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anhydrous ammonia fertilizer plants could be a “game changer” for farmers

Kevin Kaufman, vice president of agricultural products for BNSF Railway in Forth Worth, Texas, who spoke immediately following Wong, said a development involving anhydrous ammonia fertilizer plants could be a “game changer” for farmers.

Cenex Harvest States recently announced plans to build a $1.2 billion anhydrous ammonia plant in eastern North Dakota, taking advantage of the state’s abundant natural gas supplies. It’s one of several plants that are in the works in the country, he said.

Anhydrous ammonia is a crop fertilizer.

Kaufman called the development as significant as ethanol was to corn growers. Nitrogen is found in natural gas and a key ingredient in the fertilizer. The only place in the world with cheaper natural gas than the United States is the Middle East, he said. Cheap natural gas means cheap nitrogen and inexpensive anhydrous ammonia, Kaufman said.

The plants will be located in areas where there is abundant natural gas, he said.

Kaufman predicted the United States will become a nitrogen exporter in the future. If that happens, he added, U.S. farmers will have a competitive edge in crop production costs compared to the rest of the world.

“This is a big deal for you as producers,” Kaufman said.

Kaufman says BNSFcurrently transports a lot of urea fertilizer to Montana.

The anhydrous ammonia plants won’t be built for the next two to five years, Kaufman said. None have been announced in Montana, he said.
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Canada : Big oats intentions surprise market

Canada : Big oats intentions surprise market | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
CNS Canada -- A surprisingly large increase for oats acres in Statistics Canada's planting intentions report on Thursday led to a quick drop in prices. However, actual area will likely come in below the early expectations, as declining prices should cause some acres to shift elsewhere. Oats plantings were pegged at 3.6 million acres by StatsCan, which would be up by 30 per cent from the previous year and the largest acreage base in six years. Prior to the report, market participants had been anticipating a much more modest increase in oats area, with average guesses coming in at just over three million. Chicago Board of Trade oats futures dropped sharply following the StatsCan report, hitting fresh contract lows. The July contract settled Friday at US$2.515 per bushel, while the new-crop December contract was at US$2.5925 per bushel. Both were down by over 20 cents on the week. If the StatsCan number proves correct, "we're…
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Many farmers switching from corn to soybeans | Pork Network

Many farmers switching from corn to soybeans | Pork Network | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

A lot of farmers may be switching to soybeans because of the high cost of growing corn. USDA’s first estimate for corn acreage in 2015 came in at 89.2 million acres, down about 1.5 million from last year.

University of Missouri Extension agricultural business specialist David Reinbott told the 2015 MU Spring Ag Marketing Outlook Conference that farmers might switch another 500,000 to 1 million acres from corn to soybeans if fields aren’t dry enough for planting in the next few weeks.

The USDA pegged soybean planting at 84.6 million acres, up about a million acres from last year. That estimate may be on the low side, Reinbott said.

Based on trend-line yields and current use rates, ending stocks could put soybean prices under $10, he said. Prices could go even lower if farmers switch more acres from corn to soybeans, he added.

Reinbott says it looks like there will be a good-sized corn and soybean crop in Brazil and Argentina, which also will push prices down.

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Farmland Values Slip As New Report Sheds Light On Prices

Farmland prices depend on geography, proximity to urban areas, farm size, land quality and use, and other factors. In other words, they’re like pretty much everything in farming—highly individual. But overall, there are signs the farmland boom is cooling, at least for now.

Although a survey of values for the first quarter of 2015 is due soon from the Federal Reserve Bank of Kansas City, the agency’s previous report reveals this trend. Consider the following farmland price changes year-over-year for the fourth quarter of 2014, ranked from greatest value gains to greatest value declines:

  • Oklahoma: 19%
  • Texas: 9.8%
  • Wyoming, Colorado, northern New Mexico: 3.9%
  • Southern Wisconsin: 2%
  • Kansas: 0.9%
  • North Dakota: -0.8%
  • Western Missouri: -1%
  • South Dakota: -1.7%
  • Northern Indiana: -2%
  • Northern Illinois: -3%
  • Nebraska: -3.4%
  • Minnesota: -4.9%
  • Iowa: -7%

Broken down by type of farmland—nonirrigated, irrigated and pasture or ranchland—the Kansas City report shows increases in the fourth quarter of 2014 ranged from zero (nonirrigated) to 10% (ranchland).

From the first quarter of 2011 through the third quarter of 2013, all three types of farmland gained over the previous year by double-digit rates in each quarter. The last reported negative number happened in the second half of 2009.

New Study Sheds Light On Prices. A new study of farmland prices published this week by Kansas State University agricultural economist Mykel Taylor is based on actual sales in the state reported by the Kansas Property Valuation Department. The report then compares those values with figures from USDA’s Kansas Ag Statistics Service survey.

Nonirrigated farmland in Kansas rose 6.2% from 2013 to 2014, while irrigated land rose 9%, according to the Kansas Property Valuation Data. Pasture saw the biggest gains at 10.2%, Taylor says. Prices were $2,990 for nonirrigated land; $5,195 for irrigated; and $1,802 for pasture.

Meanwhile, USDA’s survey of ag producers and landowners reports a similar trend or price pattern but with much lower values in some cases and lower growth rates. Taylor notes the difference might result from people not being up to date with the latest land values.

Even the timing of a farmland sale or survey affects the price, Taylor says.

“Sales in the fourth quarter tend to bring higher prices,” she points out.

Federal Reserve sources continue to say they don’t expect a crash like that of the 1980s, though capitalized land values (cash rent divided by the 10-year Treasury note rate) is now above farmland value, as it was in the early 1980s. That relationship suggests prices are too high relative to underlying returns and interest rates. Farmland returns already have fallen. If interest rates rise, it would add to pressure for farmland value to fall, according to Gary Schnitkey, University of Illinois.

A 3% interest rate would be about in line with current values, according to one Federal Reserve economist. A 4% interest rate likely would mean a 30% reduction in land value.

Source: Gary Schnitkey/University of Illinois

Another risk: If the supply of farmland for sale rises considerably, a strong drop in prices might occur. Two years ago, when commodity prices were high, the demand for land probably would have absorbed an increase in supply. Today, as profits narrow and investors turn their backs on commodities, it might take lower land prices to clear the market. 

Rents Will Fall Later. Taylor’s analysis of rents and projections for 2015 also highlights factors that can make it even more difficult to draw conclusions. “You would expect the reduction in crop prices and profitability to influence both land purchases and rental rates,” she says. “But rents are lagging. One reason is they tend to be negotiated for multiple years, so they may not be renegotiated until the contract runs its course.”

The rent to value is falling, she notes. “Ten years ago, a return of 5 to 7% was common. That is down to 3.8% for nonirrigated land and 2.5% for irrigated. Ranchland is just 1.3%,” Taylor says. “Of course, alternative investments such as T-bills or bonds, which would compete for investments, also are very low.”

Using basis-adjusted futures prices from November the year before harvest, Taylor projects a 29% to 62% drop in rental rates for nonirrigated land in Kansas in 2015 and a 30% to 49% drop for irrigated land. “Do I think we’ll see that sharp a drop? No,” she says. Not only will some rents not be renegotiated, but data are based on averages and do not reflect land quality. Surveys also do not collect information on factors such as nonmarket activity that might be included in the relationship.

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US soft red wheat on track - but weather woes test white wheat

The US soft red winter wheat crop is on track for "average" yields, but the soft white wheat harvest may fall short again, hurt by "inconsistent" conditions, industry officials said.

US Wheat Associates said that development of soft red winter wheat in much of its growing range, which stretches from the Midwest to the South East, was slowed by a late spring.

"Heading was behind schedule as far south as Louisiana in late March," said the group, which promotes US wheat for export.

In some areas, rains had prevented farmers applying fertilizer, potentially lower crop prospects.

However, "taken as a whole," US soft red winter wheat - the type traded in Chicago – "is in good to fair condition and yield potential remains about average", US Wheat Associates said.

Roller coaster rise

But US Wheat Associates raised concerns over conditions for the production of soft white wheat, low protein variety used largely for making pastry flour, and grown in North West of the US.

"Those who watch soft white wheat conditions in the Pacific Northwest are seeing inconsistent temperatures and rainfall take production on a bit of a roller coaster ride," US Wheat Associates said.

"That could end with a smaller supply of this important export crop."

The group quoted comments from the Washington [state] Grain Commission that "sporadic but fairly severe winterkill in November" may have prompted the replanting of 25% of the state's crop".

"Poor planting conditions last fall and a dry winter have led to thinner stands and moisture now cannot make new plants grow," the commission added.

The Oregon Wheat Commission reported that, after poor levels of winter snow bringing low reservoir levels, "we are going to need additional moisture and mild temperatures to avoid significantly reduced yields".

"Timely" rains needed

US Wheat Associates said that "timely and adequate moisture through the rest of the season will be essential to make a consistently good crop".

A strong harvest "becomes even more important when soft white wheat market watchers note that the ratio of US white wheat stocks to use is likely to be down for the third straight year at the end of 2014-15".

Last year, US output of white wheat was curtailed at 7.73m tonnes by a fall in yield to a 12-year low of 3.84 tonnes per hectare.

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Former Brazilian farm boy heads Heartland unit

Former Brazilian farm boy heads Heartland unit | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
AgriNews covers topics that affect local farm families and their businesses in Illinois and Indiana. Some of those topics include: crop and livestock management, agribusiness and new products, market information and national and state political issues.
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Canada Farmers Expand Oilseed Acres as Returns on Wheat Decline

Canada Farmers Expand Oilseed Acres as Returns on Wheat Decline | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

In the new era of low grain prices, Canadian farmers like Hubert Preun are planting more land to oilseeds that they see as more profitable bets than wheat or corn.

Preun says he will sow 2,200 acres of soybeans next month on his farm in Selkirk, Manitoba, up from 1,700 acres last year. In 2014, the crop fared better than his wheat fields during periods of drought and too much rain, and soybeans are cheaper to produce than corn, he said.

“It’s a very resilient crop,” said Preun, 47, who also grows canola and corn on his 7,000-acre farm.

Canada, the world’s top canola producer and the second- biggest wheat exporter, probably will sow a record soybean crop for a seventh straight year, according to a Bloomberg News survey of nine analysts. Canola planting also will rise, the respondents said. The government will release its forecast on Thursday.

Grain Slump

After global surpluses sparked double-digit declines in wheat and corn prices over the past year, canola futures in Winnipeg are down just 2 percent. While soybeans also slumped, they are easier to grow than corn and don’t require nitrogen fertilizer, said Dan Mazier, the president of Keystone Agricultural Producers, a farmer-advocacy group in Manitoba.

“It’s a no brainer,” said Mazier, who plans to double the acres of soybeans on his farm north of Brandon, Manitoba. “The oilseeds are definitely holding their value,” with better demand from exporters and processors, so farmers probably will switch some land from wheat, he said.

Part of the reason canola prices have fared better is because of the weaker Canadian dollar, said Ken Ball, a senior commodity futures adviser at PI Financial in Winnipeg. That probably adds about C$50 to canola futures that closed on April 22 at C$451.50 a metric ton, he said. Corn, wheat and soybeans traded in Chicago are priced in U.S. dollars.

Normal Rotations

While wheat may be dropping out of favor because of the price decline, growers probably aren’t shifting acres “aggressively” and appear to be sticking with normal rotations, Ball said.

With more farmers planting canola, wheat acres may drop as much as 3 percent this year, Jerry Klassen, a manager of Canadian operations and trading at Gap SA Grains & Produits in Winnipeg, said in an April 22 telephone interview. The cost of growing canola is not that much higher than wheat and yields are “sharply higher,” Klassen said. “With wheat this past year, the low prices have actually discouraged acreage.”

Production Outlook

Because flooding limited Canadian output last year, production in 2015 probably will be higher even with the switch to oilseeds, the government said.

Grain and oilseed harvests will rise 4.3 percent to 76.8 million metric tons this year, because more land will be seeded, the nation’s agriculture agency said in an April 17 report. Canola and soybean output will rise 5 percent to 22.65 million tons in 2015, compared with a 0.7 percent increase in wheat production, the agency said.

Parts of southeast Saskatchewan might see a 10 percent increase in plantings this year after warm spring weather helped dry out waterlogged land, Arlynn Kurtz, head of the rural municipality of Fertile Belt in Saskatchewan, said in an April 16 telephone interview.

Milder Weather

Temperatures in the Canadian Prairies are expected to remain above normal until mid-April, spurring an early start to planting season, according to Commodity Weather Group in Bethesda, Maryland. “Abnormally mild spring temperatures” are expected to promote rapid fieldwork and early wheat planting, Martell Crop Projections said in an April 10 report.

“The land has dried up pretty good,” Kurtz said. “It we get another week of decent weather, I think there will be some guys out there starting to seed.”

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Water management association looking for farmers, landowners

Water management association looking for farmers, landowners | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
The fledgling association is looking for members, particularly farmers and landowners as well as others with a interest in water management. Formed in late 2012 with a focus on the tile drainage industry...
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Le Chili surpris par l'éruption du volcan Calbuco

Le Chili surpris par l'éruption du volcan Calbuco | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
Le gouvernement chilien a décrété mercredi l'alerte rouge après l'éruption violente et inattendue du volcan Calbuco, inactif depuis 43 ans, ordonnant d'évacuer la...
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USDA Confirms Bird Flu at 5th South Dakota Turkey Farm

USDA Confirms Bird Flu at 5th South Dakota Turkey Farm | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

Five commercial turkey farms in South Dakota have now been infected with a bird flu strain that's led to the deaths of more than 250,000 turkeys in the state and over 2.4 million birds in the Midwest.

The U.S. Department of Agriculture's Animal and Plant Health Inspection Service announced Friday that the H5N2 strain of avian influenza in a flock of 66,000 birds in a Roberts County farm in the far northeastern corner of the state, marking South Dakota's largest outbreak to date.

The approximately 6-mile quarantine zone that officials set up around the impacted farm also stretches into parts of North Dakota and Minnesota. Dr. Dustin Oedekoven, the South Dakota state veterinarian, said Thursday that crews were beginning to euthanize the farm's surviving birds to prevent the disease from spreading.

The commercial turkey farm is the latest in the region to be hit with the disease that has cost producers millions of birds since early March. Dr. John Clifford, the USDA's chief veterinary officer, told The Associated Press on Thursday the nation's poultry industry may have to live with the deadly bird flu strain for several years.

Once response teams have "depopulated" the Roberts County farm, approximately 256,000 turkeys in South Dakota will have died as a result of the disease. While that's a considerable chunk of the approximately 4.5 million turkeys the state's Hutterite growers produce annually and a severe loss to individual producers, Oedekoven said it shouldn't threaten the overall health of the state's industry.

"So, it's not good, but it's not going to put anybody out of business," said Jeff Sveen, board chairman for Dakota Provisions, a farmer-owned plant that processes the birds raised by the state's 42 turkey farms.

As the weather gets warmer and drier, the virus won't survive as well. Experts warn that producers should be wary of symptoms they notice in birds, such as ruffled feathers or discharge from beaks.

"But with this particular strain, the most obvious sign is: they're dead. They're suddenly dead," Oedekoven said.

Even if producers only have a dozen birds, Oedekoven said they should still alert state veterinary officials if they notice an unusual drop.

"The sooner we know about it, the sooner we can attempt to do something about it," he said.

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Newsom on the Marke Halftime Report

Each of the four seasons in grains has their idiosyncrasies.

Spring's halftime score shows market bears dominated both corn and soybeans in the first half. What does the second-half hold? (DTN illustration by Nick Scalise)

Winter (December through February) is relatively quiet, with market action dominated by soybean exports. Most of the season is spent debating the unknowable: Spring acreage, planting and growing season weather, etc.

Summer (June through August) is usually the most volatile due to weather.

Fall (September through November) tends to see the markets move lower as U.S. producers harvest their spring planted crops.

And then there is spring (March through May), the season of hope where everything is still possible yet dreams can quickly be crushed. Soybean exports usually give way to corn shipments before planting and crop conditions steal away all the attention.

This past week, Tax Day to be exact, marked spring's midpoint, giving us the opportunity to evaluate first-half performance and what it might mean for the rest of the season.

Let's start with soybeans. In DTN's Spring Market Outlook webinar (from March 11) I presented the idea that the old-crop soybean rally could cool over the spring months, due in large part to a seasonal shift in export demand to South America. As for price, the outlook was that the DTN National Soybean Index (NSI.X, national average cash price) could fall back to test the winter low near $9.10. Earlier this week the NSI.X was calculated at $9.06.

The 10-year seasonal index for the NSI.X shows cash soybeans tend to rally through the end of May, extending its uptrend into early July. Given that the NSI.X is near the low end of its 10-year distribution range with last week's weekly close of $9.08 putting it in the lower 33%, demand for U.S. supplies could start to increase again. Basis remains firm at 43 cents under (NSI.X minus the nearby futures contract), near the five-year average of 40 cents under. Seasonally, basis also tends to strengthen over the remainder of the spring. If the July futures contract can post a seasonal rally back to near its earlier spring high of $10.42 3/4, then the NSI.X could possibly approach its previous highs near $10.00 by the end of May.

As for new-crop, my Spring Outlook projection was for the November futures contract to test the highs from last fall and winter near $10.45. This week finds November beans barely holding above its contract low of $9.27 1/2 while listening to the growing din regarding an increased switch of acres from corn to soybeans due to early planting season wet weather over the southern U.S. growing area. The new-crop forward curve (series of futures spreads from the November 2015 contract through the July 2016 contract) has moved from a bullish carry to neutral-to-bullish levels. Though its

The first-half of spring 2015 was expected to see cash corn start to firm on increased export demand as soybean shipments slowed. What's happened is the DTN National Corn Index (NCI.X, national average cash price) has done little since its final weekly winter calculation of $3.65. This week finds the NCI.X at $3.54, though basis has firmed from 28 cents under to about 19 cents under since late February. The second-half still looks promising for corn, with the 10-year seasonal index for the NCI.X showing a strong tendency to rally through mid-June. However, much of this will depend on increased export business. Given the large quarterly stocks figure of 7.744 bb (as of March 1) average second-half (of the marketing year) demand results in an ending stocks figure of 1.82 bb. Therefore, demand needs to see a marked increase over the latter part of spring to spark a seasonal rally in the market.

Spring's halftime score shows market bears dominated both corn and soybeans in the first half. What does the second-half hold?Though the new-crop December contract is priced near $3.96, just above technical support near $3.91 1/2, my Spring Outlook projection of a test of the winter high of $4.40 isn't dead yet. Much will depend on the weather, as it always does, particularly if rains continue to slow planting progress over the southern and eastern U.S. growing areas. USDA cooled some of the potential bullish enthusiasm with a planting intentions figure of 89.2 million acres, above the pre-report estimate of 88.7 million acres. Still, the carry in the new-crop forward curve (series of futures spreads from the December 2015 contract through the July 2016 contract) remains neutral, indicating traders continue to take a wait-and-see approach.

Spring's second-half is expected to be more exciting than the first. If market bulls fail to rally soybeans and corn, it opens the door for a blowout by market bears before we even get to summer. My studies still show both markets with a bullish long-term outlook, meaning something should happen over the coming weeks to spark increased buying interest. We'll see how it all plays out. 

weekly chart is growing more bullish, leaving the $10.45 target in place for now, November soybeans could find renewed buying interest tough to muster unless strong support from old crop comes riding in to save the day. 

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Hedge funds record-bearish ag bets 'may spur' price support

Hedge funds' bearish betting on agricultural commodities soared to the highest on record, led by selling in grains – spurring ideas of price support for some contracts as speculators' reassess such downbeat positioning.

Managed money, a proxy for speculators, lifted its net short position in futures and options in the top 13 US-traded agricultural commodities, from corn to cattle, by more than 78,000 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.

The selling took the net short - the extent to which short holdings, which benefit when prices fall, exceed long bets, which profit when values rise – to more than 142,000 contracts, far exceeding the previous record of 102,126 lots set a month ago.

Softs vs grains

Analysis of the data again highlighted a continued gap in sentiment towards soft commodities, in which speculators are cutting their bearish exposure, and grains, in which they hiked their net short by nearly 120,000 contracts to 215,584 lots.

Speculators' net longs in grains and oilseeds, Apr 14, (change on week)

Chicago soyoil: 17,660, (+10,643)

Kansas wheat: -1,377, (-8,879)

Chicago soymeal: -19,717, (-19,071)

Chicago corn: -48,312, (-57,403)

Chicago soybeans: -81,716, (-33,124)

Chicago wheat: -82,122, (-11,235)

Sources:, CFTC

That figure for the combined net short in hard wheat, soft wheat, corn, soybeans, soymeal and soyoil far exceeded the previous record high of 146,000 contrasts, set in August 2013.

Then, the record bearish positioning heralded a sharp reversal in hedge fund positioning, with managed money turning net long by 120,000 lots on grains within a month.

Indeed, record net short, or net long, positions tend to make investors wary about extending such bets, for fear of being late on the trade, and vulnerable if a profit-taking wave drives a reversal in prices.

And investors voiced expectations that prices may receive support from short-covering this time too, especially in soybeans and wheat, in which net short positions hit record high.

Wheat price support?

Commerzbank said that while speculators "evidently believe that the supply of wheat – after two years of surpluses of 11m tonnes each according to USDA figures – is very plentiful", there were "fundamental reasons" why hedge funds should cover some short positions.

Speculators' net longs in New York softs, Apr 14, (change on week)

Cotton: 50,337, (+11,941)

Cocoa: 22,504, (+4,203)

Arabica coffee: -8,914, (-4,301)

Raw sugar: -82,968 (+21,626)

Sources:, CFTC

"For example, the wheat market balance could prove significantly tighter in the 2015-16 season - the International Grains Council even anticipates a small deficit at present," the bank said.

"We therefore expect the wheat price to soon settle down at above $5.00 per bushel again."

Chicago wheat futures for July, the best-traded contract, stood at $4.92 ¾ a bushel in early deals on Monday, up 0.7% on the day.

'Look for more short covering'

In soybeans, broker Benson Quinn Commodities highlighted that it appeared that hedge funds had already covered many of the short positions which had taken their net short to a record high.

Speculators' net longs in Chicago livestock, Apr 14, (change on week)

Live cattle: 73,208, (+3,625)

Lean hogs: 10,238, (+3,081)

Feeder cattle: 8,567, (+721)

Sources:, CFTC

Open interest, a measure of the number of live contracts, "has tumbled since" as the "speculative fund takes profits on shorts", said Benson Quinn's Kim Rugel.

Regulatory data showed a drop of nearly 35,000 lots in open interest in Chicago soybean futures since the close on Tuesday.

Nonetheless, "by the size of Tuesday's spec short and open interest levels in the options, look for more short covering" this week, Ms Rugel said.

'Beginning to worry'

Among soft commodities, hedge funds continued in the week to Tuesday to cut short positions in New York-traded raw sugar, reducing their net short to a two-month low, amid concerns of wet weather hampering the start of the Brazilian Centre South cane harvest.

Raw sugar prices have recovered strongly from a six-year low of 11.91 cents a pound reached at the end of last month.

And in cotton, the managed money net long soared above 50,000 contracts for the first time in nearly a year, amid continued concerns over rains slowing sowings in the US South.

"Weather forecasters are now beginning to worry about a prolonged delay to cotton planting in the US [Mississippi] Delta and South East regions," said Tobin Gorey at Commonwealth Bank of Australia.

"The weekend has been very wet and forecasts suggest there will be little opportunity to dry off in the next week to week and a half."

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JAPANESE trading house Marubeni has decided to close its Australian grain business

JAPANESE trading house Marubeni has decided to close its Australian grain business | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

JAPANESE trading house Marubeni has decided to close its Australian grain business. 

In a letter obtained by Fairfax Media, Marubeni Australia managing director Makoto Kajitani confirmed the company was closing its grain business in Australia. 

He said this was due to the company’s global grain strategy and not a result of any performance issues. 

“The business has made a profit for the past three years,” he said in the letter. 

He said all existing contracts would be executed before the business was wound up. 

Marubeni has been a relatively small, but important part of the Australian grains industry for many years. 

It had close links with the domestic feeder industry on the east coast in particular. 

Industry insiders estimated the company would have accumulated total tonnages less than 250,000 tonnes a year, but said it was a significant player in certain areas. 

No one from Marubeni could be contacted to comment officially.


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U.S. Forced to Import Corn as Shoppers Demand Organic Food

U.S. Forced to Import Corn as Shoppers Demand Organic Food | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

  A growing demand for organics, and the near-total reliance by U.S. farmers on genetically modified corn and soybeans, is driving a surge in imports from other nations where crops largely are free of bioengineering.

Imports such as corn from Romania and soybeans from India are booming, according to an analysis of U.S. trade data released Wednesday by the Organic Trade Association and Pennsylvania State University.

That shows a potential market for U.S. growers willing to avoid the use of artificial chemicals and genetically modified seeds, said Laura Batcha, chief executive officer of the association, which includes Whole Foods Market Inc., Whitewave Foods Co. and Earthbound Farm LLC.

The report is “a help-wanted sign” for U.S. farmers, Batcha said. “There are market distortions that are pretty striking.”

Most of the corn and soybean shipments become feed for chickens and cows so they can be certified organic under U.S. Department of Agriculture guidelines. Organic poultry and dairy operators shun feed made with seeds from Monsanto Co. and other domestic suppliers in favor of foreign products even as the U.S. remains the world’s top grower of corn and soybeans.

As a result, imports to the U.S. of Romanian corn rose to $11.6 million in 2014 from $545,000 the year before. Soybean imports from India more than doubled to $73.8 million.

Rapid Growth

Sales of foods certified by the U.S. as free of synthetic chemicals or genetic engineering reached $35.9 billion in 2014, an 11 percent increase over 2013 and about 5.1 percent of U.S. grocery spending. The organic sector’s average annual growth of about 10 percent is triple that of overall food sales, according to U.S. Department of Agriculture and trade association data.

Rising consumer demand in what’s been a niche market is creating shortages, pushing companies that supply farms needing organic feed to seek out foreign sources.

About 90 percent of U.S. corn and soy is bioengineered, thus automatically ineligible for the organic label.

Just north of the Minnesota-Iowa border, on a dirt road closed to heavy truck traffic by the late-spring mud, Hy View Feeds has seen its sales quadruple since winning organic certification a decade ago. Unlike nearby conventional feed stores that buys mostly from suppliers within a half-hour drive, Hy View gets some from Canada, more than 500 miles from its Mabel headquarters, to make up for domestic shortages.

Limited Data

“It’s a market that not everyone is going to get into because it’s done on a different scale,” said Kit VandeMark, owner and founder of Hy View, which categorizes its feeds as conventional, organic and non-GMO. “So we end up with both buyers and sellers from a broader area.”

The USDA only began collecting data on organic crops in 2011. Most of what’s tracked is fresh produce and major grains - - processed foods and meats, for example, aren’t reported in an organic category.

The four years of records show rapidly growing trade relationships. In 2014, U.S. organic exports were $553 million, almost quadruple the 2011 total. Imports last year were $1.28 billion, led by $332.5 million of organic coffee.

Imports of two crops, corn and soybeans, that also are the leading U.S. exports underscore gaps in the market, said Miles McEvoy, deputy administrator of the USDA’s National Organic Program.

Romania, China

Soybeans are the second-biggest U.S. organic import, with $184 million shipped last year. India is the No. 1 source, followed by China. For corn, with overall sales of $35.7 million in 2014, Romania is the biggest seller to the U.S., followed by Turkey, the Netherlands and Canada.

The totals are tiny compared with the combined $92.7 billion value of the two crops last year. That also means that the domestic market could easily meet organic needs, McEvoy said. In reality, U.S. farming isn’t structured to meet some of its highest-dollar consumers’ needs, he said.

“There just hasn’t been enough development of the organic feed supply in the U.S.,” he said. Organic-foods certifiers are in short supply in some regions, he said.

A requirement that all organic farms be free of non-organic seeds and chemicals for three years means farmers give up profit before gaining any price benefit. Recent high prices that fed record farm profits also gave growers less reason to switch, he said.

Organic Prices

“If there were a market incentive for more people to produce organic corn, there would be more of it,” said Paul Bertels, vice president for production and utilization with the National Corn Growers Association in St. Louis. Even though organic corn is selling for about $12.50 a bushel, more than triple the cash price for regular corn, lower yields and the three-year transition period makes GMO- and synthetics-free grain not worth the risk, he said.

“It’s not worth the headache or the cost” for most producers, he said.

In some cases, nations where farming is less industrial are seizing the advantage. Genetically modified seeds are largely absent from Romania and Ukraine, putting their farmers closer to organic certification for sales in the U.S., McEvoy said.

Still, as commodity prices tumble and growers seek higher profit margins, U.S. farmers may seek out more organic acreage, said Lynn Clarkson, founder of Clarkson Grain Co. in Cerro Gordo, Illinois.

“With the markets at break-even prices for many farmers, we’re seeing more interest in organic land,” he said. “I’m not predicting a tidal wave, but I’m seeing twice as much interest in this as I have in the past.”

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We Can't Let John Deere Destroy the Very Idea of Ownership

We Can't Let John Deere Destroy the Very Idea of Ownership | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

It’s official: John Deere and General Motors want to eviscerate the notion of ownership. Sure, we pay for their vehicles. But we don’t own them. Not according to their corporate lawyers, anyway.

In a particularly spectacular display of corporate delusion, John Deere—the world’s largest agricultural machinery maker —told the Copyright Office that farmers don’t own their tractors. Because computer code snakes through the DNA of modern tractors, farmers receive “an implied license for the life of the vehicle to operate the vehicle.”

It’s John Deere’s tractor, folks. You’re just driving it.

Several manufacturers recently submitted similar comments to the Copyright Office under an inquiry into the Digital Millennium Copyright Act. DMCA is a vast 1998 copyright law that (among other things) governs the blurry line between software and hardware. The Copyright Office, after reading the comments and holding a hearing, will decide in July which high-tech devices we can modify, hack, and repair—and decide whether John Deere’s twisted vision of ownership will become a reality.



Kyle Wiens is the co-founder and CEO of iFixit, an online repair community and parts retailer internationally renowned for their open source repair manuals and product teardowns.

Over the last two decades, manufacturers have used the DMCA to argue that consumers do not own the software underpinning the products they buy—things like smartphones, computers, coffeemakers, cars, and, yes, even tractors. So, Old MacDonald has a tractor, but he owns a massive barn ornament, because the manufacturer holds the rights to the programming that makes it run.

(This is an important issue for farmers: a neighbor, Kerry Adams, hasn’t been able to fix an expensive transplanter because he doesn’t have access to the diagnostic software he needs. He’s not alone: many farmers are opting for older, computer-free equipment.)

Over the last two decades, manufacturers have used the DMCA to argue that consumers do not own the software that powers the products they buy.

In recent years, some companies have even leveraged the DMCA to stop owners from modifying the programming on those products. This means you can’t strip DRM off smart kitty litter boxesinstall custom software on your iPad, or alter the calibration on a tractor’s engine. Not without potentially running afoul of the DMCA.

What does any of that have to do with copyright? Owners, tinkerers, and homebrew “hackers” must copy programming so they can modify it. Product makers don’t like people messing with their stuff, so some manufacturers place digital locks over software. Breaking the lock, making the copy, and changing something could be construed as a violation of copyright law.

And that’s how manufacturers turn tinkerers into “pirates”—even if said “pirates” aren’t circulating illegal copies of anything. Makes sense, right? Yeah, not to me either.

It makes sense to John Deere: The company argues that allowing people to alter the software—even for the purpose of repair—would “make it possible for pirates, third-party developers, and less innovative competitors to free-ride off the creativity, unique expression and ingenuity of vehicle software.” The pièce de résistance in John Deere’s argument: permitting owners to root around in a tractor’s programming might lead to pirating music through a vehicle’s entertainment system. Because copyright-marauding farmers are very busy and need to multitask by simultaneously copying Taylor Swift’s 1989 and harvesting corn? (I’m guessing, because John Deere’s lawyers never explained why anyone would pirate music on a tractor, only that it could happen.)

John Deere is a company, by the way, that is seriously serious about preventing people from copying their stuff. So serious, in fact, that they even locked the PDF they sent to the Copyright Office. No modifying the document. And no copying passages. Really, John Deere? How am I supposed to highlight all that’s wrong in this document now?

John Deere may be out of touch, but it’s not alone. Other corporations, including trade groups representing nearly every major automaker, made the same case to the Copyright Office again and again. It’s worth noting Tesla Motors didn’t join automakers in this argument, even though its cars rely heavily on proprietary software.

General Motors told the Copyright Office that proponents of copyright reform mistakenly “conflate ownership of a vehicle with ownership of the underlying computer software in a vehicle.” But I’d bet most Americans make the same conflation—and Joe Sixpack might be surprised to learn GM owns a giant chunk of the Chevy sitting in his driveway.

Other automakers pointed out that owners who make unsanctioned modifications could alter their vehicles in bad ways. They could tweak them to go faster. Or change engine parameters to run afoul of emissions regulations.

Joe Sixpack might be surprised to learn GM owns a giant chunk of the Chevy sitting in his driveway.

They’re right. That could happen. But those activities are (1) already illegal, and (2) have nothing to do with copyright. If you’re going too fast, a cop should stop you—copyright law shouldn’t. If you’re dodging emissions regulations, you should pay EPA fines—not DMCA fines. And the specter of someone doing something illegal shouldn’t justify shutting down all the reasonable and legal modifications people can make to the things they paid for.

GM went so far as to argue locking people out helps innovation. That’s like saying locking up books will inspire kids to be innovative writers, because they won’t be tempted to copy passages from a Hemingway novel. Meanwhile, outside of Bizarroland, actual technology experts—including the Electronic Frontier Foundation—have consistently labeled the DMCA an innovation killer. They insist that, rather than stopping content pirates, language in the DMCA has been used to stifle competition and expand corporate control over the life (and afterlife) of products.

“The bad part is, my sense is, these companies are just locking up this technology, and increasing the sort of monopoly pricing structure that just doesn’t work for us,” Brian Talley, a farmer on California’s central coast, says of restrictions placed on his equipment. I toured his farm with a fellow from the Intellectual Property & Technology Law Clinic so we could tell the Copyright Office how manufacturers are hampering farmers. “We are used to operating independently, and that’s one of the great things about being a farmer. And in this particular space, they are really taking that away from us.”

The notion of actually owning the things you buy has become revolutionary.

The Electronic Frontier Foundation, the Intellectual Property & Technology Law Clinic, and the Digital Right to Repair Coalition (Disclaimer: I’m a founding member of the Coalition.) are fighting to preserve the notion of ownership. We’re trying to open the floodgates of information. To let owners investigate the code in their devices. To modify them for better functionality. To repair them, even without the blessing of manufacturer.

Thankfully, we aren’t alone. There’s a backlash against the slow creep of corporate product control.

Earlier this year, consumers sent 40,000 comments to the Copyright Office—all of them urging the restoration of ownership rights. The year before, consumers and activists forced a law through Congress that made it legal to unlock a cellphone and move it to a different carrier.

This week, Senator Ron Wyden and Representative Jared Polis will introduce the “Breaking Down Barriers to Innovation Act of 2015, which would substantially improve the DMCA process. Lawmakers in Minnesota and New York have introduced “Fair Repair” legislation that assert an owner’s right to repair electronic equipment they’ve purchased. They want equal access to repair information, replacement parts, and security updates.

Of course, taking back the stuff that we own won’t be easy. Corporations have better lobbyists than the rest of us. And, somehow, the notion of actually owning the things you buy has become revolutionary.

It doesn’t have to be. Tell the Copyright Office to side with consumers when it decides which gadgets are legal to modify and repair. Urge lawmakers to support legislation like the Unlocking Technology Act and the Your Own Devices Act, because we deserve the keys to our own products. And support Fair Repair legislation.

If you bought it, you should own it—simple as that. It’s time corporate lawyers left the bullshit to the farmers, who actually need it.

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China to bring in tougher food safety regulations

SHANGHAI (Reuters) — China’s top legislative body has voted through amendments to its food safety law that will see tougher punishments for violations and tighter regulation of infant milk formula and online shopping, the official Xinhua news agency said on Friday.

Beijing is trying to shake off a reputation for food safety scandals, which have ranged from donkey meat tainted with fox DNA to milk contaminated with industrial chemical melamine that killed at least six infants in 2008.

Xinhua said the amendments, which come into effect on Oct. 1, brought the “toughest food safety law” so far in China, although regulators and industry insiders acknowledge the authorities lack the resources and personnel to properly keep check on a highly fragmented sector.

The new law will have 154 articles, roughly 50 percent more than the previous version, with particular attention on areas such as infant formula — a sector dominated by international brands — and the fast-growing online food market.

A number of major firms including Wal-Mart Stores Inc., McDonald’s Corp. and KFC parent Yum Brands Inc. have been hit by food safety scandals in China.

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Farmer Losses Grow As Brazilian Trucker Strike Rolls On

Farmer Losses Grow As Brazilian Trucker Strike Rolls On | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

PORTO ALEGRE, Brazil ( - After making the biggest truck strike in15 years by the end of February and early July, Brazilian truckers are again blocking highways around the country to protest against higher fuel costs and low freight prices combined with poor road infrastructure. A meeting between some leaders of the movement and the government was held on Wednesday. As there was no agreement, truckers started to block roads by the first hour of Thursday

The blockades are an issue of deep concern for farmers and deserve a close market-watch as it affects at least six important agricultural states of Brazil: Rio Grande do Sul, Santa Catarina, Paraná, Mato Grosso do Sul, Mato Grosso, and Minas Gerais. The states mentioned are big producers of at least one of the following crops: soybeans, corn, rice, coffee, cotton, and wheat.

The Association of Corn and Soybean Growers released a public statement saying that indeed there will be "commercial losses" for farmers in the short-term. As Mato Grosso approaches the second corn crop harvest, which happens in early June, storage becomes issue of worry.  "We're at the peak of the sales and need flux. Buyers need to need to know the price of the freight. At the mid-term, we will have storage problems as we need to ship the beans to have more space for the corn that will be harvested," explained the association president, Ricardo Tomczyk, at the statement. Tomczyk also cited concerns with contracts deadlines and repercussion with importers.

Market-wise, the only certain thing is that the soybean price would be pressured in the coming days. "It is yet very premature to esimate consequences for shipments because we don't know the extension of the strike. If the strike is big (in numbers and time), there will be delays on the deliveries at the ports this year," forecasts Porto Alegre market analyst Carlos Cogo in an interview with

At this time, there is no clear sign of when the strike would end. Brazil's Presidency Secretary General, Miguel Rossetto, who participated with the negotiations with truckers, has minimized the impact of the strike and says that the government cannot do much about the truckers demands. "We cannot do an economic intervention without legal support," announced Rossetto, who also promised to fine the drivers who block the roads. The fines can get up to R$ 100,000 (US$ 35,248) per day.

At the side of truckers, Carlos Dahmer, one of the leaders of the movement in Rio Grande do Sul, promised to continue the strike: "We've started the strike, but only the government can end it," said Dahmer, president of the Union of Independent Cargo Workers of Ijuí. As a form of precaution, this time around several truckers avoided loading the truck and driving if they already know a stretch will be blocked in their path.

In previous years, Brazil's oil giant Petrobras have fixed gas prices lower than the international market. Right now, the company changed the policy to recover recent losses from corruption and mismanagement. At the same time, the government has increased fuel taxes since February 1 to fight a fiscal crisis - one of the factors that pushed the first strike.

"Independent truckers end up suffering a lot with these changes. And owners of fleet also do not want to reduce margins. But the freight prices is made of several factors that cannot changed overnight", Augusto Pinho de Bem, a researcher at the Foundation of Economics and Statistics of Rio Grande do Sul, tells

For Paulo Moura, a Professor of political science at the Lutheran University of Brazil, the strike is a result of a major political and economic crisis that Brazil has lived over the last months. The country faces a severe recession with annual inflation close to 9% and growing unemployment as the Federal Police investigates cases of corruption and unprecedented mass street riots call for the impeachment of incumbent president, Dilma Rousseff. Moura affirms that the crisis will only get worse in the coming weeks and months.

"I think that truckers feel deceived by this government. There will be no quick solution and a radicalization of the protests can happen. The government is likely to unblock the roads just with a severe lack of supply. The second semester in Brazil tends to be even more critical [politically] with the opening of an impeachment process at the Brazilian Congress," says Paulo Moura in an interview with

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Putin’s Feed-Russia-First Push Has Global Grain Markets on Edge

Putin’s Feed-Russia-First Push Has Global Grain Markets on Edge | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
The Russian wheat export tax did its job, reducing shipments. Now producers say they will cut wheat acres if the tax isn't lifted. With a good crop of winter what on the way, the odds are better for that happening. Then prices may get slammed with a backlog flowing into the market.
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CN, CP book higher grain revenues in Q1

CN, CP book higher grain revenues in Q1 | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
A bump in gross revenue from grain handling helped to improve first-quarter results for both of Canada's big two railways. Canadian National Railway (CN) on Monday reported overall net income of $704 million on $3.098 billion in revenue for the quarter ending March 31, up from $623 million on $2.693 billion in the year-earlier period. Canadian Pacific Railway (CP) on Tuesday reported a record-high $320 million in overall net income on $1.665 billion in revenue for the same period, up from $254 million on $1.509 billion in the year-earlier Q1. Montreal-based CN credited the effects of a weaker Canadian dollar on its U.S.-dollar-denominated revenues; higher freight rates; and higher volumes in Canadian grain and potash, among other sectors -- offset partly by lower demand for coal. Plus, CN CEO Claude Mongeau said Monday, the bottom line was "helped in part by easier winter conditions compared with last year's polar vortex." In its combined grain and…
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Farm loans keep rising in U.S. grain belt as cash squeeze tightens

Farm loans keep rising in U.S. grain belt as cash squeeze tightens | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

CHICAGO • Farmers in the central U.S. grain and livestock states continued to take out new operating loans in the first quarter of 2015 as low grain prices failed to cover high costs for seed, rents and crop chemicals ahead of spring field work, the Federal Reserve Bank of Kansas City said on Wednesday.

"Loan volumes for almost all farming purposes rose at commercial banks as many producers contended with tighter profit margins," the bank said in its quarterly review of agricultural lending in the Corn Belt and Plains states which dominate U.S. grain, oilseed, cattle and hog production.

"Persistently low crop prices and elevated input costs continued to increase farmers' short-term financing needs. High prices for feeder cattle further boosted loan volumes in the livestock sector," the Fed said.

Corn prices set record highs in 2012 amid the biofuels boom and drought in the United States. But prices are now down by about half after two consecutive bumper American harvests. At the same time, crop production has recovered overseas, hurting wheat exports in particular.

The Fed survey, conducted the first week of February, showed non-real estate farm loans were $8.1 billion higher than the same time a year earlier. The outlook for another year of near-record harvests should keep cash flows tight in coming months, it said.

The livestock sector continued to see cyclical growth given depressed feed prices. Loans for feeder livestock led by calves rose more than 20 percent as producers rebuilt herds, the Fed said. The U.S. cattle herd grew by 2.1 percent in 2014. Meanwhile, a 40 percent drop in hog prices since June 2014 also spurred more loans to

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Bunge boss of two years faces pressure to improve results

CHICAGO (Reuters) — A $250 million deal for Bunge Ltd. to take control of CWB is set to shake up wheat sales, but may not help the head of the agribusiness firm in his drive to boost profits.

The transaction was announced on Wednesday as Bunge chief executive Soren Schroder, 53, faces pressure to improve earnings after leading the world’s largest oilseed processor for nearly two years.

Since he became CEO in June 2013, the company’s stock price has advanced 23 percent, lagging gains of nearly 50 percent for rival Archer Daniels Midland Co.

Investors and analysts are hoping Schroder on April 30 delivers strong first quarter earnings after operating profits in Bunge’s core agribusiness segment fell 14 percent in 2014.

It should be easy for trading houses like Bunge and ADM to increase earnings as large harvests provide ample opportunity to make money out of their bread-and-butter business of transporting, storing and selling grain. However, Bunge has struggled with managing risk and hedging soybeans, with missteps in these areas repeatedly hurting profits.

Bunge expects the CWB deal, which partners the company with Saudi Arabia’s state-owned agricultural investment firm, to close in July and it will not factor into first-quarter earnings. Once it is finalized, it will be too small to significantly impact results, said Jeff Stafford, senior analyst for Morningstar, noting Bunge’s market capitalization tops US$12 billion.

“That is not a big transformative deal,” Stafford added.

Karl Gerrand, who resigned as managing director of Bunge’s Canada division to lead the joint venture investing in CWB, declined to comment on the impact to Bunge’s bottom line.

For the first quarter, Bunge is expected to earn $1.19 per share excluding certain items, up from a loss of 12 cents a year earlier, according to Thomson Reuters data. In the fourth quarter, profits fell short of expectations largely due to hedging losses.

Bunge logged an $80 million loss on its books in the quarter because prices for oilseeds in North America and fuel shifted after the company locked in margins. Schroder has said he will make this back in the first half of 2015.

Bunge had a similar $80 million hedging loss in oilseed businesses in the third quarter of 2014, which it recouped in the fourth quarter.

The company lost out further in the fourth quarter when the value of soybeans it was delivering to top importer China dropped $30 million below the amount the company had paid for them.

A spokeswoman said Schroder was unable to comment about Bunge’s performance before the earnings report. In February, after the company reported fourth-quarter results, the CEO told Reuters he felt “frankly really, really good” about Bunge’s direction.

Traders grappled with markets that “were a bit random” last year because the agricultural industry was transitioning to an ample supply of grain from a scarcity, Schroder told analysts on a call in February.

“It is a continuous process of improving how we look at risk,” he said.

The decline in Bunge’s agribusiness earnings last year was particularly painful because ADM increased profits in agricultural services, which includes grain trading, by 187 percent. Profits in ADM’s oilseed and corn processing units also rose.

“I don’t want to critique their hedging policy, other than it hasn’t worked,” said Brett Wong, senior research analyst for Piper Jaffray & Co, about Bunge.

Analysts and investors want Bunge’s hedging losses to stop, and complain the unexpected charges are hurting share prices. No major shareholders or board members have publicly called for Schroder to resign.

“From what we can see, the board is OK with things,” said Ari Gendason, managing principal for investment firm Arlon Group. “I don’t think they should be, but they seem to be.”

Arlon owned Bunge shares but sold them late last year due to concerns about the potential for growth, Gendason said.

Last year, Schroder’s compensation climbed 55 percent to $10.1 million as his salary rose 20 percent to $1.2 million and options awards increased, regulatory filings show.

Schroder has said he is focused on improving financial results by building Bunge’s agribusiness and food units. He has pointed to an 8.4 percent return on invested capital in the units last year as a bright spot on the balance sheet, an increase from 7.5 percent in 2013. Schroder aims to raise it to nine percent this year.

However, the figure excludes Bunge’s loss-making sugar business. When that is factored in, together with bioenergy, the return was 6.6 percent last year, falling short of the seven percent weighted average cost of capital.

Schroder is exploring options, including a sale, for Brazilian sugarcane mills.

Privately held commodity trader Cargill Inc. has set the bar high for Bunge’s upcoming earnings, reporting last week that profits for the quarter ended Feb. 28 rose 33 percent on the year.

And Goldman Sachs recently raised its rating for Bunge to a buy, citing the best macro environment for the company in years.

“Everybody’s benefiting from this environment, it’s just that Bunge keeps shooting themselves in the foot,” Wong said last month, referring to hedging losses.

“Management just can’t seem to get it right.”

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Kernel Holding bears witness to drop in Ukraine corn sowings

Ukraine officials forecast a drop of some 8% in Ukraine's corn plantings, even as sunflowers-to-silos group Kernel Holding revealed its own sowings of the grain were to fall by even more.

Ukraine's agriculture ministry pegged corn sowings in the country, the third-ranked exporter of the grain after the US and Brazil, at 4.0m hectares, a fall of some 350,000 hectares.

The forecast - which comes as growers are starting plantings, with 120,000 hectares reported by the ministry as seeded so far – compares with an estimate by UkrAgroConsult of a drop of about 10% in Ukraine corn plantings this year.

The grain has fallen somewhat from favour largely because of the greater expense needed to grow what is a fertilizer-hungry crop, at a time when costs for imported seed and for borrowing money have soared in crisis-hit Ukraine.

Indeed, many growers opted for winter wheat, which has broadly survived the winter in better shape than seemed likely after a dry spell which stunted development heading into dormancy.

Acreage switches

Separately, Kernel Holding – which is one of Ukraine's biggest farm operators, expecting to lift plantings to 383,200 hectares for this year's harvest – said that corn would account for 41% of its sowings this year, down from 48% last year.

On an area basis, that implies plantings of about 157m hectares this year, down from 184m hectares for the 2014 harvest, equivalent to a steeper drop than that the farm ministry has forecast nationwide.

Kernel said that it had raised its winter wheat area to 19% of sowings, equivalent to more than 70,000 hectares, from 8% last year, when it planted 30,700 hectares with the grain.

Among oilseeds, the group flagged a small switch in plantings away from sunflowers to winter rapeseed.

Market reaction

Kernel Holding adding that its winter wheat and rapeseed were in "good-to-excellent condition", and that its spring planting campaign had enjoyed "favourable weather to date".

It also revealed a rise to 5% to 23.8m litres in sales of bottled sunflower oil, as rising inflation prompted timely purchasing, and an increase of 18% to 1.22m tonnes in exports, reflecting largely increased volumes handled of the group's own production.

At broker Art Capital, analyst Andriy Patiota viewing the update as "neutral" for Kernel shares, cautioned that a shortage of crop to process may constrain sunflower oil production in the April-to-June period.

And it forecast a $70m-90m hit to the group from foreign exchange losses, thanks to the collapse of Ukrainian hryvnia, which has halved over the last year against the dollar.

Nonetheless, Art Capital kept at "buy" its rating on Kernel shares.

The stock, which is listed in Warsaw, stood up down 1.3% at 38.10 zloty in afternoon deals.

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Beware Of Grain Contract Details, Analyst Says

Beware Of Grain Contract Details, Analyst Says | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

With corn futures trading in a sideways to lower pattern and at relatively low prices, farmers are inclined to be reluctant sellers, both of old and new crop corn. Many end users (in particular elevators or large commercial buyers) are offering contracts to farmers which entice them to move old crop corn. Often these contracts may have strings attached to them that could affect new crop pricing. It is important that you are aware of all the potentials that could occur in many of these contracts.

While we won't review any particular contract, many have the same general attributes. That is, farmers will receive a strong bump in the cash price for near-term delivery with the agreement to deliver likewise bushels in the fall. In many cases, however, the number of bushels required to deliver doubles if corn futures are above a certain level. Initially, these contracts can look very attractive. Yet, before you sign any contract, make sure that if you're doubling-up bushels on new crop at a fixed price, it is something that you can live with or, if need be, manage. For the purpose of this Perspective, we use round numbers that are fictitious, yet should get the point across.

Let's say new crop corn prices are trading at $3.60 in the cash market. Elevators may offer a $4.00 cash price for near-term delivery. This is attractive. At the same time, however, they may require twice as many bushels delivered if corn futures in December are above $4.00 at a specified date. If corn futures are below $4.00, then no delivery is required. So, while you may get a bump in cash prices now, what you potentially are doing is committing yourself to twice as many bushels at a later point. If you can live with that, fine. The key is to not overdo it. Don't end up with significant bushels sold in a bull market that leaves you in the dust. If you do sign a contract that is similar to this, consider purchasing call options to cover these potential forward sales. If corn rallies to $5.00, you've doubled-up your sales at $4.00. By having a call, you can recoup the difference between $4.00 and $5.00, or at least a big portion of it.

The biggest detriment we see with these contracts is that farmers experience a rally and are of the belief that they have corn sold at $4.00 (in our example). Yet, one only has to remember back to 2008 when many of these types of contracts suggested that farmers were heavily sold as prices zoomed to $8.00 a bushel. By fall, however, prices were under $3.00 a bushel, and in the end, farmers had no bushels sold in a year of record-high prices. Therefore, if you do sign into these contracts and prices do rally, you may also want to shore up against lower prices by purchasing puts.

So, we've just outlined the idea that you may have to manage your position with the purchase of puts and calls. It is highly likely that the firm offering these contracts is selling a call option for you and collecting that premium. That's where they get the funds to bump up your cash for near-term delivery. You could, in essence, do this on your own by selling call options on deferred months through an independent brokerage firm. Therefore, you forego the delivery and uncertainty of whether or not you'll have bushels doubled-up on sales.

The bottom line is to make sure you know exactly what you're getting into. Over the years, this author has taken too many phone calls where producers are stuck in contracts they either didn't fully understand or didn't think would be a problem. Evaluate each marketing tool with care, and ask the "what if" questions. This will help keep you out of trouble and able to manage the market rather than allow it to manage you.


If you have questions or comments, or would like help implementing strategy for the year ahead or desire materials that you can read to learn more about marketing, please contact Bryan Doherty at 1-800-TOP-FARM ext. 129.


These strategies may not be for everyone. In any strategy, consider commission costs on transactions, and make sure you understand the ramifications whenever you are in any market position.


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Opposition seeks Commons debate on CWB sale

Opposition seeks Commons debate on CWB sale | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |
The federal opposition New Democrats are asking for an emergency debate in the House of Commons on the pending sale of majority control in CWB, the former Canadian Wheat Board. Winnipeg Centre MP Pat Martin, the party’s critic for public works and government services, announced Friday he has written to …
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Wheat Prices Hinge on Corn As Animal Feed Drives Market

Wheat Prices Hinge on Corn As Animal Feed Drives Market | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

When many U.S. consumers think about wheat, they visualize a loaf of bread or cereal. But in years of plentiful global supplies such as this one, though, the crop’s price often is determined in the animal feed market, especially domestically. So what does wheat need to do to push its way into feed bunks?

To answer that question, producers should look first at the demand side for 2014/15 wheat and then at the supply prospects for 2015/16 wheat. In April, USDA did not change its 2014 production estimates. It left hard red winter at 738 million bushels; soft red winter at 455 million; and winter white at 184 million bushels. Hard red spring is at 556 million bushels while durum is at 53.1 million.

Although in April USDA tightened all-wheat ending stocks for the current marketing year to 684 million bushels—down from 691 million in March—that is still ample at 33% of expected use. 

“The supply and demand situation in wheat is not bad; some even argue [it is] modestly bullish,” says Kim Anderson, Oklahoma State University ag economist. “The problem is corn. We think of wheat as a food grain, and it is, but worldwide I believe that about 15% to 20% of the wheat produced is used as animal feed. In feed markets, wheat and corn are substitutes. So we are back to corn, and corn, as they say, is king. If the corn market is on the defensive, wheat prices will have a difficult time going higher.”

Total 2014/15 ending stocks are expected to be up 16% from 2013/14. Meanwhile, USDA has lowered exports by 20 million bushels to 880 million, the lowest export total since 2009/10. Feed and residual use was boosted 10 million bushels due to finding less than expected stocks in the Grain Stocks report, implying greater use. 

USDA pegs the 2014/15 season-average farm price for wheat at between $6 and $6.10 per bushel, down from $6.87 in the previous marketing year.

Export Prospects Generally Dim. It is no secret the U.S. has been losing wheat market share, a trend that has accelerated with the appreciation in the dollar. Canada’s record crop this past year, a growing crop in Ukraine and stiff competition from Europe, especially France, have all eaten into potential export markets. U.S. producers benefited in 2014 from huge exports to Brazil because of a poor Argentine crop, but that is over.

USDA sees this season’s exports at just 15% of the global total, the lowest ever in USDA’s database. At the same time, the European Union will be the top exporter for the second year in a row as it sets a new record. For the first time on record, Canada’s exports are expected to match those of the U.S. Russia’s exports are projected higher, despite its export tax. The ruble’s collapse has made its wheat less expensive.

Wheat Exports By Class, 2013 to 2014 (via USDA)

Profitability Worrisome. The Prospective Plantings report shows additional reductions in U.S. acreage in 2015. The all-wheat estimate stands at 55.4 million acres, a 3% drop from a year ago. Yet several classes show small increases, most notably durum. Some analysts think the spring wheat numbers might actually be too low. The truth won’t be known until planting season is over, and both weather and the markets are sending messages.

“Spring wheat has not yet been planted and may still be competing with other crops for acres,” explains Brian Williams, Extension ag economist at Mississippi State University. “As of March 31, USDA is projecting 13 million acres of spring wheat to be planted.”

Additionally, while basis has improved somewhat with lower rail costs, those gains are not enough to offset a slide in futures prices.

“I would say most producers are disappointed in current price levels for their 2014 wheat harvest, and also disappointed in the 2015 harvest price outlook,” says Jim Peterson, North Dakota Wheat Commission. “Both prices are below the cost of production.  In 2014, we did harvest record to near-record yields. But even with that, most wheat producers will likely fall below needed revenue levels to cover production costs.” That means it’s possible not all of last year’s prevented planting acres will return to production this year.

Dryness is allowing northern farmers to get into the field much earlier than recent years, which could encourage additional corn or soybean planting. On the other hand, wheat is more drought tolerant and has lower input costs.

“Producers already are out seeding,” says Fryne Olson, North Dakota State University crops economist and marketing specialist. “Early planting means that spring wheat has a chance to mature before the typical dry and hot July weather, promising pretty good yields. But we don’t have the soil moisture level of the past few years, so it will mean this crop needs timely rains through the growing season.”

Wheat Acres, 2014 And 2015 (via USDA)

Wheat production worldwide for the current marketing year has been revised upward to 726.5 million metric tons (MMT), compared to 716.8 MMT this past year. For details of revisions, see page 15 here

 “Globally, there are no real concerns today; supplies certainly are adequate,” says Mark Welch, Texas A&M Extension economist. “Near-term, at least, the global situation is not friendly for U.S. prices.”

Wheat Marketing Strategy: Grab Nickels And Dimes. With the winter wheat harvest not far off, producers must review their marketing strategy to preserve profitability.  

“We’ve been seeing some better-than-average basis for both current delivery and harvest contracts,” Welch notes. “In this market environment, nickels and dimes can be significant. We suggest producers have a discussion with potential buyers.”

Capturing protein premiums is another way to garner some extra nickels and dimes or more. Protein scales in North Dakota now offer 10 cents per one-fifth point of protein, Williams points out. “Fifteen percent protein might be priced at about $6.15,” he says.

Remember that crop revenue insurance kicks in at about $4. “That means there’s still $1 in price risk,” Welch explains. “Even at these levels, you can better the price you get with some futures hedges, etc., to limit risk to the downside.”

Likewise, he says, some parts of Texas do not have an abundance of storage if the crop is a good one. “While this crop may not be as huge as what was harvested in central Texas in 2010, it is likely the best crop since then. There was a real mess due to lack of infrastructure. Communicate about your marketing and possible production. Even if you don’t sign a contract, having the discussion makes it more likely you’ll get the storage you need.”

Producers should know their breakeven to optimize profitability, Williams adds. “If they can lock in a profit by hedging or forward-contracting, they should definitely consider doing so. The price movement this spring will depend mostly on growing conditions and where the rain does or does not fall. If the Plains states remain dry, we could see wheat prices rise. If rain comes at the right times and can boost yields, we could see prices come down.”

In the end, as in pretty much every year, producers must balance economics and weather while hedging their bets. An outstanding supply or demand factor will not answer the market’s questions in 2015.

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