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Stockpile Two Years of Corn Inventory

Stockpile Two Years of Corn Inventory | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

Cattle feeders and other corn end-users should consider stockpiling one to two years of grain ahead of any price reversal for the crop, advises Bryan Doherty, Stewart-Peterson.  


“Moving into the growing season, you look at something like corn trading in that, let’s say, $3.75 on the board, $3.80 on new crop, a little bit lower for old crop,” Doherty points out on the “AgDay” Agribusiness Update. “Look at those price levels and say, ‘How much downside do we really have?’ If I’m a cattle feeder or a dairy, 50 cents, 75 cents, why not scale in? Start buying it now, taking ownership of the inventory, and then if prices go down, take additional inventory. Look out one or two years because at some point, something comes along and changes that whole supply picture. You want to take advantage of low prices when you can. That’s a value proposition.”

There not much end-user competition for corn at this point simply because of ample inventories, but that doesn’t mean livestock producers should play the waiting game.

“The market’s at a just-in-time inventory,” Doherty explains. “If you bought ahead two months ago or three months ago, that was a mistake because it’s cheaper. So it’s a psychological issue. But at some level, you’ve got to recognize you’re in the lower half or third of the market for the year. You need to start stepping into this and buying some inventory.”

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Green Plains sees U.S. ethanol retaining export advantage vs Brazil

(Reuters) - U.S. ethanol exports will remain at multi-year highs this year, battling back competition from producers like Brazil as fuel demand improves, said Green Plains Inc's chief on Wednesday, striking an upbeat tone after a rocky first quarter.

Buyers in the Philippines and India, both countries with biofuels mandates, have been inquiring about orders through 2015 and into the first quarter of next year, Todd Becker, president and chief executive officer of the Omaha, Nebraska, based producer, said during an investor call.

His comments stand in sharp contrast to mounting worries from U.S. exporters, with inventories at three-year highs. Some exporters said shipments to India will dry up next month, after some orders were canceled or washed-out in the opening months of the year and as Brazil enters its harvest.

India, though only the No 7 importer of U.S. ethanol last year, is a burgeoning market, where buyers import for chemical and industrial uses when local gallons fall short.

But Green Plains expects U.S. ethanol to retain its advantage over Brazil amid signs the greenback's rally is waning. The two countries have been jockeying for sales this year, especially as Brazil's weakened real left their cane-produced biofuel near parity with corn-based U.S. ethanol.

Becker said he sees total U.S. exports reaching 800 million to 1 billion gallons this year and profit margins recovering from low levels. That compares with 2014's three-year high of 826 million gallons.

"When you look out on the curve beyond some of the nearby noise around the Brazilian currency and the sugar harvest, we remain competitive," Becker said.

India scooped up nearly 17 million gallons of fuel-grade ethanol in the first two months of the year, according to U.S. International Trade Commission (ITC) data, leaving the country poised to outpace last year's 41 million gallons.

Exporters have gone "whole hog" on sales to India, a U.S. trader said. The business is highly competitive and sellers need to offer considerably long financing deals, exporters said.

Green Plains executives on Wednesday affirmed that demand was out there in the not-to-distant future, noting "interest" from new countries.

The company on Tuesday reported a loss in the first quarter of 2015 due to weak margins and high stocks.

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Your Trading Charts Work Better in Study When Markets Get Frothy

Your Trading Charts Work Better in Study When Markets Get Frothy | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

 To critics, technical analysis is snake oil, purporting to find order in markets when none exists. New research says using charts as the basis for trading decisions actually works -- when investors are at their least rational.

In a study titled “Sentiment and the Effectiveness of Technical Analysis,” researchers found that hedge funds that leaned on technical analysis beat their peers by an average of 5.3 percent per year during stretches when investor optimism was elevated. One reason: price momentum overwhelms influences like earnings and the economy in times of market euphoria.

The study, to be published in the Journal of Financial and Quantitative Analysis, is part of a debate dating back to Nobel laureate Eugene Fama’s efficient market hypothesis, which questioned whether useful information about future prices could be divined from the past. According to David Smith, one of the authors of the study, insights can be drawn from charts when investors are acting irrationally.

“If you can take the emotion and behavioral impediments and simply use numbers on things like moving averages, Bollinger bands and other types of technical analysis, it may save people from their own impulses,” Smith, a professor of finance at Albany’s School of Business and Center for Institutional Investment Management, said in an interview.

Technical Returns

Smith, along with Hofstra professors Edward Zychowicz and Na Wang, and State University of New York at Albany professor Ying Wang, tracked the performance of more than 5,000 hedge funds from 1994 to 2010. The group then compared the results of funds that identify themselves as users of technical analysis against those that don’t use price and volume charts as trading cues.

Funds using technical tools returned an average 0.39 percent during months in which the Baker-Wurgler index of market sentiment was above the median, the study shows. Non-technical funds averaged a loss of 0.06 percent during that time. When sentiment was depressed, the opposite was true: technical funds trailed their peers by 0.2 percentage points.

The findings suggest speculation during bull markets drives prices beyond intrinsic values, Smith said. Because not all market participants have the ability to bet against stocks through short-selling, high stock multiples often last longer than low ones.

Valuation gaps during market euphoria are an opportunity for technical analysts, as corporate earnings and economic outlooks are “imprecise” signals when investors are excited and stock prices deviate from fundamental value. That’s when moving averages and momentum strategies can provide better guidance, the authors write.

“Insofar as markets exhibit stronger trends in high sentiment periods, technical analysis techniques such as moving average and momentum strategies are informative because they are primarily designed to detect price trends,” the authors wrote. “In contrast, other signals such as earnings and economic outlook are likely to be imprecise.”

‘Random Walk’

The study shows randomness doesn’t always rule markets, said Burton Malkiel, chief investment officer of Wealthfront Inc. and professor emeritus at Princeton University. Malkiel, whose “A Random Walk Down Wall Street” advocates buying and holding broad index funds as a practical interpretation of the efficient market hypothesis, says there’s one big catch.

“The market is not a perfect random walk,” Malkiel said in a phone interview. “From time to time there is a bit of momentum in the stock market and when people use technical analysis usually what they’ve done is loaded up on this momentum factor. The problem is it’s very undependable and can stop on a dime. Nobody can time the market.”

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Early Financial Defaults Hit Farm Country

INDIANOLA, Iowa (DTN) -- The farm financial ice is beginning to crack, reports from financial consultants, machinery dealers and bankruptcy attorneys show.

Early fractures in farm finances are beginning to crop up at machinery dealerships and in land rental disputes.

Andy Goodman, president of the Iowa-Nebraska Equipment Dealers Association, knows two situations beginning in March where the bank asked an equipment dealer to pay up on a lien for a piece of equipment a farmer had traded in. The dealer didn't know it had a lien against it.

"We haven't had these types of calls for years. But beginning in March, we've gotten several calls from worried dealers," Goodman said. What surprised the dealers is the equipment didn't have a specific lien against it. Rather, it was included in a farm "blanket" or "dragnet" clause on a security lien for an operating loan. In those cases, the bank technically owns the equipment the dealer bought from the farmer who later defaulted on his bank loan.

In fact, "my first farm bankruptcy call in a long time came around Christmas, and since March, my farm bankruptcy business has really picked up," said attorney Joe Peiffer, with Day Rettig Peiffer, P.C., in Cedar Rapids, Iowa. "One client who last year farmed over 15,000 acres found out on the Monday before his March 1 cash rent payments were due that his lender would not give him any financing.

"And I just got a call April 30 from a farmer who last year got financing at the last minute, but wasn't able to get any money this year. It's May. He thought he was going to be OK, but now he's calling me [a bankruptcy attorney] for help."

LANDLORDS AREN'T BACKING DOWN

Peiffer also had another client who had a problem with his landlords and sold out this winter. "He had signed a lease for $150,000 last fall, but it was terminated when he didn't pay it. The landowner found another tenant who would only pay $120,000. The owner has asked my client for the $30,000 difference," said Peiffer. "In addition, the landowner has threatened to sue not just for the shortfall in 2015 rent, but also for all of the 2016 and 2017 rent as well. How's he going to pay that when he couldn't even afford this year's lease?"

Moe Russell with Russell Consulting in Panora, Iowa, had four situations where his customers found more land to rent in the third and fourth week in April. "One landowner approached my farmer client because his tenant did not pay the rent that was due April 1. The farmer asked for a lower rent, but the landowner was not willing to budge and said he would put it up for bids if the farmer didn't pay the amount the owner had negotiated with his former tenant last fall." Russell has seen a few landlords go down $10 to $25 per acre in cash rent this year, but not much more than that.

"The past five to 10 years, farmers, for the most part, have had high capital expenses and high living expenses; now they are facing high cost of production. With the current inverted profit margins, something has got to give," explained Russell.

WHERE DO WE GO FROM HERE?

All farmers, even those not financially fragile, should run cash flows this July, recommended Peiffer. There could still be a commodity

"Talk to your banker. Make sure you are on the same page before you go to your landowner in August to set next year's rent," advised Peiffer. (Iowa has a farm tenant termination deadline of Sept. 1.)

Early fractures in farm finances are beginning to crop up at machinery dealerships and in land rental disputes.

One of the segments most exposed to financial shock is large operations over 7,500 acres who have expanded quickly in the past five years, especially those who have a lot of cash-rented acres. "Four out of the past five farmers who have come to me have had debts larger than Chapter 12 [re-organization bankruptcy] eligibility (over $4.37 million)," added Peiffer.

"You need to figure out if you won't make a profit this year, how can you minimize your loss? And how many years of loss can you afford and still get financing from your bank?" said Peiffer.

TIGHTEN YOUR BELT

"A lot of bankers will be evaluating portfolios, looking for working capital," noted Nathan Kauffman, Omaha branch executive with the Kansas City Federal Reserve. "July will be a crucial time to evaluate the crop and expected profits," he added.

Family living expenses will be on the chopping block. "There are a lot of nice pick-up trucks, campers and boats bought on installment," said Peiffer.

It's tough to pare down your living expenses, said Russell. But that may be the only thing you have control over in the near-term.

On the flip side, those in good financial shape with strong working capital can look for opportunities, Russell said. "The bottom line in a free-enterprise society is it's OK to fail, but it's also OK to succeed."

If you have an equipment dealership, make sure you get a release from any liens the customer's lender may have on that piece of equipment. What happens sometimes is the farmer has a purchase money security interest with John Deere or Case IH and the dealer gets a release from that. That is obvious. But then the farmer's lender or even the equipment manufacturer's financial company may also have a second lien on that equipment related to other loans with the lending company, Peiffer explained.

"Before accepting a trade-in or purchasing used equipment, the dealer should call the farmer's lender and get a termination of UCC (Uniform Commercial Code) with respect to that piece of equipment," said Peiffer.

Federal Reserve's Kauffman noted that an increase in loan defaults hasn't shown up in the regulator's data yet. "We took our first-quarter [credit conditions] survey in February. The next one will be in May. Coming off lofty farm incomes and high land values sounds similar to the 1980s, but financial leverage isn't the same today as it was back then and farm households have more off-farm income," Kauffman said in explaining why a financial setback this time may not be as severe as in the 1980s.

However, the financial ice in agriculture is beginning to crack. "The more important question is, 'how thick is the ice?' Peiffer said.

If we can get cash corn back up to $4.50, the stress will drop. The $4.20- to $4.50-per-bushel range covers a lot of farmers' costs, said Russell. "But Friday at my central Iowa co-op, cash corn was $3.64."

That's pretty thin ice.

price run-up after July, but don't count on it. You know what's in the ground, you can estimate your costs for getting it out. And you should have an idea of what price you can get.

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Coming Soon: $125 Million to Grow Ag, Rural Startups

Coming Soon: $125 Million to Grow Ag, Rural Startups | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

Somewhere in rural America, an entrepreneur’s dream of making farming easier, faster, and better just got a bit more realistic.

In April, the USDA announced two new “Rural Business Investment Companies,” or RBICs, headed by venture capital firms Innova Memphis of Memphis, Tenn., and Meritus Kirchner Capital, which has offices in Kentucky, Tennessee and Alabama.

"These two new private funds will provide innovative small businesses throughout rural America access to the capital they need to grow and create jobs," said U.S. Secretary of Agriculture Tom Vilsack. "At USDA, we are working hard to reenergize the rural economy, and we are enlisting more and more private sector partners to help achieve that goal.”

At Innova, which has concentrated on health care investments in the past, the focus for this new $25 million fund will be agricultural innovation.

“We will look at opportunities that use innovation and technology to increase efficiency, lower costs, or increase output,” Innova Memphis Partner Jan Bouten told AgWeb.

Will those opportunities be in conventional, commodity agriculture or more specialty crops? “It’s really too soon to tell,” he said.

The new fund is not Innova Memphis’s first foray into farming. The firm previously invested in AgSmarts, a precision ag startup, and has been keeping an eye on agriculture for years.

“With our partners Memphis Bioworks and Ag Innovation Development Group, we have been looking at the ag space since Innova's founding in 2007,” explained Bouten, whose firm noted a growing number of potential ag investments in the past two years. “Having built the expertise over time, we felt the RBIP program was the perfect opportunity to capitalize a fund around this effort.”

For those who invest, the Innova Ag innovation Fund will have a 10-year horizon and is anticipated to deliver returns of 15 percent.  That longer time frame is “is typical for investments in VC funds,” Bouten said. “We believe this is an attractive long-term investment option as part of a larger balanced portfolio.”

Meritus Kirchner will manage the second fund recently announced by Vilsack. It will be larger--$100 million—but will also target startups.

“The capital we raise will be invested in exceptional growth-stage, agriculture-related and rural companies, which historically have had limited access to this kind of capital,” said Grady Vanderhoofven, partner at Meritus Kirchner Capital. “By doing so, we will help create wealth, jobs, and opportunities in rural America.”

What do you see as areas where investment could help ag innovate? What types of rural businesses could really use this capital to grow?

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Corn price - Firm cash market raises hopes of end to corn price falls

The slide in corn futures, which have lost some 10% from a late-March high, may be approaching at least a pause, Societe Generale said, citing cash market signals and potential yield overoptimism.

The drop in March corn futures from an intraday top of $3.98 ½ a bushel on March 31 to stand at $3.59 a bushel on Monday, for Chicago's spot contract, has not been matched in the US cash markets, the bank said.

Basis – the cash price in a local market minus the futures price – has risen at both major US Gulf ports and inland, a factor that "suggests that demand remains reasonable", the bank said.

And while the drier weather for US plantings has prompted some talk of accelerated harvesting and improved yield ideas, SocGen cautioned over some negative factors for crop prospects too, with weak corn prices deterring farmers from spending on crop inputs such as fertilizer.

"Dryness in the western Corn Belt and prospects of lower overall fertiliser usage on lower crop prices, given the reduced margins in corn production year-on-year, suggests that the US Department of Agriculture may be a bit optimistic on its initial yield expectations."

The USDA has forecast a 166.8-bushels-per-acre US corn yield this year, a result which would behind only last year's record of 171.0 bushels per acre.

'Short-term bottom in prices'

SocGen foresaw potential for corn futures, now near six-month lows, to be approaching at least a near-term plateau.

"For the moment, despite the general downbeat view of the market, we expect to see at least a short-term bottom in corn prices in the coming weeks," SocGen analyst Christopher Narayanan said.

Support might come at the psychologically important level of $3.50 a bushel.

"Demand continues to be respectable and there are little signs of this abating into the summer months at this time."

Slow farmer selling

The comments follow observations last week from companies such as ag trading giant Bunge and ethanol group Green Plains over relatively tight supplies of corn in the US for now.

This has been widely attributed as being fuelled by a reluctance of growers to sell corn at relatively depressed prices, although there is some debate as to whether supplies might be more forthcoming once the new crop is better developed, and decent yield prospects more likely.

Talk of improved yield prospects, given rapid sowings, reflects the greater likelihood of an early-sown crop reaching pollination, a heat sensitive period, before peak summer temperatures.

Old crop vs new crop prices

However, some other commentators too are less downbeat on corn price prospects for now, with Futures International, for instance, saying last week that "we see July corn futures in a $3.55-4.00 a bushel trading range".  

That said, the Chicago broker added that, further ahead, it expects new crop December futures to hit a low of $3.20 a bushel "if normal weather prevails".

Corn futures for July stood down 0.3% at $3.62 a bushel in early deals on Monday, when the December contract was down 0.3% at $3.79 ¼ a bushel.

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Uralkali 'compromises' to seal India potash deal

Russian potash giant Uralkali signed a supply deal with India's major fertiliser importer, in a move that will be key in determining spot prices of the fertilizer - and with a deal with North American producers expected soon.

Uralkali, the world's biggest potash producer, will supply 800,000 tonnes of the nutrient to Indian Potash "at an increase of $10 per tonne" on last year's price – implying a value of $332 a tonne on a cost and freight basis.

The contracts, which covers the year to March next year, enshrines a price upgrade in line with that agreed by potash groups with Chinese buyers last month.

China is believed to have sealed agreements at $315 a tonne, also up $10 a tonne year on year, with the lower prices reflecting its status as the top potash importer, ahead of second-ranked India.

However, the price agreed with Indian Potash is short of the $20-a-tonne raise that Uralkali, and other major potash producers, had reportedly originally hoped for.

Uralkali chief executive Dmitry Osipov said: "This agreement represents a compromise, reflecting the current situation on the global potash market."

'Optimistic about demand growth'

Mr Osipov added that "the contract will undoubtedly become one of the major drivers for industry development, stimulating potash demand".

The global potash market has been watching prolonged negotiations between miners and importers for clues to pricing of the nutrient.

The Uralkali deal is likely to herald a follow-on contract from North American producers, which sell through the Canpotex consortium, and comes amid a time of apparently strong demand for potash in India.

"Industry potash sales in India are up almost 20% in the first quarter of 2015 despite uncertainty about the government subsidy," which will remain until India finalises budget proposals, Mosaic chief executive Jim Prokopanko told investors on Thursday.

"We are optimistic about demand growth in India."

'Very low inventories'

Mr Prokopanko added that "early indications lead us to believe a Canpotex contract will be signed before June.

"The Indians are going to need this product in-country…. available to farmers sometime in July," he said, adding that India has "got very low inventories, from all reports we hear from the industry and from our people in the country.

"So, they've got to get shipping product to their ports soon."

Given the 35 days needed to ship potash from Vancouver, the main North American potash export port, to India, and the time needed to transport the nutrient in-country, "you're going to have to have this product on a vessel, a vessel at the port, ready to go, before the end of May".

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Monsanto-Syngenta mega-merger talks may drive other deals

Monsanto-Syngenta mega-merger talks may drive other deals | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

MONSANTO has approached Syngenta about a takeover that would create a giant in the market for seeds and crop chemicals with more than $US30 billion ($38 billion) in revenue. 

Getting a deal approved by regulators won't be easy - and may not happen at all. To address antitrust issues and help its case, Monsanto has planned for a deal to include a sale of parts of the combined business. 

The biggest concerns may be tied to what would be an unprecedented market share in soybeans and corn seeds for the combined company. 

Syngenta's operations in those areas would appeal to a range of buyers from Dow Chemical Co, to BASF SE and Bayer AG, said Colin Isaac of Atlantic Equities LLP. 

Syngenta's "seed businesses would be pretty easy to sell for good multiples," Mr Isaac, a London-based analyst, said. "People are always looking to buy share." 

DuPont Co. could also be a buyer of any assets that are divested, said Bill Selesky, an analyst at Argus Research Co. There is another possibility: at Dow, activist investor Dan Loeb once pushed for a breakup, and chief executive officer Andrew Liveris has suggested the company is open to divesting its agriculture unit. Monsanto becoming a much stronger competitor could be a catalyst for the $60 billion company to more seriously consider taking the step of exiting that business, which made up about 13 per cent of its revenue last year, James Sheehan of SunTrust Banks Inc said. That segment would be prime pickings for DuPont and its Pioneer seed business, he said. 

"That's the deal that I've always expected to happen," Isaac said. "It's attractive for Pioneer and it's attractive for Dow in terms of focusing their portfolio on the chemicals business and raising a lot of cash." 

If Dow doesn't want to sell directly to DuPont, both companies could combine their agriculture businesses in a separate entity, Argus's Selesky said. 

A $19.5 billion bid by DuPont for Dow's agricultural sciences business could generate a 7 per cent return on invested capital according to a report from Jefferies Group LLC.

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Warren Buffett doit répondre à des questions pointues

Warren Buffett doit répondre à des questions pointues | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it
Chaque année, les actionnaires de Berkshire Hathaway célèbrent Warren Buffett au cours de leur assemblée générale annuelle. Samedi, le traditionnel concert de louanges...
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Brazil takes aim at U.S. farm subsidies as Rousseff readies visit

Brazil takes aim at U.S. farm subsidies as Rousseff readies visit | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

(Reuters) - After finally turning the page on a dispute over spying that hampered attempts to deepen trade ties, Brazil and the United States may be headed for another clash, this time over U.S. farm subsidies.

Brasilia is gathering evidence to show that the United States is increasing subsidies for soy and corn farmers, which threatens to further push down prices for the key crops grown in the South American country and hurt its already sputtering economy, four Brazilian officials told Reuters.

Although it is too early to launch a full-out trade dispute, Brazil plans to apply pressure on Washington by questioning its farm program at the World Trade Organization's agriculture committee and by rallying support among other commodities exporters, officials said.

Brazil's growing concerns over U.S. farm subsidies comes as President Dilma Rousseff prepares to visit Washington in June, a trip aimed at bolstering trade between the hemisphere's two largest economies.

It took more than a year of intense negotiations for Rousseff to reschedule the trip, which was originally set to take place in 2013 but was scrapped following revelations that Washington spied on her personal communications.

Although Rousseff will not address the concerns about farm subsidies directly with U.S. President Barack Obama, her aides plan to bring it up in meetings with U.S. officials ahead of the visit, one of the Brazilian officials said. They all spoke on condition of anonymity to discuss the plans candidly.

"We are certain that U.S. subsidies will rise, but we need to gather evidence during the next harvest to build our case," said another official involved in trade policymaking. "We don't rule out a trade dispute, but we are in the early stages."

The U.S. government says its farm programs are transparent and fair and do not distort commodity markets.

"The new farm bill programs have minimal effects on production and trade and, as such, we are confident that the programs are in compliance with our WTO commitments," Cullen Schwarz, a U.S. Department of Agriculture spokesman, said in email response to questions from Reuters. He was referring to the 2014 U.S. farm bill.

A farming powerhouse, Brazil is an experienced player in agriculture disputes. It won a landmark WTO case in 2004 against U.S. cotton subsidies, a dispute that finally ended last September with a $300 million settlement for Brazilian producers.

The concerns over subsidies show how difficult it is for the regional powers to deepen economic ties after decades of disagreements over trade policy and other issues.

On her trip to Washington, Rousseff wants to attract more U.S. investment and technology to Brazil, which is one of the world's most closed economies because of high import tariffs and other trade barriers. But officials say both countries will struggle to deliver on key topics such as ending double taxation.


CONCERN OVER FALLING GRAIN PRICES

Brazilian officials worry that the drop in global grains prices will prompt the United States to release more subsidies to its farmers through crop insurance schemes in the 2014 farm bill.

In a presentation last year when she led Brazil's farm lobby group CNA, Katia Abreu, now agriculture minister, warned that Brazil could lose up to $500 million a year in revenues from soy exports due to price distortions caused by U.S. subsidies.

The estimates are from a study by consultancy Agroicone, which expects those subsidies to drag down world corn and soy prices by 4 percent and 3 percent, respectively.

"If prices remain at this level that will trigger more subsidies to U.S. farmers, leaving Brazilian producers at a disadvantage," said Alinne Oliveira, head of international affairs at CNA, which set up a group to monitor the subsidies.

Soy prices on world markets have plunged around 35 percent over the last year while the value of corn fell nearly 60 percent since its record high in late 2012, according to benchmark CME futures.

Brazilian authorities expect to have more evidence of the distortions by early next year to challenge the United States. In the meantime, officials say Brasilia will seek to press the United States to be more transparent about its subsidies.

Brazil comes a close second to the United States as the world's largest producer of soy, which makes up about 10 percent of its total exports. The fall in soy prices helped explain Brazil's first trade deficit in 14 years in 2014.

"We need to act multilaterally at the WTO to reduce those subsidies," said another Brazilian official. "At a time when economic growth is low, every major exporter is fighting for every little piece of the market."

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China pledges $11B to support grain farmers | Country Guide

China pledges $11B to support grain farmers | Country Guide | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

Beijing | Reuters -- China will give a total of 57.8 billion yuan (C$11.26 billion) to grain farmers as part of efforts to deepen rural reform, promote modern agriculture and raise incomes for farmers, state news agency Xinhua said.

The total includes 14 billion yuan in direct subsidies, while 20.4 billion yuan will go to farmers to promote better crop varieties, Xinhua said late on Thursday, without providing a time frame.

A further 23.4 billion yuan will be used to support the “appropriate management scale of grain, with a focus on big professional bodies such as family farms and farmer co-operatives,” it added.

Last year Beijing scrapped its cotton and soybean stockpile schemes, switching to direct subsidies to farmers to cover the gap between a target price and the market price, but it kept the stockpile policy for grains, sugar and rapeseed.



Sinograin, the state stockpiler, purchased a record 125 million tonnes of grain in 2014, according to state media.

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Argentine crop supplies pick up - as US farmers shut up shop

Argentine growers, amid a record soybean harvest, may be showing signs of stepping up crop sales, after years of hoarding harvests as a hedge against a falling peso, even as their US peers hold-off.

Soren Schroder, the chief executive of ag trading giant Bunge, said that while it is still early in the season to judge Argentine farmers' appetite for selling, for now "we've got active deliveries of soybeans to the ports.

"It's a bumper crop. It's the largest crop we've had," Mr Schroder said, speaking even as the Buenos Aires grains exchange raised by 1.5m tonnes to a record 60m tonnes its forecast for the Argentine soybean harvest, lifting its estimate for the corn harvest by 2m tonnes to 25m tonnes.

The US Department of Agriculture, whose data set global benchmarks, estimates Argentina's soybean harvest at 57.0m tonnes, and corn crop at 24.0m tonnes.

'Running at full speed'

The ready flow of soybeans in Argentina meant that for Bunge "all the crushing plants are running at full speed", and with stronger profitability prospects than a year ago, Mr Schroder told investors.

"Argentina has really taken the stage now of global pricing of soybean meal, and at good margins.

"Whereas last year it was touch and go, Argentina really is an improvement, without a doubt."

The comments come as Argentina is taking an increasing profile on world agricultural markets, given its ongoing and large harvests, at a time when growers have already hoarded significant crop which, being dollar-denominated, acts as a hedge against a falling peso.

The USDA bureau in Buenos Aires estimated last month that, as of the end of March, Argentine growers had some 14.0m tonnes of soybeans in store as of the end of last month, up 25% year on year.

However, it forecast a pick-up in selling, saying that "the stocks bubble will begin to break due to a conflation of factors - currency devaluation pressure, farmer indebtedness, and a surging industry demand".

'Behind in farmer pricing'

By contrast, Bunge underlined the observation of many brokers, and the likes of ethanol group Green Plains, that farmers in many other countries - notably the US - are hoarding crop, in hope of a revival in prices, with Chicago corn futures this week setting six-month lows.

"Marketing patterns suggest that we are tracking about 5% behind in farmer pricing compared to normal," Mr Schroder said.

"Certainly in the US, on-farm storage has expanded at a significant rate over the last years and farmers are increasingly in a position to hold the vast majority of their crop."

And they appear to be employing that extra space to allow them to delay grain sales.

"It is a fact that on-farm storage of crops, corn in particular, is at an all-time record high."

Late-year pick-up?

However, echoing comments from Green Plains earlier in the week, he backed ideas of a pick-up in sales later in the year – assuming the strong harvest which many see as more likely this year, after a strong pick-up in sowings this week.

"Although a lot of storage space has been added in North America over the last several years, you would expect that with another large crop, which we expect, that marketing pattern should return to something more normal in… the last four months of the year," Mr Schroder said.

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More 'probable' bird flu cases in Iowa, outbreak could be U.S. biggest

(Reuters) - The highly pathogenic H5 avian flu turned up in initial tests at five more farms in Iowa, including a commercial egg operation housing up to 5.5 million birds, Iowa's agriculture department said on Thursday.

If the virus is confirmed at the farms in additional tests under way at a U.S. Department of Agriculture laboratory, the total number of American cases could surpass 20 million birds and result in the biggest death toll in a bird flu outbreak in U.S. history.

Avian flu at the egg farm in Buena Vista County, where workers saw an unexpected jump in bird deaths before the flock was tested, could be the largest single farm operation to be hit in the current outbreak.

The egg farm's owner, Rembrandt Foods, one of the top U.S. egg producers, confirmed the outbreak but disputed the number of birds affected. The state did not identify the affected farm by name.

Avian flu was "probable" at four other commercial farms in Buena Vista, Sioux and Clay counties, the Iowa Department of Agriculture and Land Stewardship said. If the virus is confirmed at all five farms in the coming days, the number of sites where H5 has been found in Iowa would rise to 17.


BROILER FARM HIT

The news came only hours after state officials confirmed on Thursday that an Iowa-based chicken broiler breeding farm has initially tested positive for the virus.

The facility in Kossuth County, Iowa, houses an estimated 19,000 birds, the state agriculture department said.

Birds were dying in greater than normal numbers at the breeding farm, which is a typical sign of influenza infection in a flock.

This is thought to be first time the virus has affected a broiler breeding farm in this outbreak. Such breeding farms are traditionally known for having extremely tight biosecurity systems.

Though the operation is small compared with some of the other poultry farm sites in the Midwest that have been affected by the current outbreak, the probable breach of a chicken broiler breeder's biosecurity underscores the potential for the country's poultry meat industry supply chain to be affected.

Typically, such facilities' chickens lay fertile eggs, which are sent to a hatchery to produce chicks that are later raised and slaughtered for meat.



Infections with the H5N2 strain have picked up pace in the past few weeks. Only a million birds had been infected at the beginning of April after the strain was first found in January.

Two bird flu strains have been found in the United States this year. The H5N2 strain has been reported in Arkansas, Idaho, Iowa, Kansas, Kentucky, Minnesota, Missouri, Montana, North Dakota, Oregon, South Dakota, Washington and Wisconsin. It has also been identified on farms in Ontario, Canada.

The H5N8 strain has been identified in California and also in Idaho, according to the Agriculture Department.

More than 15 million commercial birds nationwide have died or are expected to be killed in the current outbreak. 

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Chinese beef giant wants $100m of land - Agriculture - Cattle - Beef - The Land

Chinese beef giant wants $100m of land - Agriculture - Cattle - Beef - The Land | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

ONE of China's largest beef producers, Chongqing Hondo Agriculture Group, is looking to buy up to $100 million worth of cattle stations in Australia within the next year.

The company's president, Qin Ya Liang, attended Austrade's Australian Beef Industry Seminar in Brisbane last week where he told The Australian Financial Review his company was looking for investments in farmland and abattoirs.



"We are here looking for investments in cattle farms - the bigger size is good," Mr Qin said through his interpreter Clement Quan.

"We will look to invest in partnership with corporate farmers but we will take percentage investments in medium and small enterprises as well."

Mr Qin, who operates three massive feedlots in China, producing about 110,000 head of cattle a year, is part of the growing beef business in China, whose overall volume accounts for over 10 per cent of global beef output.

"I like Australia because there are big farms and we are wanting to increase our consistency of supply," he said.

"We have not made an investment yet. We are still looking. We think we will invest between $50 million and $100 million within one year."

The scale of Chinese investment looking to invest in Australian cattle stations and the beef supply chain is substantial and is beginning to build momentum.

One of China's top 500 companies, Hailiang Group, purchased more than $40 million worth of cattle and cropping land east of St George in southern Queensland in March, while the Chinese group Yiang Xiang Assets purchased Allan Myers' Elizabeth Downs cattle station for a price believed to be more than $11.5 million.

There are numerous Chinese groups keeping a low profile, such as Rifa Australia, headed by former Elders boss David Goodfellow. The parent company is Zhejiang RIFA Holding Group.

Austrade's trade commissioner in Chengdu, Jeff Turner, said the line-up of Chinese interests was extensive, with as many as 300 Chinese cattle and cattle-related companies looking to invest in Australia.

"They are interested in everything from production and farms and the whole supply chain," Mr Turner said.

"Deals are starting to get done much more quickly but [Australian cattle producers] need to still do the fundamentals, for example you still need to have Guanxi - the relationships."

The Austrade seminar, sponsored by major agency Colliers International, was the first leg for a visiting Chinese delegation that is attending Australia's national beef exposition - "Beef Week" - in Rockhampton this week.

Colliers International director Rawdon Briggs said the prominence of Chinese inquiries and contractual activity was growing.

"It is also notable that a number of significant deals have been made across the north by Chinese investors," he said.

"Asian market opportunities and the depreciating Australian dollar have begun the process of revival for many sectors of Australian agribusiness."      

Austrade's trade commissioner in Chengdu, Jeff Turner, said the line-up of Chinese interests was extensive, with as many as 300 Chinese cattle and cattle-related companies looking to invest in Australia.

"They are interested in everything from production and farms and the whole supply chain," Mr Turner said.

"Deals are starting to get done much more quickly but [Australian cattle producers] need to still do the fundamentals, for example you still need to have Guanxi - the relationships."

The Austrade seminar, sponsored by major agency Colliers International, was the first leg for a visiting Chinese delegation that is attending Australia's national beef exposition - "Beef Week" - in Rockhampton this week.

Colliers International director Rawdon Briggs said the prominence of Chinese inquiries and contractual activity was growing.

"It is also notable that a number of significant deals have been made across the north by Chinese investors," he said.

"Asian market opportunities and the depreciating Australian dollar have begun the process of revival for many sectors of Australian agribusiness." 

       

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Big China corn premiums may tempt buyers to step up imports

May 4 (Reuters) - Tumbling global corn prices have raised the prospect of a pickup in imports by China, the world's second-largest consumer, as a widening discount to high domestic prices makes full-duty imports more economic.

An increase in imports by China would be a filip for global prices, still languishing not far off a five-year low, although analysts said any initial volumes may be limited given fears of government action to curb shipments.

China allows 7.2 million tonnes of annual corn imports at a 1 percent import tariff, but most goes to large state-owned firms. Private firms typically get only small volumes of quota corn and must buy the rest of their needs from domestic sources.

But global prices have fallen 9 percent this year on a record U.S. crop and demand fears. Chinese domestic prices, propped up by government buying to support farmers, are now so far above the global market that so-called "out-of-quota" imports attracting full duties are looking economic.

"Of course we will consider it if the price is cheaper," said Jin Weidong, chairman of Wellhope Agri-tech, a major feed company, adding that a 100 yuan ($16) margin between imported and domestic prices would be significant.

U.S. No.2 corn was priced last week at about 1,493 yuan a tonne at ports in China's southern Guangdong province, nearly 1,000 yuan below domestic prices. This put it about 90 yuan cheaper than Chinese corn, even after a 65 percent duty for out-of-quota imports, and analysts say global prices are still weakening.


IMPORT RISKS

Out-of-quota imports, however, carry significant risks, said Li Qiang, chairman of consultancy Shanghai JC Intelligence. Although there are currently no restrictions on imports, companies would be nervous this policy could change.

"China's corn stocks are very big. We believe China would increase its out-of-quota import management," he said.

China's state reserves hold a record 150 million tonnes, more than eight months' consumption.

Beijing is working to lower its reserves but with weak demand at state auctions, it may choose to lower its selling price, pushing down domestic prices and eroding the import margin.

"Given this situation, bringing in out-of-quota imports carries a high risk," added a purchasing manager at another large private feed mill.

Buyers could also run the risk of being caught up in fresh checks by Beijing for unapproved genetically modified material or other contaminants, said industry participants.

Corn imports by China fell 20 percent to around 2.6 million tonnes in 2014, after a government crackdown on an unapproved genetically modified variety led to more than 1 million tonnes of U.S. corn being rejected at ports.

That variety has since been approved, but buyers have largely stayed away from the U.S. market, opting instead for corn from Ukraine or corn substitutes.

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Russia and China have had enough of western banking

Russia and China have had enough of western banking | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

 President Vladimir Putin approved a new $100 billion reserve fund over the weekend that will specifically aid the BRICS nations: Brazil, Russia, India China and South Africa.

It's another step by the BRICS to build an alternative so they don't have to go to the United States or the International Monetary Fund for any financial help.

BRICS leaders first agreed on the new fund -- seen by many as a power play against the west -- at a conference last July. The BRIC countries make up 40% of the world's population and about 20% of the world's economic activity.

Related: Emerging market stocks are surging

The reserve fund will help BRICS countries with cash problems. It will get most of its seed funding from China, which will contribute $41 billion. Russia, India and Brazil will put in $18 billion each, and South Africa will give $5 billion. The timing is critical as many emerging market nations and businesses are struggling to pay their debt for various reasons.

China is also moving forward with its own investment bank, the Asian Infrastructure Investment Bank, which America isn't supporting financially.

That bank has quickly become a thorny issue for President Obama. European nations, such as Britain and Germany, defied U.S. requests to withhold membership, and chose to back China's bank.

Related: Biggest loser from the strong dollar: emerging markets

Last week Obama said he's "all for" China's investment bank, but wants to make sure it's operated properly before the U.S. joins. But both the bank and the fund appear to be an effort by the BRICS reduce reliance on U.S. and western Europe for investment.

IMF Director Christine Lagarde said last October that she sees the new BRIC reserve fund as complementary to the IMF, not a rival. The IMF's total reserves amount to about $1 trillion, according to an IMF spokesperson.

"I don't see it, as some people have said, competing with the IMF," Lagarde said at a press conference. "We will be working and partnering with this arrangement if it endures." 

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Declining canola crush margins start to be felt

CNS Canada -- Declining canola crush margins are finally starting to be felt in the Canadian processing sector.

The weekly crush pace took a hit, in the latest report from the Canadian Oilseed Processors Association.

Domestic crushers processed only 126,917 tonnes of canola during the week ended Wednesday, according to COPA data.

That figure represents only 69 per cent of domestic crush capacity, and was the smallest weekly crush, aside from the Christmas week, since November.

Crush margins provide an indication of the profitability of the product values relative to the seed cost when processing canola, with exchange rates also factoring in to the equation.

As of Friday, the Canola Board Crush Margin calculated by ICE Futures Canada was at about $81 above the most active July contract.

Current levels have lost about $10 per tonne over the past month and compare with crush margins at the same point a year ago of about $188 per tonne above the futures.

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U.S. Rains Rescue Kansas Wheat From Second Drought Disaster

U.S. Rains Rescue Kansas Wheat From Second Drought Disaster | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

David Schemm isn’t complaining that a deluge last month made soils too wet to plant corn because his 4,500 acres of wheat in west-central Kansas will probably be the best crop in four years.

 

“There were cracks in the soil and plants were starting to turn yellow because of the dry weather during the winter,” said Schemm, 44, who farms near Sharon Springs. “Survival of my crop was down to hours, not days.”

Rains in April worked to revive crop prospects across Kansas, the biggest U.S. wheat producer, and helped farmers escape a second year of drought losses. In 2014, dry weather shriveled plants and the harvest fell to the lowest since 1989. Production this season will probably jump 21 percent to 298 million bushels, the first increase in three years, according to the average of 16 analysts surveyed by Bloomberg.

Wheat prices are near the lowest since July 2010 after bumper harvests in the European Union, Russia, Ukraine and India pushed global reserves to a five-year high. More world supplies mean that demand is waning for shipments from the U.S., the world’s top exporter. Grain gluts are also keeping global food inflation in check, with costs tumbling 19 percent in the past 12 months.

For Kansas grower Schemm, April rains that were more than double the average mean that his yields this season should climb to 40 bushels an acre from 22 collected on average last year. That trend will be mirrored across the eastern half of the state, and will help push total U.S. winter-wheat production up 7.7 percent to a two-year high, the Bloomberg survey showed.

Kansas Tour

More than 90 traders, farmers, grain buyers, flour millers and bakers, including representatives from Grupo Bimbo SAB, Archer-Daniels-Midland Co. and General Mills Inc., will tour fields across Kansas beginning Tuesday to measure production potential during the annual Wheat Quality Council Tour. The group will issue a crop forecast for the state on May 7, and the U.S. Department of Agriculture issues its first estimate on May 12.

 

“Wheat was headed for half a crop at the end of March, and it is adding bushels at the end of April,” said Troy Presley, grain manager for Comark Grain Marketing LLC in Cheney, Kansas, the marketing division for 12 cooperatives with more than 70 locations in Kansas, Oklahoma and Nebraska. “April rain probably added 5 bushels an acre” to yields in Kansas since March, and more rain this month could add another five, he said.

Rains also aided crops from Texas to Nebraska, and U.S. production of hard-red wheat could climb as much as 15 percent this year to 850 million bushels, according to Ryan Caffrey, the senior wheat merchandiser for CHS Inc., the largest U.S. cooperative. Futures have slumped 40 percent in the past year and traded at $4.995 a bushel on the Chicago Board of Trade on Monday.

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U.S. Ethanol Exports Worth $2 Billion

U.S. Ethanol Exports Worth $2 Billion | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it
By USDA/FASU.S. ethanol exports rebounded in 2014, with value and volume both up approximately 35 percent from the previous year, although still below the record set in 2011, according to the USDAreport released Thursday. At nearly 3.2 billion liters (836 million gallons), U.S. ethanol exports were worth more than $2 billion dollars. Six percent of ethanol produced in the United States was exported last year, and the United States overtook Brazil as the world’s largest exporter. U.S. ethanol exports are also being shipped to a more diverse range of markets.The United States is, by far, the world’s largest producer of ethanol, with an output more than double that of the next-largest producer, Brazil. The United States implemented the Renewable Fuel Standard (RFS) in 2005 and expanded it in 2007, mandating that transportation fuel sold in the United States contain an increasing volume of ethanol or other biofuels. Since 2007, ethanol production in the United States has soared, more than doubling in just three years from 23 billion liters (6.5 billion gallons) in 2007 to 49 billion liters (13.3 billion gallons) in 2010. After 2010, U.S. ethanol production stagnated due to the approaching 10-percent “blend wall” (an upper limit on the amount of ethanol that can be blended in motor fuel for conventional vehicles, constraining the widespread use of 15-percent, or E-15, and 85-percent, or E-85, blends), and rising price of corn, which is by far the largest feedstock for U.S. ethanol. However, in 2014 ethanol production jumped nearly eight percent, reaching a record 54 billion liters (14.3 billion gallons). Among the driving forces behind the upturn were lower corn prices and a recovery in gasoline consumption following the 2008-2012 decline due to the recession and rising oil prices. Record U.S. corn crops in 2013 and 2014 caused a sharp drop in prices, with the farm-gate value in mid-2014 registering about 40 percent lower than the same time the previous year. U.S. ethanol imports (including both fuel and non-fuel ethanol) dropped by more than half in 2014, to less than 900 million liters, the lowest level since. U.S. Is World’s Largest Ethanol ExporterWith growth in domestic ethanol consumption constrained by the blend wall and projected reductions in U.S. gasoline consumption in the next decade, refiners and traders are increasingly looking to export markets. In 2014, U.S. ethanol exports reached the second-highest level in history, and approximately six percent of domestically produced ethanol was exported. Net exports were valued at $1.3 billion, the highest in the world. Most of the ethanol exported from the United States is sold and shipped by traders, but some ethanol companies also export directly to foreign buyers. The United States and Brazil dominate the global market, accounting for three-quarters of world ethanol trade. While Brazil has traditionally been the largest exporter of ethanol, in 2014 Brazil’s exports fell sharply, from 2.9 billion liters to only 1.4 billion. The United States took over the top spot, shipping more than twice as much as Brazil, and accounting for about half of the six-billion-liter global ethanol market. Brazilian ethanol is produced from sugarcane and production depends on the economics of sugar prices. The primary reason for the fall in Brazilian exports was a lower sugar cane harvest in Brazil, coupled with reduced import demand from the United States, which typically accounts for 60 percent of Brazil’s exports. Another factor, which is likely to impact Brazil’s exports in the future, is growth in domestic consumption of ethanol. The Brazilian government recently raised the blend mandate in Brazil from 25 to 27 percent, which should boost domestic use. Biggest Customer Is CandadaU.S. ethanol exports have typically been concentrated in three key foreign markets – Canada, Brazil, and the European Union. As recently as 2011, more than 80 percent of U.S. ethanol exports went to these markets. However, in recent years U.S. ethanol exports have become more diversified, and the United States now exports to more countries around the globe. An important driver of global ethanol demand is the existence of government mandates specifying that a certain percentage or volume of ethanol be blended with gasoline. In many countries, blend mandates function as targets rather than requirements. It is estimated that 84 percent of U.S. ethanol exports in 2014 went to countries with mandates in place.Canada: Canada has been the largest and most dependable market for U.S. ethanol exports, accounting for more than 40 percent of total exports. U.S. exports to Canada have increased every year for the past five years. Canada surpassed the United States as the largest ethanol importer in 2014. Canada has a national blend mandate of five percent, but statistics suggest that the actual blend rate has exceeded that due to discretionary blending as well as the fact that some provinces have higher mandates than the national level. Brazil: Exports to Brazil, the world’s second-largest ethanol producer, doubled this past year, making Brazil the number two market for the United States. However, U.S. ethanol exports to Brazil were far below the levels of 2011 and 2012 when high sugar prices discouraged domestic Brazilian ethanol production and encouraged imports. EU-28: The European Union had been a major importer of U.S. ethanol, accounting for about a quarter of all U.S. exports between 2010 and 2012. However, anti-dumping duties were put in place in 2013, and since then U.S. exports have dropped sharply. In 2014, shipments to the EU made up only six percent of U.S. exports. The EU now relies on imports from other countries including Guatemala, Pakistan and Peru. Other Markets: The strongest growth in U.S. exports in 2014 was to the United Arab Emirates, the Philippines, and India – the third-, fourth-, and sixth-largest markets, respectively. The United Arab Emirates is largely a discretionary blending market, with imports driven by the relative price of ethanol and gasoline rather than an established blend mandate. The Philippines has a 10 percent blend mandate, but domestic ethanol production (using sugar cane and molasses as feedstocks) has been unable to meet this requirement, necessitating imports. India has a five percent blend mandate but the target has not been met due to insufficient fuel ethanol supplies.












Other Markets: The strongest growth in U.S. exports in 2014 was to the United Arab Emirates, the Philippines, and India – the third-, fourth-, and sixth-largest markets, respectively. The United Arab Emirates is largely a discretionary blending market, with imports driven by the relative price of ethanol and gasoline rather than an established blend mandate. The Philippines has a 10 percent blend mandate, but domestic ethanol production (using sugar cane and molasses as feedstocks) has been unable to meet this requirement, necessitating imports. India has a five percent blend mandate but the target has not been met due to insufficient fuel ethanol supplies. 
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Get ready for a (short-lived) 85-cent Canadian dollar

Currency watchers expect the Canadian dollar to perk up even more after its recent bounce, possibly to around the 85-cent mark.

But that's likely to be short-lived, they say.

Bank of Nova Scotia, for example, forecasts in its most recent outlook that the loonie will rise to just shy of 85 cents (U.S.) this quarter before slipping back and ending the year at 79 cents.

CIBC World Markets, in turn, predicts an 80-cent loonie by the end of this quarter, and, like Scotiabank, 79 cents as the year closes out.

The loonie had been driven down by the oil shock and a dovish Bank of Canada.

But the currency has gained of late amid more stable oil prices, a weaker U.S. dollar and an upbeat central bank.

"Currency markets typically overshoot, but the shifts in CAD are complicated and extreme," Camilla Sutton, Scotiabank's chief currency strategist, said in her most recent report, referring to the Canadian dollar by its symbol.

"Between July 2014 and March 18 CAD depreciated 21 per cent against the U.S. dollar (USD), from mid-March until the end of April it had rallied back by a third, almost 7 per cent," she added.

"As we enter May, the near-term outlook is biased towards further USD weakness, but is unlikely to be sustained, as a strong CAD will prove uncomfortable for the Bank of Canada."

The outlook is, of course, uncertain amid these wild swings in various markets.

"Oil is the big wild card for the loonie - if the gains stick, or even build, then the currency’s worst days are likely behind it, especially with the BoC ditching its dovish tune," said chief economist Douglas Porter of BMO Nesbitt Burns.

"However, we would still expect the C$ to remain on the defensive in the months ahead, largely because we simply do not believe that the recent US$ weakness will be sustained," he added in a recent report.

"The U.S. economy is primed to recover with purpose from its [first-quarter] lull, and the Fed also looks poised to move at the first possible point. While the BoC may be less dovish than before, they are a long, long way from being hawkish, and will lag behind any Fed rate hike by roughly a year or so, we believe."

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Commodities Analysis | Corn Wheat Soybeans Heating Oil | Big Pat's Blog

WEDNESDAY, APRIL 29, 2015


FARM COMMODITY SETTLEMENTS-CME APR 30/2015 THURSDAY


Markets: price supply-demand during relative strength tradingTrends: join prices, highs with highs, lows with lows, giving directionTrading: daily move, momentum, activity, prevailing strengthTargets: projected price objectives of both move and trading


CORN: -25 cent daily limit, 30 cents may 1/2015Trends: price-down, open interest-down, volume-down, supply-upTrading: up, accelerated, net buying, testing resistance@382

Targets: 419-392-385-373-359-347 =oversold

Commitments-net change: users divested short, funds-invested short


SOYBEANS: -70 cent limitTrends: price-down, open interest-down, volume-down, supply-evenTrading: flat, accelerated, buying, testing resistance@985

Targets: 1087-1014-985-959-917-983 =oversold

Commitments-net change: users-divested long, funds-divested short


WHEAT: -35 cent limit, 40 cents may 1/2015Trends: price-down, open interest-down, volume-down, supply-evenTrading: up, decelerated, buying, 478 support-to resistance@trend

Targets: 677-606-598-558-553-511-478 =maintaining trend

Commitments-net change: users-divested short, funds invested short


CANADIAN DOLLAR -4.00 dollar daily limitTrends: price-up, open interest-up, volume-upTrading: up, accelerated, net buying, met good resistance at 8365

Targets: 7781-8048-8250-8365-8406-8719 =overbought

Commitments-net change: users-invested short, funds-divested short


HEATING OIL (ULSD) -25 cent limitTrends; price-up, open interest-down, volume-upTrading: up, accelerated, buying, testing resistance at trend

Targets: 159-187-214-232-269-306 =struggling with trend

Commitments: users-divested long, investors divested shortPosted


by Patrick Hearn at 6:03 PM

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Monsanto-Syngenta Mega-Merger Would Drive More Deals

Monsanto-Syngenta Mega-Merger Would Drive More Deals | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

A combination of Monsanto Co. and Syngenta AG would set the stage for even more mergers and acquisitions.

Monsanto has approached Syngenta about a takeover that would create a giant in the market for seeds and crop chemicals with more than $30 billion in revenue. Getting a deal approved by regulators won’t be easy -- and may not happen at all. To address antitrust issues and help its case, Monsanto has planned for a deal to include a sale of parts of the combined business, a person familiar with the matter has said.

The biggest concerns may be tied to what would be an unprecedented market share in soybeans and corn seeds for the combined company. Syngenta’s operations in those areas would appeal to a range of buyers from Dow Chemical Co. to BASF SE and Bayer AG, said Colin Isaac of Atlantic Equities LLP. Even private-equity firms could look.

Syngenta’s “seed businesses would be pretty easy to sell for good multiples,” Isaac, a London-based analyst, said in a phone interview. “People are always looking to buy share.”

DuPont Co. could also be a buyer of any assets that are divested, said Bill Selesky, an analyst at Argus Research Co.

Dupont-Dow

There is another possibility: At Dow, activist investor Dan Loeb once pushed for a breakup, and Chief Executive Officer Andrew Liveris has suggested the company is open to divesting its agriculture unit.

Monsanto becoming a much stronger competitor could be a catalyst for the $60 billion company to more seriously consider taking the step of exiting that business, which made up about 13 percent of its revenue last year, said James Sheehan of SunTrust Banks Inc. That segment would be prime pickings for DuPont and its Pioneer seed business, he said.

“That’s the deal that I’ve always expected to happen,” Isaac of Atlantic Equities said in a phone interview. “It’s attractive for Pioneer and it’s attractive for Dow in terms of focusing their portfolio on the chemicals business and raising a lot of cash.”

If Dow doesn’t want to sell directly to DuPont, both companies could combine their agriculture businesses in a separate entity, Argus’s Selesky said.

Counterbid Potential

A $19.5 billion bid by DuPont for Dow’s agricultural-sciences business could generate a 7 percent return on invested capital, according to a report Friday by Laurence Alexander at Jefferies Group LLC. But a DuPont takeover of this business is less likely until agricultural markets improve from current trough levels, he said.

DuPont and Dow may be interested in acquiring all of Syngenta and can’t be counted out as possible counterbidders, said Selesky at Argus Research. For Dow, buying Syngenta would give it a strong share of the crop protection and seeds market and create significant opportunity for cost cuts, said Martin Lehmann, manager of 3v Asset Management’s 3v Invest Swiss Small & Mid Cap Fund.

Dow may also have a clearer path to regulatory approval in a Syngenta takeover than Monsanto. For example, Dow has a 6 percent share of the corn seed market, compared with Monsanto’s 31 percent, according to data compiled by Bloomberg Intelligence.

Dow and DuPont may not want to engage in a bidding war with Monsanto. While Dow and Loeb’s Third Point LLC struck a peace accord in November that gave the hedge fund two seats on the board, the activist investor still holds a stake in the company. DuPont meanwhile has been battling with Nelson Peltz about his proposals to unlock value. A pricey purchase by either could draw more criticism.

Whatever the permutations, the agricultural-chemical industry is facing pressure to further consolidate amid slower growth and lower commodity prices, said Lehmann of 3v.

“A Monsanto/Syngenta Deal would mark the beginning of further deals,” he wrote in an e-mail.

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Forward oil prices anchor around $75: Kemp

Forward oil prices anchor around $75: Kemp | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

(Reuters) - Market participants expect the price of Brent to average around $75 per barrel through the rest of the decade, not much above the current level.

Spot Brent prices have risen around $20 per barrel from their mid-January low, from $46 to $66, an increase of more than 40 percent.

Over the same period, however, futures prices for oil delivered at the end of 2017 have increased just $4.50 per barrel and remain semi-fixed a little over $70.

As spot prices have risen, the slope of the forward curve has become flatter, ensuring prices for 2017 and beyond are almost unchanged (link.reuters.com/jyr64w).

Analysts tend to cite the curve selectively, quoting it when it coincides with their own view and ignoring it when the curve is at variance with their forecasts.

In any case, the forward curve is a notoriously poor predictor. Back in June 2014, it pointed to an oil price around $100 per barrel at the end of 2017. There is no evidence the market can successfully anticipate prices more than about 6 months ahead.

And the curve is not a consensus forecast. The curve is what traders bet against. There will be as many traders who believe prices will be above the curve as below it. For a market to exist there must be uncertainty and a diversity of views.

That said, the curve can provide some indication about the state of market views on average. At the moment it indicates many market participants think oil prices will trade around $75 for the next few years.

That level corresponds roughly to most estimates of the breakeven price needed to sustain modest growth in global oil production.

Published estimates by industry sources range from a marginal cost of $55 or $65 to as much as $75 or $85 per barrel.

Forward prices have settled in the center of this range, which suggests marginal cost estimates are acting as an anchor for expectations.

Those expectations appear roughly reasonable. North Dakota’s Department of Mineral Resources estimates the state’s shale producers need at WTI price of $65 per barrel to sustain their current output of 1.2 million barrels per day.

Cost reduction throughout the supply chain should help lower the marginal cost of production in the next 2-3 years, which could pull medium-term prices below their current level.

On the other hand, if Brent prices stabilize around $75, growth in oil demand, which has been subdued, is likely to accelerate, tending to push up prices in the medium term.

There is no such thing as an "equilibrium" price in the oil market. Supply and demand are characterized by long lags and deep cycles which ensure prices are always unstable in the medium and long term.

But as a very rough estimate for planning and investing purposes, assuming an average of $75 per barrel over the next 3-4 years is reasonable (though that could just be me invoking the forward curve as it agrees with my own assessment).

Prices much above that level look unsustainable because they would encourage too much new supply, especially from the shale sector, and restrain demand.

Prices much below look equally unstable because they would not sustain healthy capital investment and boost demand too much.

The only certainty is that predictions about oil prices are always wrong (newspapers and academic books are littered with dozens of forecasts that went badly awry and it is hubris to assume this time will be any different).

But if you want a figure to plug into a medium-term model, $75 is not a bad place to start. 

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Thriving Bunge surfs wave of upbeat grain market forces

Bunge name-checked an array of tailwinds, from improving oilseed crush margins in China to synergies from a Mexican acquisition, as it unveiled earnings ahead of forecasts, and upbeat hopes for the rest of 2015.

The trading house – with Archer Daniels Midland, Cargill and Louis Dreyfus one of the ABCD group of ag giants – unveiled a strong bounce back to profit for the January-to-March quarter, with earnings of $263m compared with a loss of $13m a year before.

The earnings, equivalent to an underlying $1.58 per share, well exceeded market expectations of a $1.14-per-share result.

"We had a good start to the year," said Soren Schroder, the Bunge chief executive, highlighting improved profitability in all the group's four major divisions.

'Considerably higher results'

And Bunge was upbeat over prospects too, saying that the outlook for its agribusiness division, responsible for about three-quarters of revenues, was "favourable".

In the food and ingredients division, "we expect 2015 results to be considerably higher year-over-year", Drew Burke, the Bunge chief financial officer, said, although highlighting the dent to prospects in some markets from a stronger dollar.

In February, Mr Burke had forecast "continued improved performance" in the division.

He restated an expectation that the group's Brazil-based sugar and bioenergy business would run in the black this year, noting that its "sugar cane crop is developing well".

'Strong crushing margins'

The group highlighted a number of supports to its performance, including, in the January-to-March period, "strong soybean crushing margins" and "high-margin oilseed export programmes".

Oilseed results were particularly strong in North America, where Bunge noted "high crush margins resulting from strong global demand and higher volume".

In Mexico, milling results benefited from synergies achieved as Bunge integrated mills bought from Altex last year, besides from a recovery of mark-to-market foreign exchange losses which dented results for the October-to-December quarter.

Meanwhile, in South America, "processing results were good" in Brazil, where grain origination picked up last month too, with weakness in the real raising, in local terms, the value of crops denominated in dollars.

'Large crops'

And looking ahead, Mr Burke forecast that processing margins in Argentina and Brazil "should remain good through September", helped by strong crops supplies.

Much of the strong South American crops "remains to be sold" too, implying opportunities in marketing ahead.

Meanwhile, in the important Chinese market "livestock margins have recently improved in China supporting good crush margins and a favourable outlook for the remainder of the year".

And while profitability in European and North American crush operations will come under seasonal pressure for now, as supplies from last year's harvests dwindle, "farmers in the northern hemisphere are expected to plant large crops this spring, which should drive strong asset utilisation and exports later in the year".

Bunge shares lost early gains to close down 0.8% at $86.37 in New York.

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Newsom on the Market

As April 30 was checked off the calendar, we find ourselves already two-thirds of the way through spring. In sports terms, Thursday evening heading into Friday (May 1) trade is like the second intermission of a hockey game with a wild third period just ahead. And yes, for those of you who may not be following, the NHL playoffs are still going on.

With all the days in April checked off, it???s time for a monthly check-up on the markets. (DTN file photo)

One of the things I do at the start of each month is update the monthly analysis in my Technically Speaking blog for the energy complex, livestock sector, and grain markets (both futures and cash). Summarizing the analysis of those particular markets, and the balance making up the total of 25 I keep an eye on each day, resulted in some interesting findings.

Given the market sectors of spring crops (corn, bean complex, and cotton), wheat, livestock, energies, and financials, which would you say was the most bullish at the end of April?

I'll give you a minute to think about it/make a guess?

Time's up.

Here's a hint: The leader of this sector has one of the most bearish fundamental situations in all of commodities, with recent reports showing record large supplies on hand. Did you get it now?

That's right, the energy complex as a whole is the most bullish, based solely on major (long-term) trends of those that I track. Sure, this week's EIA stocks report showed crude oil supplies continuing to grow, but that hasn't stopped the spot-month contract from strengthening its uptrend that began with the spike to a new low of $42.03 in March. In fact, the spot-month contract has climbed above initial resistance at $59.21 and looks to be headed to its next target of $69.84. All while the spot futures spread shows a carry (contango) of more than $1.00.

Why is crude oil rallying in the face of bearish fundamentals? Noncommercial traders (investors, speculators, etc.) are adding back to their net-long futures position. It's as simple as that. The sector as a whole has three of its markets in major uptrends (crude oil, distillates, and RBOB gasoline) with the other three (natural gas, ethanol, and propane) trending sideways.

The second most bullish sector is also somewhat counter-intuitive. A casual observer would note that its major markets haven't moved higher since December, with the above mentioned noncommercial interests moving to net-short futures positions in some cases. Is that enough clues?

Those of you who guessed the spring crops sector are absolutely correct. Doesn't make sense, does it? Think about it this way though: The major (long-term) uptrends established in corn, the DTN National Corn Index (national average cash price), and soybeans are still in place. While the secondary downtrend since December has all three markets, as well as the DTN National Soybean Index, testing important price support levels, as DTN Analyst Todd Hultman pointed out in a recent column the sector is "Still Standing."

On the other end of the spectrum is wheat. Poor wheat. Of the six markets I track (futures and cash for SRW, HRW, and HRS), three are showing major downtrends and three are moving sideways at best. But like the actual crop itself, about the time you count it dead, it comes back. Given that the HRW crop could have a wide array of

Speaking of the U.S. dollar index, April saw it post what looks to be a 2-month reversal on its long-term monthly chart. Though I'll discuss it in further detail in an upcoming blog post, suffice it to say the work may actually have turned for the greenback with its April settlement of 94.600 (down 3.757 for the month). Like a bullish crude oil market, a downturn in the U.S. dollar index makes no sense fundamentally ... or does it?

Consider this week's FOMC statement that talked of a possible interest rate hike in June, or maybe September. Couple that language with a much lower-than-expected April consumer confidence index of 95.2 (pre-report estimates were looking for 102.5) and the Fed could maintain its hands off approach until later in the year. If so, the U.S. dollar index has little reason to extend its gains, for now, and could look at a possible retracement back to near 89.000 over the coming months.

The livestock sector was also bearish at the end of April, with both live cattle and feeder cattle showing major downtrends still in place. That having been said, both markets could push higher in May before selling sets in again. Lean hogs, on the other hand, are trending up. It's okay, you can have a minute to read that sentence again. I understand. Though it sounds crazy, the market's long-term monthly chart shows the June contract could try test resistance between 83.00 and 86.70, if not higher in the coming months.

May could prove to be a critical month, from a technical point of view, with many markets at or near key price points. So many possibilities lay ahead, so many questions likely answered by the time all the days are crossed off the calendar again. 

damage from drought, disease, and freeze (be sure to follow DTN's coverage of the Kansas Wheat Tour the week of May 4), and that the U.S. dollar index may be ready to finally break, the wheat complex could start to make a comeback in May. 

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