more than two-thirds of the winter wheat in good to excellent condition in several major production states, including Oklahoma (74 percent good to excellent); Ohio (74 percent); Michigan (73 percent); Montana (72 percent); Indiana (71 percent); and South Dakota (67 percent).

Weather outlook:  For today and tonight, precipitation will linger in the southern Atlantic region, where an additional 1 to 2 inches could fall in some locations. Rain may mix with or change to snow overnight in some Atlantic coastal communities. Some additional precipitation may fall early next week along the Atlantic Seaboard. Meanwhile, unsettled weather will persist across the Northwest into the weekend, following by a transition to mild, dry conditions. Many other areas of the U.S., from California to the middle and lower Mississippi Valley, will experience dry weather during the next five days. In California and the Desert Southwest, a marked warming trend will accompany the dry weather. Elsewhere, precipitation will be mostly light and confined to the nation’s northern tier, except for some heavy snow early next week in the vicinity of the Great Lakes.

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Canada signs Trans-Pacific Partnership

Canada signs Trans-Pacific Partnership | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
Trade ministers from the 12 countries in the Trans-Pacific Partnership have signed their trade agreement, committing them to take the deal to their home governments for review and/or approval. The deal, which Trade Minister Chrystia Freeland signed on Canada's behalf on Thursday in Auckland, New Zealand, is expected to see tariffs on Canadian products in the 11 other TPP markets eliminated or dramatically reduced over 15 years following ratification. Signing countries include Japan, Australia, Malaysia, New Zealand, Singapore, Vietnam and Brunei Darussalam and Canada's existing free-trade partners, the U.S., Mexico, Chile and Peru. "The signing of the agreement signals an important milestone and the beginning of the next phase for TPP. Our focus now turns to the completion of our respective domestic processes," the 12 ministers said in a joint statement. The trade pact is expected to come into force within two years of signature, once member countries have completed their domestic legislative procedures. The…
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DXH16 | Commodity Futures Price Chart for U.S. Dollar Index March 2016

DXH16 | Commodity Futures Price Chart for U.S. Dollar Index March 2016 | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
Free futures chart and futures quote for U.S. Dollar Index (DXH16). Technical indicators, studies, real time charts
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United States Drought Monitor > February 2, 2016

United States Drought Monitor > February 2, 2016 | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

The week following the major East Coast snowstorm/blizzard was characterized by the passage of several cold fronts across the contiguous U.S., frequently changing temperature patterns related to deamplifying flow aloft, and widespread precipitation across the Great Lakes, the Southeast and the West. By the end of the observed period (Tuesday morning, 7am Eastern time), a major storm system had developed across the Southwest and was moving across the Central states, attended by areas of heavy snow (and in some cases, blizzard conditions), heavy rain, flash flooding, and severe weather.

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