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Favorable Weather Boosts Brazil's Soy Crop Prospects

Favorable Weather Boosts Brazil's Soy Crop Prospects | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

SAO PAULO, Brazil (DTN) -- Brazil's Agriculture Ministry on Thursday refined its 2012-13 soybean crop forecast to 82.6 million metric tons (mmt) from a range of 80.1 mmt to 83.0 mmt.

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K+S rejects $8.7-billion takeover bid by Potash Corp.

K+S rejects $8.7-billion takeover bid by Potash Corp. | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

Germany’s K+S AG rejected a $8.7-billion (U.S.) bid from Potash Corp of Saskatchewan, saying the offer was too low and “completely disregards” the value of its large potash project in Saskatchewan.

Potash Corp., the world’s biggest fertilizer producer, is increasingly facing more competition in Canada and abroad. Acquiring K+S would  give the Canadian company control over about 30 per cent of the potash market as well as K+S’s project in the prairies, which is due to start production next year and will contribute to the surplus of potash in the market.

K+S, which is the world’s largest supplier of salt products, has higher cost fertilizer operations in Europe. K+S said its boards of directors are not convinced that Potash Corp has an interest in continuing the fertilizer and salt businesses in their current form.

The German company also said Potash Corp has made no firm commitment to protect the interests of the more than 14,000 K+S’s employees.

“Despite repeated requests to address this question, PotashCorp’s answers have remained vague,” Norbert Steiner, K+S’s chief executive, said in a statement.

The rejection could lead Potash Corp, the world’s biggest fertilizer producer, to go hostile and take its offer of 41 euros per share directly to K+S’s shareholders.

K+S’s Saskatchewan project, called Legacy, is expected to produce about 3 million tonnes a year, nearly the same size as some of Potash Corp’s mines in Saskatchewan.

Potash Corp did not immediately respond to a request for comment.

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corn futures - corn futures climb 7% as US data rocks markets

Corn futures ended up more than 7% on Tuesday, as grains soared on data from the US Department of Agriculture which showed stocks and acreages sowed behind analyst's expectations.

Grains are making 2015 highs, as the markets adjust to a double whammy of lower than expected sowings, and surprisingly thin stocks.

Soybeans saw the biggest surprise in the USDA numbers.

US stocks of soybeans as of June 1 were seen at 625m bushels, compared to trade expectations of 670m bushels.

'Another big surge'

Soybeans acreage estimates, based on early June surveys, were seen at 85.139m acres, compared with analyst's expectations of 85.171m acres, though still exceeding 2014 plantings of 83.701m acres.

The latest planting data may not even show the full extent of the decline in soybean acreage, as it will not reflect the most recent changes in farmer intentions as a result of the heavy Midwest rains, which could have caused farmers to take out prevented planting insurance, leaving the ground unsown.

The USDA will resurvey farmers in some of the effected states, with the results to be released on August 12.

There was also bad news on soy crop condition released by the USDA overnight, with the proportion of beans in good or excellent condition down by 2 percentage points.

"The USDA numbers have sparked another big surge in prices," said Darrell Holaday of Country Futures, adding "the most bullish number was soybean stocks number".

'Not as negative'

Mr Holaday said that the low soybean stocks were "an indication that the residual use was not as negative as expected," suggesting that last year's soybean harvest may have been below USDA estimate.

However, he warned that despite being smaller than expected, soybean stocks were still 54% above the same time last year "so the market will have to deal with that reality at some point".

August soybeans closed up 5.4% at a six-month high of $10.49 ½ a bushel, while new crop November beans were up $10.37 ¼.

Condition fears

But corn saw an even greater boost, thanks to additional condition fears.

Corn stocks were reported at 4.447bn bushels, compared with trade estimates of 4.555bn bushels, while planting estimates were at 88.897m acres, against expectations of 89.292m acres.

Corn prices were also helped by a 3 percentage point week-on-week decline in US corn crops rated good or excellent, as wet weather takes its toll

Brian Henry of Benson Quinn Commodities "the corn crop in the eastern Corn Belt is under considerable pressure".

'Significant wetness and flooding concerns'

MDA Weather services noted that rains would favour the southern Midwest over the next few days.

"This will maintain significant wetness and flooding concersn across the souther portion of the Corn Belt" said Kyle Tapley of MDA.

"On the other hand, somewhat drier weather will allow wetness to ease slightly in southern Iowa, northern Illinois and Michigan".

September corn closed at a six-month high of 7.2% at $4.22 a bushel.

From outside the US market, there was the news that China's agriculture minister had announced that China is likely to reduce corn acreage in 2016 because of large stockpiles, which is likely to result in a switch to soybeans in the North China Corn Belt. 

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High-quality land values continue decline

High-quality land values continue decline | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

Location and quality of land continue to be the main drivers of pricing for individual tracts. The stability of this market is maintained by a lower supply of land for sale, contrasted with a continued demand for quality properties. Farmers National Company statistics show the volume of properties for sale is down 40% over the past six months, as compared to the past two years.

“The current level of available land is having a real impact on farm and ranch operations looking to expand,” said Randy Dickhut, AFM, Vice President of Real Estate Operations of Farmers National Company. “Demand is still good for quality land. The market just isn’t as aggressive as in the past few years, so values are drifting sideways to lower.”

While land values are down nearly 10 percent in most areas, price softening is happening at different rates in each region. For example, sales in the Northwest have been brisk, as the California drought is driving activity north. The Southern Delta region hasn’t seen much decline, while parts of the Midwest are experiencing significant drops in value.

While current buyers are predominantly active farmers and ranchers adding land to their operations, interest from investment funds and individuals is on the rise. In addition, generational land transfers continue to play a large role in market movements, as many inheriting land choose to sell.

“With the softening of land values, some investors are looking at this as an opportune time to buy,” said Dickhut. “Land is considered a low risk long-term investment, so we will see these types of buyers jumping into the land market more and more over the next several years.”

Demand for cropland and grazing land from owner operators remains good, but buyers are being more realistic in what they will pay given lower grain prices. Land professionals are  recommending  that sellers be more realistic in evaluating the quality of their land and the expected selling price in order to have a successful sale.

According to Dickhut, long term economic trends look positive in relation to land values and ag markets. Demand for feed grains and protein sources by China and other world markets will remain strong long term as the growing world population has a desire to eat better.

“Demand for our products creates a positive outlook,” said Dickhut. “Any adjustments to values and sales activity are likely to be slow and steady so the impact won’t be overwhelming.

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Deere In (Economic) Headlights?

Deere In (Economic) Headlights? | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it
Summary
  • The up's and down's of the economic cycle continue to impact Deere's performance.
  • Deere could benefit from the potential passing of recent Trade Promotion Authority legislation, which will create greater opportunities for US farm exports.
  • The company's business model is one of the best, but if we haven't yet passed the peak of the economic cycle, we're pretty close.
  • Let’s take a look at Deere’s performance and derive our fair value estimate of the firm.
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If Syngenta deal fizzles, here’s what a Monsanto bid for Bayer might look like

If Syngenta deal fizzles, here’s what a Monsanto bid for Bayer might look like | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

Monsanto Co. is committed to making a deal for the Swiss Syngenta AG for now, but not forever. Monsanto CEO Hugh Grant has said that Monsanto’s continued courtship would likely last months, not years. If a deal with Syngenta doesn’t get done, Monsanto is expected to return to the marketplace to see what its options are.

One possible alternate, which company officials have confirmed would be of interest to Monsanto, is Bayer CropScience, the agricultural unit of German conglomerate Bayer AG and a $13 billion business in its own right.





One thing is clear at this point: Monsanto wants to add more crop chemicals to its business to speed up its research pipeline for new seeds and traits, to give it more product offerings and expand its sales reach, and to beef up its precision agriculture platform. Piper Jaffray analysts Brett Wong and Tyler Etten wrote in a note Tuesday that Bayer would be “the seemingly next best option” for Monsanto as it looks to expand its chemical business.





Acquiring Bayer would be “accretive” to Monsanto and could yield $400 to $550 million in profit through cost cuts, according to Wong and Etten.

As with a Syngenta acquisition, Monsanto could also reduce its tax rate by re-incorporating overseas after an acquisition. Wong and Etten surmise than Monsanto would seek out a country with a tax rate of about 20 percent, similar to what its tax costs would be by incorporating in the United Kingdom, as Grant proposed a merged Monsanto-Syngenta would do. The dollar cost of tax savings could be between $150 million and $350 million, depending on the rate, the analysts estimate.




Assuming an even split between cash and stock in an acquisition, Brett and Wong estimate Monsanto’s price tag for Bayer could be between $32 billion and $38 billion. The analysts also assume Monsanto, as with a Syngenta acquisition, would spin off Bayer’s seed business and overlapping chemical business, which together could fetch $9.5 billion to $10.5 billion, reducing Monsanto’s debt load for a buyout.

“Although not as extensive as Syngenta’s crop protection portfolio, we believe Bayer’s offerings are strong as the number two global crop protection player,” Wong and Etten write.

Monsanto has made two offers to buy Syngenta for $45 billion this year. Syngenta has rejected both offers, with officials saying Monsanto has undervalued their company and the regulatory risks of a deal.

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What Is Currently Priced Into Monsanto's Stock Performance?

What Is Currently Priced Into Monsanto's Stock Performance? | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it
Summary
  • Despite management efforts, Monsanto has been facing tough times recently because of low commodity prices and a strong dollar.
  • The company's third quarter (3QFY15) report and guidance update testifies to the ongoing external challenges.
  • Given the company's three stated goals, this article takes a look at what the market thinks is achievable by the end of the decade.

Monsanto Company (NYSE:MON) reported its third fiscal 2015 (3QFY15) earnings on Wednesday, June 24. The company posted a beat on its quarterly bottom line, while missing the consensus on the top line number. Monsanto anticipates zero profitability for the upcoming August quarter (4QFY15), given the weak commodity prices and foreign exchange headwind.

The two factors discussed above are the ongoing concerns, rather than just specific to the fourth quarter, for the Missouri-based agrochemicals company. It is evident not only in its financial performance, but also in the stock price movement. The revenues are down 4.4% year-over-year (YoY), while the net income contracted 3% YoY during the past nine months. Likewise, the share price fell 15.85% over the last year.

These statistics sharply contradict with Monsanto's performance since the beginning of the decade. The revenues expanded 51.24% from fiscal 2010 (FY10) to fiscal 2014 (FY14). The impact on profitability was more pronounced, as the net income grew two-and-a-half fold over the same period. The stock price has gained 119.97% in value during the past five years, even including its lackluster performance of the last twelve months.

Financial Valuation

Keeping this scenario in mind, I tried to perform a financial valuation of Monsanto Company. The key financial metrics of the company are tabulated below. All figures are presented in billions of dollars, except for percentages and ratios.

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Ontario books drop in bee death 'incidents' at planting

Ontario books drop in bee death 'incidents' at planting | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

Early data from federal pesticide regulators appear to suggest Ontario’s bee yards are moving past a spell of unusually high death losses seen around the 2012 and 2013 planting seasons.

Combining the numbers of acute honey bee mortality “incidents” by bee yard in Ontario in the 2015 pre-planting and planting periods, up to June 11, Health Canada’s Pest Management Regulatory Agency (PMRA) counted 46 affected yards.

That’s down from 79 in the pre-planting and planting periods combined in 2014; 260 in 2013; and 241 in 2012.

The new PMRA figures, obtained Thursday by Grain Farmers of Ontario (GFO) and the Canadian Seed Trade Association (CSTA), thus show declines of 82 and 70 per cent in incidents in the 2015 and 2014 periods respectively against the 2013 level.



By comparison, mortality “incidents” reported during the overwintering period in early 2015 sat at 31 unique yards — the same number reported in the same period in 2014, up from two in 2013.

GFO, in a release Thursday, said the data suggest “the federal government’s leadership on neonicotinoids through improved best practices has been successful.”

The PMRA early last year imposed new measures to limit bees’ exposure to dust from some types of equipment used to plant corn and soybean seeds pre-treated with neonicotinoid pesticides.

The agency restricted farmers’ use of seed flow lubricants — the products used to prevent planters from clogging with sticky neonic-treated seed. Bayer CropSciences’ “Fluency Agent,” billed as reducing “fugitive” pesticide dust, became the lone approved lubricant; talc and graphite were no longer permitted.



The CSTA, in a separate release Thursday, said the data show “the seed industry’s unprecedented action to protect bee health is having a very positive impact.”

The figures “are a great start; however, today’s numbers do not mean that we can stop working to protect bee populations,” CSTA president Dave Baute said in the association’s release.

GFO chairman Mark Brock, however, took aim also at the Ontario government’s plans to restrict corn and soybean growers’ use of neonic seed treatments, to be phased in starting this summer.

“Ontario’s rush to be the first in North America to restrict neonicotinoids is on track to cost rural Ontario’s economy more than $600 million a year, to solve a problem that it appears the federal government has already addressed,” he said Thursday.



The provincial environment ministry, GFO said, is “ignor(ing) the self-reported poor hive management practices of beekeepers, which beekeepers believe contributed to higher-than-normal mortalities in years prior.”

Ontario beekeepers “readily admit to the province that poor hive management by beekeepers in four areas” — starvation, weak colonies, fungal infections and mite infestation, plus weather conditions — “are also likely to blame for bee mortalities,” Brock said.

PMRA noted that while the death losses seen in 2012 occurred around planting time, increases in incident reports of poorly performing hives “later in the (growing) season” were seen in 2013 and 2014.

It could be, PMRA said in a separate report in November, that beekeepers have become “more vigilant in reporting unusual symptoms observed in their colonies, as well as more aware of the process of reporting these issues” to federal and provincial officials.


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In 2013, PMRA said, some of the colonies affected later in the season had pesticide residues present in the hives, while other affected colonies “did not have any measurable residues, making it difficult to determine whether or not pesticides were a contributing factor to the effects reported.”

It’s also unclear, PMRA said in November, how “widespread” these effects were, as a “small number of beekeepers account for the majority of reported colony effects.”

In 2014, the agency said, three beekeepers accounted for over 72 per cent of reported incidents. –– AGCanada.com Network

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Downpours and Drought Send Wheat to Biggest Gain in Three Years

Downpours and Drought Send Wheat to Biggest Gain in Three Years | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

Too much rain in the U.S. and not enough in Europe and Canada sparked the biggest weekly rally in wheat and corn prices in three years.

Wheat futures jumped 15 percent in Chicago this week, entering a bull market. Corn climbed 9.4 percent and milling wheat rose 8.7 percent in Paris. The advances are the largest since 2012. Soybeans capped the biggest gain since October.

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Ethanol industry raises questions

Ethanol industry raises questions | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

WASHINGTON — A docket tucked into the U.S. Environmental Protection Agency’s proposed Renewable Fuels Standard revision issued last month has the ethanol industry questioning the contradictions.

The “Preliminary Assessment of RIN (Renewable Identification Numbers) Dynamics, RIN Prices and Their Effect” found that despite claims to the contrary over the past three years RIN prices don’t impact retail gasoline prices, a notion the ethanol industry long has claimed.

RIN is a serial number assigned to a batch of biofuel for the purpose of tracking its production, use and trading under the auspices of the EPA. RIN prices are determined by market factors typical of other commodities.

To ensure compliance, obligated parties are periodically required to demonstrate they have met their RFS quota by submitting a certain amount of RINs to the EPA.

EPA examined the 2013 market when RIN prices increased from about 5 cents in January to 80 cents in March and $1.40 in June before dropping to 20 cents five months later. The spike took place during a time of uncertainty about the Renewable Volume Obligations for 2013 and 2014, both of which EPA missed deadlines.

EPA proposed a corn-based ethanol target of 13.4 billion gallons for this year and 14 billion for next year under the Renewable Fuels Standard. The original target was 15 billion gallons.

“We typically wouldn’t organize a press call like this to talk about a technical memo that’s buried deep in the docket for the RFS rule-making, but we thought this memo is significant enough that it was worth calling to your attention,” said Geoff Cooper, Renewable Fuels Association senior vice president.

“A lot of the hullabaloo  that we’ve heard out here for years is (RFS) would drive RIN prices through the roof, raise consumer prices, but it was just rhetoric by those obligated parties who don’t want to live up to their obligation in the Renewable Fuels Standard,” said Tom Buis, Growth Energy CEO.

On Record

Cooper said the memo is significant in that it puts the EPA and former White House officials on record concurring that RIN prices have no impact on E10 gasoline and that RIN prices can lead to low retail prices for fuel blends such as E85 and E15.

“It struck us as noteworthy that in this memo and really in the proposal itself EPA is finally openly acknowledging a few things that we think are very important,” Cooper said.

EPA noted the reason there is no impact is because the RIN price is not an additional cost to the consumer.

“It’s really just a transfer payment between parties that are blending renewable fuels and obligated parties who are producing petroleum-based fuels, and those obligated parties are required to obtain RINs and demonstrate compliance with the RFS,” Cooper said.

“In many cases, those obligated parties, those oil companies, are both producers and importers of gasoline and blenders of renewable fuels. So you effectively having those folks acquire all of the RINs they need internally through their own vertically integrated operations.”

Nothing New

The EPA’s memo is not the first confirmation that RIN prices don’t impact prices at the pump.

Economists at the University of Illinois and Iowa State University found that to be true in studies conducted two years ago, and two statistical studies by Informa Economics also found no evidence to support a relationship between RIN prices and gasoline prices.

“This is a case where the messenger is as important as the message. It isn’t what’s being said in the EPA memo that’s so significant here; it’s who is saying it,” Cooper said.

“You go back to 2013 and everything we were hearing was that the administration was terrified of the potential impact of higher RIN prices on consumer fuel prices, and the oil industry really played into those fears, and the result was a proposal for the 2014 Renewable Volume Obligation that embraced the blend wall and really disemboweled the RIN market mechanism and touched off the melee we find ourselves in today.

“It’s great to see EPA is now openly recognizing how the RIN market can work to transform the marketplace and recognizing the consumers are insulated from any impact of RIN trading amongst obligated parties.”

Rebuts 'Scare Campaign'

“Big oil has been trying to make the case really since 2013 that rising RIN  prices were going to be directly be passed on to the consumer in the form of higher gas prices,” said Jim Miller, Growth Energy vice president and chief economist.

“This EPA memo along with other work that Growth Energy had done on this issue clearly shoots down just another element of big oil’s scare campaign in their effort to destroy the Renewable Fuels Standard.

“The other main point that is really critical as we look forward in terms of what we can do in the renewable fuels industry is the incentive that RINs can create within the market for motor fuel to encourage refiners, blenders and retailers to expand the use of higher blends of E85 and certainly E15.”

The public input process regarding the proposed RVO is being held through July 27 and a volume standards ruling is expected to be made by Nov. 30.

“Now we’re in the rule-making process and EPA has issued a proposed rule that doesn’t even begin to reflect the fact that RINs don’t impact consumer prices and can incentivize the market,” Miller said.

 “We believe they still have an opportunity to modify this proposal to recognize that the market for RINs really can serve as the incentive to meet the RFS volumes and that an adequate supply of RINs certainly exists to continue to provide the obligated parties the flexibility that they claim they needed when the RFS was first enacted in order to comply with the law.”

“It’s really bewildering that the administration is saying there’s no impact yet they’re fundamentally changing the goals of the RFS. It’s not based on whether or not we can produce enough biofuels for higher blends, it’s not based, and obviously the EPA agrees with this, that it’s going to cost consumers,” Buis said.

Discourages Investments

Bob Dinneen, Renewable Fuels Association president and CEO, said the systematic destruction of the RIN credit market discourages investment in new technology and infrastructure that would break the blend wall.

“They’re only helping the oil companies by doing this. Their own analysis and their own proposed rule-making says that by increasing the potential profitability of blending renewable fuels higher RIN prices can incentivize to build the infrastructure necessary to blend industry renewable fuel blends,” Dinneen said.

“But they’re manipulating the RIN market, artificially creating the surplus of RINs in the marketplace, devaluating that market and ripping the guts out of the program by removing any incentive to invest in infrastructure or new technologies. They are ignoring all of those surplus RINs as they evaluate the supply of renewable fuels for this program.

“That is inconsistent with what they’d done prior to the 2014 RVO and is inconsistent with the statute. We strongly believe that EPA must scrap this (RVO) proposal and get the RFS back on track which means with a RIN program that will drive the investments that Congress designed this program to do.”

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Dry spring puts Sask. grass, hay in short supply

Dry spring puts Sask. grass, hay in short supply | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it
A dry, cool spring has checked pasture growth in Saskatchewan and a hay shortage is looming. The province's latest crop report notes topsoil moisture in hay fields and pasture is rated 42 per cent short and 24 per cent very short. Crop district 7A, in west-central Saskatchewan, has the dubious distinction of being the driest in the province, according to the crop report. In that district, 82 per cent of pasture and hay land is rated as very short on moisture. But it's much the same all over. Producers in the southeast and southwest are worried about feed shortages. Some livestock producers in the northwest have let animals graze hayland, as pastures are already overgrazed, the crop report states. It's no better to the west, either. Alberta pastures and hay fields are producing "a pittance," forage specialist Grant Lastiwka recently told Alberta Farmer Express. The northeast seems to be the one bright spot in Saskatchewan,…
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Cargill Inc idles Iowa corn processor due to flooding

Cargill Inc on Friday temporarily shut down its corn processor in Eddyville, Iowa, due to flooding in the area, two trade sources said.

The plant was likely to resume production by Saturday, according to a Cargill letter seen by Reuters. A Cargill spokesman did not immediately respond to a request for comment.

The Eddyville processor is relatively small, with the capacity to produce 37 million gallons of ethanol per year, according to U.S. Energy Information Administration.

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Six numbers in agriculture that make you stop and think

Six numbers in agriculture that make you stop and think | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

The spring rush is over, so now is the time to take a moment and reflect. As you gaze across fields flush with new growth, think about how much things have evolved in the last few years. Although that lone tree out there still leans to the east, and the sun still sets in the west, change has become the new norm. Today we need to understand, accommodate and capitalize on change.

Predicting the evolution of Canadian agriculture is never easy, mainly because the evolution of agriculture is driven by the accumulation of countless decisions by countless farmers in an industry so vast, so complex and so varied, it’s impossible to take every critical factor into account.

But here’s a start, in the form of six numbers that reflect some of the important national trends in the last few years. Take them in, roll them around, and ask yourself: Where are these trends driving us?

In 2009, total Canadian net farm income was $2.8 billion. Four years later, it was $10 billion more, with Statistics Canada’s saying a $5.6-billion rise in the total value of farm-owned inventories from the year before accounted for almost all of the increase in total net income in 2013.

That inventory increase came from a record production of several field crops in Western Canada, coupled with greater on-farm storage capacity and a railway system that simply couldn’t keep up.

According to 2015 Canadian Agricultural Outlook produced by Agriculture and Agri-Food Canada, aggregate net cash income for 2014 is expected to reach $14 billion, 10 per cent above the 2013 record.

Farm-level average net operating income is forecast to be $78,139, also an all-time high. Although grain and oilseed prices fell, strength in livestock prices and margins has buoyed average farm income.

Alberta fed cattle prices reached $202 on May 1, points out Jerry Klassen, a commodity market analyst in Winnipeg who maintains an interest in the family feedlot in southern Alberta. That is up 40 per cent over last year, while feeder cattle prices are up 40 to 50 per cent on average over the past year.

Lower energy values have resulted in larger disposable income for the average consumer, Klassen explains. Lower crude oil prices have also contributed to a weaker Canadian dollar, enhancing the competitive edge for Canadian cattle producers.

Finally, the North American economy is firing on all cylinders, causing a rise in wages, lower unemployment levels, greater disposable income and pre-recession-type consumer confidence levels that are causing a demand shift toward beef products.

Now the fourth largest crop in Canada, soybeans are projected to keep growing. In 2014 Canadian farmers planted a record 5.5 million acres, up nearly two million from 2011. Notably, soybean acres in Western Canada have ballooned, with over one million acres in Manitoba alone. Better short-day bean varieties with herbicide tolerance have been the catalyst for the expanded acres, and this trend is expected to continue, thanks to more new varieties bred for Western Canada.

In response, a new national organization was formed last September replacing the Canadian Soybean Council and the Canadian Soybean Exporters Association. Members and directors of the board include representatives from each of the major soybean grower associations across Canada plus industry representing crushers, exporters and seed companies.

“Soy Canada will speak with a single voice for the industry and, working collectively, will develop and implement a strategic plan to grow the industry and maximize returns to all components of the value chain,” says newly hired executive director, Jim Everson.

According to Farm Credit Canada’s (FCC) farmland report, the average value of Canadian farmland increased 14.3 per cent in 2014, following increases of 22.1 per cent in 2013 and 19.5 per cent in 2012. Average land values have increased every year since 1993.

FCC’s chief agricultural economist, J.P. Gervais, has been predicting a soft landing for farmland values since crop prices began moving closer to the long-term average, following abnormally high prices due to the 2008 U.S. drought.

Gervais doesn’t anticipate a collapse of farmland values, but he does see slower increases in the coming years. The most likely drivers of increased values are crop receipts and interest rates.

The highest increase last year was in Saskatchewan at 18.7 per cent but this is slower than in 2013, when average value jumped a colossal 28.5 per cent following a 19.7 per cent jump in 2012.

However, farmland in Canada is not appreciating everywhere, with increases in the Maritimes being much slower.

Overall, average net worth per farm is expected to set new records of $2.0 million in 2014 and $2.1 million in 2015.

In agriculture, strong crop receipts have kept the debt-to-net-income ratio relatively flat for the decade. “It’s important to remember that even as farm debt is rising, land values continue to increase on average across Canada,” says Gervais. “Interest rates remain low, and asset value and farm size continue to grow.”

According to the Association of Equipment Manufacturers (AEM), year-to-date sales of self-propelled combines are very soft in Canada, dropping from 4,130 in March 2014 to 2,500 a year later. This big drop of 39.5 per cent follows a combine- and tractor-buying bump in October.

AEM, citing U.S. Department of Commerce data, sees similar 2014 trends around the world for all types of ag equipment. Exports of U.S.-made farm machinery ended 2014 down 29.2 per cent compared to 2013. Exports to Canada dropped 38.4 per cent.

All world regions recorded double-digit declines except Central America. Asia, Europe and Canada had the highest rates of decline.

AEM’s director of market intelligence Benjamin Duyck says the decline has continued into 2015. “We are currently experiencing a global ag downturn,” Duyck says. “The overall downturn is a combination of various factors, mainly economic, but some of it is also driven by legislation and issues regarding the strong dollar.”

Two farmers, 2,000 miles apart, are shaping Canada’s e-farm future, with their combined 22,000 social media followers.

Andrew Campbell, a young dairy farmer from near Strathroy, Ont., has about 18,000 followers between Twitter and Instagram. “Twitter makes up the bulk of that — but I do post the pictures to Instagram as well,” he says. You can check out his website at thefreshair.ca.

Nurse and mother, Sarah Schultz is also a farm wife to Jay Schultz who grows about 6,000 acres of wheat, canola and yellow peas in south central, Alberta. She also has a blog ‘Nurse Loves Farmer‘ and is on Facebook.

Schultz says the payback for being part of agriculture on social media includes all the connections she has made with people from all over the world, plus being able to have questions answered within minutes. “As a farm wife and mom who spends the majority of my time at home, social media has been a great way to still be social and have that human connection that sometimes gets lost living in a rural area,” Schultz says.

The downside includes getting pulled into arguments, and finding out how easy it is to be misunderstood. It’s extremely hard, if not impossible, to interpret someone’s tone on social media, she warns, and it’s far too easy to have your words taken out of context.

Schultz has learned to choose her words wisely, and to be kind and respectful. “It’s guaranteed that you won’t agree with everyone on everything, but we can at least respect each other’s differences,” says Schultz. “I also go by the rule: tweet as if Grandma is watching.”

Andrew Campbell knows the impact that negative feedback can have in the social media world. Earlier in the year, he achieved some notoriety when animal rights advocates targeted him and his livestock farming, yet he also received praise for how he handled being a lightning rod for activism. “It just shows the importance of opening up our industry,” says Campbell. “We do need to address the issues and conceptions that the majority of consumers have, so we can continue farming the way we know is best for our land and livestock rather than being told how to do it.”

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US corn plantings in number

US corn plantings in numbers


USDA estimate for 2014 sowings: 90.6m acres

Current USDA estimate for 2015 sowings: 89.2m acres

Consensus estimate for sowings in June 30 USDA acreage report: 89.136m acres


Highest estimate: 91.742m acres

Lowest estimate: 88.10m acres

Range of estimates: 3.6m acres


Range of estimates ahead of 2014 acreage report: 1.2m acres

Sources: USDA, Bloomberg, Reuters, Agrimoney.com

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Monsanto CEO Flies to Europe to Meet Investors on Syngenta Bid

Monsanto CEO Flies to Europe to Meet Investors on Syngenta Bid | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

(Bloomberg) -- Monsanto Co. Chief Executive Officer Hugh Grant will be in Europe this week and next to meet with Syngenta AG investors as he pursues a takeover of the Swiss pesticide producer.


Grant, in his first European trip to lobby shareholders on the potential deal, will be accompanied by Chief Financial Officer Pierre Courduroux, said Sara Miller, a company spokeswoman.


“We remain encouraged by the reactions to our proposal from our respective shareholders, customers and other stakeholders,” Miller said Wednesday in an e-mail.


Syngenta in May rejected Monsanto’s initial $45 billion offer as inadequate. Despite the rebuff, St. Louis-based Monsanto is pressing on with its attempt to acquire the Basel- based company.


Syngenta reports first-half earnings on July 23.

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U.S. Farmers Reduce Corn Acres as Soy Plantings Rise to Record

U.S. farmers planted fewer acres of corn than the government estimated three months ago while soybean plantings rose to a record, the Agriculture Department said.

Corn, the nation’s biggest crop, was sowed on 88.9 million acres compared with a March 31 projection of 89.2 million, the USDA said Tuesday in a report released in Washington. Soybeans, the No. 2 crop, were seeded on 85.1 million acres, up from 84.6 million estimated in March.

Wheat plantings are estimated at 56.1 million acres, an increase from 55.4 million acres estimated in March, while cotton was seeded on 9 million acres, a drop from the earlier forecast of 9.55 million acres.

Warm, wet weather affected plantings throughout much of the continental U.S., with the biggest exception being the Pacific Coast, where drought persisted.

A separate report released showed supplies of corn on June 1 at 4.447 billion bushels, up from 3.852 billion a year earlier. Soybean stockpiles as of June 1 were 625.4 million bushels, compared with 405 million a year earlier, the USDA said. Demand for both crops in the second quarter of 2015 was higher than a year ago, the department said.

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Koch Nitrogen expansion still on track

Koch Nitrogen expansion still on track | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

ENID, Okla. — A $1.3 billion expansion of the Koch Nitrogen plant east of Enid is going along as planned, according to officials.

Rob Carlton, Koch manager of business communications, said the expansion project is progressing on schedule. Completion is set for late 2017. Koch officials broke ground Oct. 9, 2014.

Carlton said the next quarter phase of the project includes work to U.S. 412. Work on U.S. 412 and 78th will begin in late-August.

“Initial improvements on the sections north and south of the plant should be complete within a few months,” Carlton said in an email. “Work on 78th Street west of the plant is scheduled to finish in late spring or summer of 2016.”

Brent Kisling, Enid Regional Development Alliance executive director, said about 200 construction workers and contractors currently are working on the project. The contracting company is Houston-based KDR. By July 2016, the project is expected to have 600 on-site contractors.

“They are adding additional folks every day,” Kisling said. “They interact with local contractors and many are involved with the project.”

The project includes construction of a 900,000-ton-per-year urea plant and improvements to the existing ammonia plants.

Once completed, Koch will be able to process so-called gray water discharged from the city of Enid’s wastewater treatment plant. The change would cut the plant’s water usage by almost five million gallons per day. Currently, the plant uses six million gallons of potable water per day, almost half of what the rest of the community utilizes, Kisling said.

Mayor Bill Shewey told Enid Rotary Club on Monday the plant would cut its water use to 500,000 gallons per day by converting gray water into potable water.


Kisling said without the water component of Koch’s expansion, water use would have doubled.

“We worked with them to be able to treat their own water and change to reuse water, which is going to free up four to five million gallons of water per day,” Kisling said. “It is not a long-term fix for water in Enid, but it is a significant Band-Aid that will allow us to grow until we’ve made some decisions on more diversified water sources for our economy.”

Kisling said the project has helped the Enid area during what could have been a turbulent economic time.

“Whenever this project first started, we were excited about it for the water side, and we were excited because they were investing in their facility here in Enid,” Kisling said. “Another benefit we have seen here recently is the fact that as crude oil went from $100 to $40 (per barrel) and active rigs went from 80 to 21, that could’ve been a pretty big impact on our economy, but with a $1.3 billion construction project going on in town, our sales tax revenues and wealth generation has really not had as big of an impact as it could have.”

Once completed, the Koch plant expansion is estimated to bring between 50 and 60 full-time jobs.

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Monsanto Company’s (MON) New Strategic Vision In Focus – Merrill Lynch

Monsanto Company’s (MON) New Strategic Vision In Focus – Merrill Lynch | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it
By: LARRY DARRELL

Published: Jun 30, 2015 at 5:42 pm EST

Bank of America Merrill Lynch’s recent field trip to Monsanto Company’s (NYSE:MON) headquarter in St. Louis confirmed its view that CEO Hugh Grant has a clear vision of the future of agriculture, and it is one that will require substantial investment to further reshape the company into an even more formidable force in global agriculture. Following the trip, Merrill Lynch cut its price objective on Monsanto from $140 to $137, while reiterating a Buy rating on the stock.


Monsanto aims to build an “Integrated Solution” wherein it will leverage not only biotech traits — the company’s primary engine of growth over the past 20 years, but also molecular breeding for germplasm upgrades, development of biological, new RNAi-based solution, and crop protection chemistry (CPC).

The firm stated that Monsanto’s new strategic vision is perhaps the best example of creative disruption in the firm’s coverage. Technologies for yield enhancement will ultimately be integrated on a common platform of digital agriculture. To that end, Monsanto continues to invest in Climate Corp., which uses “big data” to develop algorithms to enhance yield.


Merrill Lynch believes that Monsanto’s CPC objectives include the pursuit of Syngenta, a potential $45-50 billion deal, as well as new organic investment of $1 billion for dicamba herbicide production capacity, to complement Monsanto’s next key biotech trait platform.

The Street is mainly bullish on Monsanto stock. Out of the 22 analysts who cover the stock, 15 suggest a Buy, while seven indicate a Hold. The 12-month average target price stands at $132.38, implying upward potential of 24.2% over trading price of $106.59 as of Tuesday’s close.

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Weekly Outlook: USDA Grain Stocks and Acreage Estimates Supportive for Corn and Soybean Prices

Weekly Outlook: USDA Grain Stocks and Acreage Estimates Supportive for Corn and Soybean Prices | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it
The just-released USDA Grain Stocks and Acreage reports provide some important fundamental information for the corn and soybean markets going into the most critical part of the growing season.
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A Surge In Crop Prices Drives Deere Higher

A Surge In Crop Prices Drives Deere Higher | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it
Summary
  • Corn, wheat and soybeans prices have surged higher over the past month, removing a major headwind from Deere & Company’s stock price.
  • On a relative and historical basis, Deere remains attractively priced.
  • John Deere’s stock has broken out of a five-year base to the upside and appears poised for further gains.
Introduction

With bargains few and far between in the market, I have been looking for relative value in commodity stocks, which have underperformed the broader equity market since April of 2011. On May 22nd, 2015, I authored a bullish article on Deere & Company (NYSE:DE). Subsequently, the company posted earnings for its second fiscal quarter that handily beat expectations and the company raised its profit forecasts for 2015. The stock has risen 9% since its close on May 21st, 2015, outpacing the S&P 500 index by over 10% over this timeframe. Today, June 26th, DE is up over 3% on heavy volume, and is poised to close at a new five-year high. Thus, I thought an update on Deere & Company was pertinent.

Thesis

While improved construction equipment sales are driving Deere's better than expected 2015 results and forecasts, weak crop prices and an oversaturated large tractor market have caused agricultural equipment sales to fall 25% year-over-year. The struggles in agricultural equipment sales have hindered Deere's stock price. Improving crop prices could alleviate the pressure on Deere's largest business segment, removing a significant headwind to a higher stock price for Deere & Company.

Corn, Soybeans, Wheat Post Strong Gains

After peaking in 2012, the crop prices of grains have struggled. Over the past month, however, there appears to be a change of sentiment in the air, with corn, soybeans, and wheat prices all up substantially:


Conclusion - Deere Has Room To Run

While I remain cautious on the overall market, and believe at least a 20% correction is long overdue, the timing of this forecast is not certain. Thus, looking for out-of-favor stocks, such as those in the commodity sector, with improving fundamentals remains a top priority for me. Deere continues to check all the boxes in this search, and while there are reasons to be cautious, the improving prices of grains could be the catalyst the company needs to end its multi-year underperformance versus the S&P 500. Thus, I reaffirm my buy recommendation.

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Barley stocks held by top exporters to hit 20-year low

Barley stocks held by top exporters to hit 20-year low | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

Barley inventories held by major exporting countries – a key pricing metric – will fall by more than has been expected in 2015-16 to a 20-year low, the International Grains Council said, cutting its harvest estimate.

The council downgraded by 700,000 tonnes to a three-year low of 23.3m tonnes its estimate for overall world barley inventories at the close of the season, representing a drop of 1.6m tonnes year on year.

Inventories in exporting countries will fall particularly far, by 2.2m tonnes to a 20-year low of 10.1m tonnes.

The level of stocks of a commodity held by big shippers - such as Argentina, Canada and the European Union in the case of barley - is particularly important for determining prices of the raw material, in that these supplies are available to the world market.

'High input costs'

The expectation of dwindling barley stocks reflects weaker harvest estimates, with the forthcoming world harvest downgraded by 700,000 tonnes to 136.2m tonnes.

Among major, exporting countries, the Ukraine harvest estimate was trimmed by 200,000 tonnes to 6.3m tonnes - a drop of 2.7m tonnes year on year.

The forecast reflected "high input costs and limited access to credit" which had cut Ukraine's sowings of the grain by some 12%.

For the European Union, the production forecast was cut by 800,000 tonnes to 57.7m tonnes – a fall of 2.7m tonnes on last year.

"While weather was mostly favourable in Scandinavia and the Baltic States, hot and dry conditions reduced yield potential in Spain, parts of France, Germany and Poland," said the IGC, which timed expectations for the bloc's wheat harvest too, by 1.2m tonnes to 148.8m tonnes.

Demand patterns

Indeed, the stocks estimates may have been trimmed further were it not for the weaker consumption prospects in 2015-16, expected to drop by 4.0m tonnes to 137.8m tonnes, thanks to dynamics in some major importing countries.

"Better pasture availability in Near East Asia is likely to reduce supplementary feed needs, with the regional total expected to contract by 2%, to 20.6m tonnes," the council said. 

"In China, feed use is forecast at an above-average 3.6m tonnes, but is nevertheless 24% lower year on year, amid competition from alternatives."

Competitors to barley in feed include local wheat and corn, as well as imported distillers dried grains (DDGs) and sorghum, Chinese buy-ins of which are expected to hold at 9.0m tonnes in 2015-16.

Early harvest

The comments come as European Union farmers have started their barley harvest, with progress having reached parts of France, the bloc's top producer.

The first cuts of winter barley "are showing good results both in quantity or quality", Paris-based consultancy Agritel said.

However, it cautioned over a read-through to wheat, saying that barley's earlier development meant it was "less hit by water deficit during May and June than wheat".

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With $21 Trillion, China’s Savers Are Set to Change the World

With $21 Trillion, China’s Savers Are Set to Change the World | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it

Few events will be as significant for the world in the next 15 years as China opening its capital borders, a shift that economists and regulators across the world are now starting to grapple with.

With China’s leadership aiming to scale back the role of investment in the domestic economy, the nation’s surfeit of savings -- deposits currently stand at $21 trillion -- will increasingly need to be deployed overseas. That’s also becoming easier, as Premier Li Keqiang relaxes capital-flow regulations.

The consequences ultimately could rival the transformation wrought by the Communist nation’s fusion with the global trading system, capped by its 2001 World Trade Organization entry. That stage saw goods made cheaper across the world, boosting the purchasing power of low-income families at the cost of hollowed-out industries.

Some changes are easy to envision: watch out for Mao Zedong’s visage on banknotes as the yuan makes its way into more corners of the globe. China’s giant banks will increasingly dot New York, London and Tokyo skylines, joining U.S., European and Japanese names. Property prices from California to Sydney to Southeast Asia already have seen the influence of Chinese buying.

Other shifts are tougher to gauge. International investors including pension funds, which have had limited entry to China to date, will pour in, clouding how big a net money exporter China will be. Deutsche Bank AG is among those foreseeing mass net outflows, which could go to fund large-scale infrastructure, or stoke asset prices by depressing long-term borrowing costs.

‘Historic Proportions’

“This era will be marked by China shifting from a large net importer of capital to one of the world’s largest exporters of capital,” Charles Li, chief executive officer of Hong Kong Exchanges & Clearing Ltd., the city’s stock market, wrote in a blog this month. Eventually, there will be “fund outflows of historic proportions, driven by China’s needs to deploy and diversify its national wealth to the global markets,” he wrote.

The continuing opening of China’s capital account will also promote the trading of commodities in yuan, and boost China’s ability to influence their prices, according to an analysis by Bloomberg Intelligence.

As was the case with China’s WTO entry, where many of the hurdles had been cleared in the years leading up to 2001, policy makers in Beijing have been easing restrictions on the currency, the flow of money and interest rates for years. What’s making 2015 notable is the International Monetary Fund’s once-in-five-year review of its basket of reserve currencies. China wants in, and is accelerating reforms to get there.

Offshore Centers

Recent steps to promote its currency have included setting up five offshore yuan centers, a new link between the Shanghai and Hong Kong stock exchanges and letting the tightly controlled yuan trade against the dollar in a wider band. It has promised to remove a cap on interest paid to savers.

“The integration of China –- the world’s second-largest economy with the highest saving rate but still a low per capita income -– into the global capital markets is an unprecedented event,” China International Capital Corp. economists led by Beijing-based Liang Hong wrote in a note this month.

There are already signs of that potential. Chinese buyers topped Canadians to rank as the biggest foreign purchasers of U.S. homes by sales and dollar volume in the year through March, accounting for more than a quarter of all international spending.

Moving Abroad

Lenders are speeding up their ambitions: Bank of Communications Co., China’s fifth-largest lender, is making its first overseas acquisition by buying a lender in Brazil, while China Construction Bank Corp. plans to open branches in Europe, Southeast Asia and Africa.

The global community is watching. U.S. Treasury Secretary Jacob L. Lew said after meetings this week between U.S. and Chinese officials that China is committed to pushing through necessary reforms to liberalize interest rates, open capital markets and open up more to foreign enterprises. The U.S. wants more access to the world’s second-biggest economy for its financial firms, something that’s been elusive since China’s WTO entry.

Few expect the yuan to soon threaten the dollar’s role as the global reserve currency, with a wave of domestic reforms needed first up to reassure international investors -- such as bolstering liquidity in the local bond market.

While U.S. policy makers are betting that a more open China will ease currency tensions between the two nations, any rapid depreciation in the yuan could trigger large-scale capital outflows, prompting intervention and new restrictions from China’s policy makers.

U.S. Friendly

“If they’re going to be gradually opening up to be like the U.S., then vast amounts of money are going to flow overseas,” said David Dollar, who served as U.S. Treasury attache in China and is now a senior fellow at the Brookings Institution in Washington. “I would speculate that it favors the U.S. over everything else.”

Other nations, from Argentina to South Korea, have suffered whiplash from volatile capital flows after they eased restrictions. While China is unlikely to tear down the barricades altogether, the opening of the nation’s capital borders will reverberate across the world.

“I don’t think you can find any significant economic system where deposits in the banking system are twice GDP,” said Nicholas Lardy, who has studied China for more than three decades and is a senior fellow at the Peterson Institute for International Economics. “That’s the potential.”

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U.S. corn, DDGS imports likely as drought tightens feed supply

U.S. corn, DDGS imports likely as drought tightens feed supply | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it
CNS Canada -- Livestock producers in Western Canada will likely have to import feed grains such as corn and dried distillers grains with solubles (DDGS) this year, as drought is seen trimming domestic barley and other feed production. "We've seen droughts before, and when it's happened, usually what has to happen is we import other feed grains from outside of Canada," said Jim Beusekom, a grain trader with Market Place Commodities in Lethbridge. "If this (drought) continues like this, it's not a matter of price, it's a matter of supply -- we're going to have to import U.S. corn and DDGS into Western Canada to cover the feed supplies." Normally June is a rainy month for Western Canada, but it hasn't been in many regions this year, Beusekom said. While not all crops are in dire straits, as some parts of Saskatchewan and Manitoba have enough moisture, drought is still a major issue. "Right now…
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Monsanto sells deal of future innovation

Monsanto sells deal of future innovation | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it
Since Syngenta chose to take Monsanto’s private buyout offer public, Monsanto now counters by talking to shareholders and the farm media.
I recently spoke with Mike Frank, Monsanto’s global operations lead, who stated their case for the value of this Syngenta buyout.
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Monsanto exec: Merger with Syngenta would be win for farmers

Monsanto exec: Merger with Syngenta would be win for farmers | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it
ST. LOUIS — The ultimate beneficiaries of Monsanto’s bid to acquire one of its biggest competitors will be the world’s farmers, a top executive believes.

The company is attempting a hostile takeover of Swiss-based Syngenta following the rejection by Syngenta’s board of a merger offer. Monsanto has put forward an offer directly to Syngenta shareholders worth considerably more than where the company’s stock is trading.

And while the global corporate drama plays out amid public disclosures of the deal-making, the bottom line is helping farmers across the globe, said Michael J. Frank, vice president of global commercial for the St. Louis-based agribusiness giant. 

Frank spoke about the proposed merger in an interview with AgriNews.

“This acquisition and combination of Monsanto and Syngenta is a natural extension of that vision we have of helping farmers become more productive,” he said. “They’re working in an environment that is less predictable than it used to be based on weather and other issues, including commodity prices.”

Obstacles Remain

The proposal faces obstacles separate from the resistance by Syngenta, whose directors have publicly said that the offer undervalued the company. 

Regulatory approvals in Europe and the United States also could hold up the deal. To that end, Monsanto has said it will sell off shared assets, especially Syngenta’s seed business.

“If that farmer is buying some Syngenta seed today, that company and assets will be sold through somebody else,” Frank said. “One of the hurdles of the regulators is that the seed that we invest in has to go into the hands of a very capable company. We’ve had a lot of calls from companies, including some very large, significant, multinational companies that are in this industry today that would be very interested in acquiring Syngenta’s seed assets. If you’re a farmer today buying their seed or chemistry, you will still have those options going forward.”

To further assuage concerns by Syngenta, Monsanto has offered an unprecedented $2 billion “reverse breakup fee” in the event that government regulators block the merger. The money would be paid to Syngenta stockholders. 

The guarantee underscores Monsanto’s confidence that the deal will pass muster with government regulators.

“The regulatory process to get the deal closed is a very technical one,” Frank said. “We’ve hired some advisers who are expert in this area of global regulatory approvals on deals like this size and magnitude. Based on our commitment to sell off the overlapping assets, we believe we would be able to get approvals and satisfy them that farmer choice and competition will be alive and healthy.”

Merger Of Equals

The companies are nearly equal in size, both with annual revenues in the neighborhood of $15 billion. Syngenta has a presence in the seed market, but the bulk of the company’s revenues are from its crop protection business, which includes the brands Tilt and Banvel.

The merger offer has been in the works for months behind the scenes, but Syngenta recently went public with the proposal and its rejection. That led to the takeover attempt.

“We would have preferred to keep it private. But the benefit of the fact that it is now out is that we get to talk to people like you about why this deal makes sense for farmers,” Frank said. “We’re not getting the type of engagement we expected out of their board and management.

“Technically, we would consider (the appeal directly to shareholders) to be a friendly offer.”

Frank did not deny reports that the company is considering a move of its corporate headquarters to Europe if the deal goes through. Not only could the headquarters move, but the Monsanto name itself may even go away.

The fact that the Monsanto name itself — which has been used since the company’s inception in 1901 — could be changed is evidence of the gravity placed on the proposal. 

Frank made it clear that this would be different than past acquisitions. And he emphasized that farmers and the world’s consumers will be the winners.

“This would be a unique opportunity to create innovation at a scale and speed that no one delivers today,” he said. “Ultimately, this makes a lot of sense for farmers, because our business is all predicated on farmers. And if we don’t earn the farmers’ business, then we don’t have a business.”

 

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Potash bid for German miner likely faces pushback from target, regulators

Potash bid for German miner likely faces pushback from target, regulators | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) | Scoop.it
  • Potash Corp.'s (POT -2.1%attempt to buy rival K+S (OTCQX:KPLUY) and create a company capable of controlling up to 30% of the global potash market is likely to face pushback from the German company and regulatory hurdles, analysts say.
  • WSJ reports that K+S is likely to reject the confirmed offer from POT, believed to come in at slightly more than €40/share ($44.80) in cash, since it is seen as undervaluing the dominant position the two could achieve in North America, where POT has major mines and K+S is developing its own mine.
  • Many analysts say the combined large market share in North America, and in other markets including Germany, means that German regulators likely would reject a takeover, particularly since Germany nixed a similar takeover attempt in 1997.
  • K+S has sunk €2B ($2.2B) into a new Canadian potash mine which should start up in late 2016, which will add low-cost capacity of 2M metric tons/year for K+S - and which POT seems to be trying to scoop up on the cheap, writes WSJ Heard on the Street's Helen Thomas.
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