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Ethanol advocates fight bill at Capitol that that would cut production

Growth Energy, a coalition of U.S. ethanol supporters, met on Capitol Hill this week to counter mounting attacks made by the oil industry to repeal the Renewable Fuel Standard.
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Corn Heists Turning Port Into Argentina’s

Corn Heists Turning Port Into Argentina’s | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

The 200 pesos ($24) that truck driver Hector Jofre usually carries to bribe gang members or shanty dwellers for access to Argentina’s biggest grain port did no good one night in April.

Six youths in a pickup climbed on the back of the rig when Jofre slowed near a railroad track. They opened hatches that spilled 10 metric tons of corn onto 100 meters of road and swept up as much as they could. Jofre says it took three more deliveries without pay to compensate his employer for the loss.

"It used to happen once a month," said Jofre, 31. "Now it’s every day. Truckers are getting spooked."

Truck drivers in Argentina, the world’s third-largest exporter of corn and soybeans, say theft and extortion are on the rise at the main port, Rosario. While police have pledged to step up security, escalating crime has boosted shipping fees and compounded delays at terminals, threatening the country’s biggest source of dollar income at a time when Argentina’s debt crisis has sent central bank reserves near an eight-year low.

As grain supplies arrive from a harvest that is almost complete, thieves are targeting cargo, fuel and personal belongings on trucks headed into Rosario, where increasing drug trafficking led to a doubling of the murder rate in three years. The river city handles 80 percent of agricultural exports, and is known as Argentina’s Chicago--the deadliest municipality in the U.S.--for its link with commodities and crime.

Jeopardizing Profit

While data on agricultural crime isn’t available, police and port authorities interviewed by Bloomberg News say incidents are on the rise, affecting deliveries to grain handlers including Cargill Inc. and Archer-Daniels Midland Co. Even railway owner Belgrano Cargas & Logistica SA added security after convoys were looted in the province of Santa Fe, which includes Rosario.

"The federal and provincial governments need to get a grip on the situation," said Ernesto Ambrosetti, chief economist at the Rural Society, the largest farming group. "It isn’t just jeopardizing public safety, but also the ability of the nation’s agricultural industry to operate profitably."

Government and police officials pledged to step up security near Rosario’s 28 export terminals after meeting with drivers on Aug. 6, the Federation of Argentine Truck Drivers, which represents about 6,000 drivers, said in a statement. After receiving the assurances, the union said it canceled a planned strike to protest the crime wave.

Rising Costs

Fernando Sostre, a spokesman for the Argentine Federal Police, declined to comment when contacted by telephone in Buenos Aires. Damian Umansky, a spokesman for Santa Fe Governor Antonio Bonfatti didn’t respond to two voice-mail messages seeking comment, and the provincial police office in Rosario didn’t respond to six telephone calls seeking comment.

Theft losses and demands from truckers for more pay to deliver in danger zones has sent grain-shipping costs surging, Ambrosetti said by telephone from Buenos Aires.

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Farmers Dismayed As New Farm Bill Dumps Direct Payments

The threatened end of cash subsidies to the nation’s row crop farmers dates back through at least the last two iterations of national agriculture policy legislation.

That threat became real, though, earlier this year when Congress passed the newest Farm Bill.

The measure eliminates direct payments, money doled out simply as a revenue enhancement based on a producer’s acreage.

In Arkansas, direct payments accounted for $244 million annually.

How will the state’s agriculture economy handle that fiscal blow?

“We don’t know yet, but if the prices go down any, Arkansas agriculture is going to be in trouble,” said Tony Schwarz, of Weiner, whose family has farmed Poinsett County land for generations. “If beans go to $10 a bushel and rice goes to $5, it’s going to be hard to pay out your crop loan. It really is.”

The bill, which governs agriculture policy on a multiyear basis, consists of several components. The federal food stamp program and other nutrition programs account for 80 percent of the legislation’s spending. Other components — “titles” in legislative language — deal with row-crop farming, regulations for livestock and poultry operations and conservation rules.

The Farm Bill is umbrella legislation but it does treat producers differently based on the crops they grow. Cotton farmers work under a different set of rules, for example, than rice growers.

In the give-and-take of negotiating the final bill, members of Congress agreed to replace direct payments with two programs designed to help farmers manage risk, while also enhancing crop insurance programs. Farmers can opt into one of the programs, or not, but they can only participate in one at a time for the duration of the five-year legislation.

Ben Noble, president of the Arkansas Rice Federation, predicted that the state’s farmers will likely choose to participate in the program that focuses on commodity pricing.

“Farmers have the option of opting into programs that best meet their specific needs with emphasis on price protection and yield protection,” Noble said. “Many row crop producers in Arkansas are expected to enroll in the Price Loss Coverage program that sets target pricing and pays farmers if prices fall. Many program options exist and farmers will likely rely on software under development that will assist them in analyzing the best approach for their specific farm.”

Farm advocates in the state note that the yield-loss program is more likely to benefit producers in Missouri, Iowa, Illinois and Indiana, where few row-crop acres have irrigation systems. Most Arkansas farmers irrigate their soybeans, corn and cotton crops.

Rep. Rick Crawford, who represents the farm-centric Arkansas 1st District, graded the overall legislation fairly well but said an accurate assessment of the bill’s effect on the state’s agriculture industry is at least a year away.

“You have to grade it on a curve. On one hand, pass/fail, OK, it passed. On the other, it was tough sledding,” he said. “I’m going to say it is about a ‘B’, maybe a ‘B-minus’. We certainly didn’t get everything we wanted.”

Crawford acknowledged that it is not clear how effective the new programs will be toward providing a revenue safety net for the state’s row-crop farmers.

“It was an uphill battle, and we just couldn’t win it,” he said.

Noble explained that federal support for farmers dates back to the Great Depression era and the new legislation will cut that support by about a third.

“It’s extremely frustrating that we had that debate in the first place,” he said. “The United States had taken the lead in reducing support in the agriculture sector and had taken steps to move toward a trade-friendly structure. Other countries are subsidizing agriculture at a much higher rate. They basically watched us take our support down while they held steady, if not increasing theirs. It’s certainly going to be a challenge for Arkansas farmers as this is implemented.”

Noble noted, though, that the market pricing program will give some stability, which could help producers decide how to best manage their operations.

“Farmers are watching the market very closely and making planning decisions based on that, and that’s a good thing,” he said.

Andrew Grobmyer, executive vice president of the Arkansas Agriculture Council, suggested that the new legislation shrinks the federal safety net.

“The benefits to farmers do not trigger until farmers experience a problem based on revenue declines or price declines or yield losses,” he said. “That is a pretty big transition away from the direct payment system.”

Direct payments became the primary target in the battle over the legislation because commodity prices in recent years had been at high levels, Grobmyer noted.

“People saw it as something not politically defensible,” he said. “The climate in Washington changed with the budget situation. There was a call to cut back on spending and move toward something more risk-oriented and defensible, not only defensible to the general public in urban and suburban areas but also defensible on a global scale with the world.”

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$4 Corn Will Remain to 2020, Forecast Says

$4 Corn Will Remain to 2020, Forecast Says | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

Corn prices will fluctuate slightly above $4/bu. through 2020, and corn acres will decline, a new report says. Strong livestock profits will generate growth in cattle and hog sectors, though prices will moderate from current highs.

Row Crop Price Outlook

For corn and soybeans, large U.S. and global supplies will push prices to their lowest levels since 2009, though modest recovery is likely after 2015, according to projections this month from the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri.

Estimates call for farm corn prices of $3.89/bu. for the 2014/15 crop based on Aug. 15 conditions, more optimistic than some forecasts and higher than new-crop bids in many locales. FAPRI sees a slight recovery moving forward, with prices of $4.09/bu. for the 2015/16 marketing year and a gradual rise to $4.25 by 2019/20.

Meanwhile, soybean prices of $10.30/bu. are projected for this year’s crop. The figure will dip to $9.64 for 2015/16. From 2016 to 2019, FAPRI calls for soybean prices between $10.11 and $10.69/bu.

Wheat prices are expected to be $6.27, which is 60 cents per bushel lower than in 2013. They will decline to $5.73/bu. in 2015/16 and fluctuate between $5.72 and $5.97 through 2019/20.

Livestock Price Outlook

For cattle producers, steer prices (total all grades) are forecast to be a record $150.42/cwt. for 2014, up $25 from last year. FAPRI forecasts a gradual price decline as supplies rebuild, from $147.45/cwt. in 2015 to $124.69 by 2019.

Pork barrow and gilt prices are forecast to be $75.96/cwt. this year. That’s a strong recovery over the previous two years. Prices are forecast to fall to $66.93/cwt. in 2015, easing to a range of $55.37 to $59.17/cwt. for the rest of the forecast period.

"Reduced cattle numbers, animal disease problems and strong international demand are causing record cattle, hog and milk prices in 2014," the report says. "Supply response to these high prices and lower feed costs contribute to lower meat and dairy prices in 2015."

U.S. per capita meat consumption is forecast to rise from 198.6 million pounds this year to 208.6 million pounds in 2019.

Corn Acres to Drop

Planted corn acres are projected to drop 2 million acres in 2015 to 89.6 million. Acres will increase slightly, to the 91.8 million to 92.3 million acre range, throughout the rest of the forecast period.

Soybean acreage will decline in 2015 by fewer than 1 million acres, to 83.9 million acres. They are expected to dip further over the rest of the period, down to between 81.1 million and 82.2 million acres.

Wheat acreage will change little, from 56.5 million acres this year to 54.7 million acres by the end of the period.

Cotton acreage is forecast to decline from 11.19 million acres this year to 10.32 million in 2015, changing minimally through 2019.

Row Crop Returns Outlook

Despite the bearish price outlook, corn returns per acre will beat returns for soybeans, wheat and cotton. Corn returns over variable costs will be $288.30/acre this year and will range from $304.14 to $344.54 for the rest of the period, FAPRI says.

Soybean returns over variable costs will be slightly lower at $282.38/acre this year and between $239.31 and $296.32 over the next five years. Because of this, the soybean/corn price ratio is set to decline from 2.65 this year to 2.36 in 2015 before increasing slightly.

As for wheat, returns over variable costs will be $144.72/acre this year before ranging between $133.62 and $146.35 through 2019/20.

Row Crop Demand and Exports Outlook

From this year to 2019/20, FAPRI sees modest increases in corn demand, from 13.6 billion to 14.3 billion bushels. Ethanol and feed demand remain relatively flat, and exports will post modest increases from 1.8 billion to 2.2 billion bushels.

Soybean exports are expected to change little over the forecast period, from 1.7 billion bushels this year to 1.8 billion bushels by 2019/20.

Wheat exports also are forecast to increase slightly, from 938 million bushels this year to 1.07 billion bushels by 2019/20.

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Corn And Soybeans Can Drop Much More

Lately, there is a statement I have heard quite often that is a misconception. "Prices have already dropped so far, they can't go down that much more." As far as I am concerned, there isn't much validity to the hopeful way of thinking and recent events clearly show why.

"Prices can't go down much more." This is wishful thinking for any farmer who has not priced their grain going into harvest. Based on facts, prices can fall much farther than current levels. Another way to look at it; grain prices since 2010, when corn started to rally in June with farmers selling bushel after bushel for $4.00 was an unprecedented super rally and it has come to an end.

The recent event; during July 2008 soybeans rallied as high as $15.57/bushel and by March 2009 beans dropped to $7.84/bushel. On May 2014 soybeans were as high as $12.79, and as I write, 12.00PM central time August 28, 2014, November soybeans are trading around 10.30/bushel.  If soybeans dropped $7.74/bushel in nine months just six years ago with the current stocks to usage ratio now, there is no logical reasoning they can't drop more at this point into harvest and beyond. Worldwide industries have had inflated prices outside of agriculture that broke and broke hard. There is no economic reason agricultural prices can't break from current price levels.

A Year Ago

Looking 12 months to the day after Labor Day September 3, 2013, December corn opened at $491.00, pushed up to $493.75 and closed the day at $475.25. Prices continued down to $4.10 on December 2nd.  As you can see from the tables below, compare estimated supply to ending stocks a year ago to the present, and there really is no factual reason at all, why prices can't fall.

We must remember 2012 threw ending stocks out of whack and, at the same time, China was buying to fill its reserve. Beginning in 2008 many times over the agricultural officials in China announced their goal of filling reserves by 2015 to 85% to 90% of projected needs. It never was a secret. I can't recall the number of times I wrote about it. It was evident by last year with their own corn harvest setting records that they were ahead of schedule. Several publications had reports from private companies such as Rao bank that conducted studies that indicated China was on schedule. Recently, several publications have reports of the "glut" in China. We have seen several times when China in the past two months has auctioned grain from the reserve in order to refresh with new crop and how the auctions many times have only sold a fifth to a third of available grains for sale. Why? Feed companies in China can buy grain cheaper outside of China. 

Oilseeds: World          TOTAL USE  ENDING STOCKS

2012/13                       396.59             67.29

2013/14 (Est.)              416.19             80.93

2014/15 Aug (Est.)       426.84             99.53

Oilseeds: United States

2012/13                       50.24               5.76

2013/14 (Est.)              51.21                5.23

2014/15 Aug                52.46               13.32

Coarse Grains: World

2012/13                       1136.54           169.26

2013/14 (Est.)              1236.13          207.43

2014/15 Aug                1253.13          222.11

Coarse Grains: United States

2012/13                       276.23             23.53

2013/14 (Est.)              309.05             32.80

2014/15                       310.97             49.06

(Table from August 12, 2014 USDA WASDE Report)

The glaring fact; Ending stocks are growing faster than supply.

Farmers are Storing and Can Hold Until Prices Rise

Well, if this was ever a misconception, I don't know of others better. Farmers sold soybeans at harvest in 2013 and stored corn. A simple question is answered if farmers storing grained worked. What grain rallied in 2014 and what grain fell? Since January 2014 the spot month for soybeans have rallied and corn has dropped. Cash basis for soybeans is tight and cash basis for corn has narrowed only in areas where several competitors buy corn.

An adage that I can't recall failing is, "When big hands own he crop, it rallies." When small hands hold the crop it falls. If there is ever a marketing advice that needs to be committed to memory, this needs to be it.

From the tables above, a real eye opener should be world numbers. As I often say, the U.S. is no longer the bread basket to the world, but now a couple of slices off a large loaf. The utter malarkey now that wheat supplies in Russia and Ukraine will be disrupted with the ongoing travesty of problems is ridiculous. Anyone believing it should think hard. How can wheat in both countries be at a record export pace this year if problems in the eastern section of Ukraine have and are disrupting movement? Recent estimates show wheat harvest HARVESTED record yields and movement may be as much as a third or more than 2013.

Since late winter 2013, reporters have tried to use the Ukraine/Russia turmoil behind daily, or weekly rallies in wheat. A chart easily can tell anyone with eyes that spreaders are buying wheat and selling corn, or buying Chicago wheat and selling Kansas. Since June 18th Kansas wheat was a little more than $1.20/bushel over Chicago. The spread has narrowed over 50 cents.

As summer comes to an end, and as old crop corn and soybeans officially close out on August 31st and new crop officially begins September 1st, after nearly an ideal summer for growing crops, the harvest of the largest yielding crops is about to start at nearly the same time across the U.S. Midwest and the northern hemisphere, grain producers will have to decide what they will do. If recent marketing events can help make a decision a bit easier, selling remains the best course of action.

With bear spreading quite evident and cash basis in many areas helping to show what is about to happen, widening as harvest progresses, it is not too late to sell. If there ever was a time to use marketing strategies to ease the decision, now is the time.

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Agco Gets an Upgrade, Deere Still Underwhelms

The folks at JPMorgan took a look at the farm-equipment manufacturers today and had some good news for Agco (AGCO), which announced layoffs at one of its plants on Wednesday, but bad news for Deere (DE). Analyst Ann Duignan explains why she’s more bullish on Agco…

Because of its weaker market share in the row crop sector, AGCO did not participate in rolling programs or multiple unit discount programs in the past few years. Instead its CAT dealers (i.e., AGCO’s Challenger brand) focused on three-year lease programs with extended warranties. This, coupled with its GSI business, which is benefiting from the lack of grain storage capacity as well as the recovery in protein sector fundamentals, should result in its earnings being about flat in 2015, outperforming its peers. For that reason, we are upgrading the stock from Underweight to Neutral as we believe that, at its current valuation, the downside risks are priced into the stock.

…but still bearish on Deere:

Deere is anticipating an imminent down-cycle in US row-crop agriculture and taking appropriate action…We are revising down our FY’15 EPS for DE and introducing our FY’16 estimates. Our FY’15 goes from $7.49 to $6.95, and our FY’16 estimate is $7.29. We are above consensus for both years (consensus is $6.85 for FY’15 and $6.75 for FY’16); however, we remain Underweight as we await a trough in demand, which may not occur until FY’16, at which point we will better understand the magnitude and duration of the down-cycle.

Shares of Deere have fallen 0.3% to $83.76 at 10:01 a.m. today, while Agco has gained 1.1% to $58.74.

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Options Abound for Syngenta (SYT) as Monsanto (MON) Deal Doesn't Pan Out (DOW) (DD)

Syngenta (NYSESYT) shares are lower following positive commentary over its M&A prospects.

Bloomberg noted Thursday night that no deal between Syngenta and Monsanto (NYSE: MON) wouldn't be the end of the world for Syngenta. The two held talks earlier this year, but a deal isn't expected to pan out, according to people familiar with the matter.

However, Syngenta might make a move on Dow Chemical's (NYSE: DOW) agricultural business. Dow has said it was open to divesting the unit in the past. Dow could also move to acquire Syngenta and use the deal to relocate overseas for various tax advantages.

Another option would be a merger between Syngenta and DuPont (NYSE: DD).

Wintergreen Advisers CEO, David Winters, recently commented to Bloomberg, There are a lot of ways to win here ... They’ve tipped their hand that they’re willing to do something. Who they end up doing the dance with and mating with, we’ll see but they’re clearly at the dance.

Shares of Syngenta are down 0.6 percent Friday.

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Wheat Output Forecast Raised on Northern Hemisphere Crops

Global wheat production will be bigger than expected a month ago as prospects improved for crops in China, the European Union and Russia, the International Grains Council said.

World wheat production will rise to a record 713.4 million metric tons in the 2014-15 season, 1.6 percent more than estimated in July and topping the prior year’s harvest of 712.5 million tons, the London-based IGC said today in an e-mailed report. Rising wheat output and higher-than-expected production of corn, or maize, means total grain harvests worldwide will be near an all-time high at 1.976 billion tons, it said.

“With larger-than-expected crops in Russia, the EU and China, world production is forecast at a new record” for wheat, the IGC said. “The world harvest will include an above-average proportion of low-medium grade supplies and, while strong competition from maize is expected in most markets, feed wheat consumption is forecast to rise.”

Wheat futures on the Chicago Board of Trade, the global benchmark, have slipped 12 percent in the past year on the outlook for ample grain supplies. Prices fell to a four-year low on July 29 and have rebounded about 11 percent since then amid concerns that supplies from the Black Sea region will be disrupted because of unrest between Ukraine and Russia.

Global wheat trade was pegged at 146 million tons, higher than last month’s forecast at 145 million tons, the IGC said. Inventories at the end of the 2014-15 season were estimated at 195 million tons, “only slightly higher” than a previous forecast of 193 million tons because of increasing demand, according to the report.

Grain Stockpiles

Total stockpiles of grain at the end of 2014-15 will be 426 million tons, a 15-year high, the IGC said. Inventories will rise even though increasing demand for livestock feed will push worldwide consumption to a record 1.952 billion tons.

Global production of corn will rise to 973 million tons, up from the July forecast of 969 million tons. Output still will be below the past season’s level at 982 million tons. Stockpiles will rise to 190 million tons by the end of 2014-15, compared with a previous estimate of 187 million tons.

“Northern Hemisphere yield prospects continued to improve in August” for corn, the IGC said. In the U.S., the top producer, “crops have benefited from a prolonged period of benign weather.”

World production of soybeans will be 304 million tons, unchanged from last month’s forecast, while bigger than the 282 million tons harvested the prior year, the IGC said. The rice harvest may be a record 478 million tons, the agency said, issuing its first estimate for the 2014-15 season. In the prior year, production was 476 million tons. 

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Levinoff-Colbex sera démantelé

L’usine de Saint-Cyrille-de-Wendover sera vidée de tout son équipement puisque le bâtiment et le terrain ne font pas partie de la vente. Le nom de l’acquéreur et le montant de la transaction n’ont pas été dévoilés.

Pour sa part, la Coopérative avait déposé deux offres : une première en décembre 2013 et une seconde en juin dernier. Forte de ses 535 membres producteurs de bovins et d’ententes avec des transporteurs de bétail, la Coopérative garantissait l’abattage de 625 vaches/semaine.

Le porte-parole de la Coopérative, Paul Doyon, se dit déçu par l’attitude d’Investissement Québec, le principal créancier de l’abattoir.

« Nous sommes choqués de voir que nous n’avons même pas été capables d’expliquer notre projet. Ces gens-là ont refusé de nous rencontrer. C’est un manque de respect. » Pour l’agriculteur, le message est clair. « Ça démontre le peu de confiance que le gouvernement du Québec a envers le secteur agricole pour créer de la richesse », estime-t-il.

Principal abattoir de bovins de réforme du Québec et des Maritimes, Levinoff-Colbex a cessé ses activités en mai 2012. Lors de sa fermeture, ses créances dépassaient les 30 M$.

Vous pourrez lire tous les détails de cette annonce dans l’édition de La Terre de chez nous du 3 septembre prochain.

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Canada Dollar Advances as Economic Growth Tops Estimate

The Canadian dollar gained for a fourth day after economic growth rebounded to the fastest in almost three years in the second quarter, led by exports and household spending on big-ticket items.

The currency extended a weekly advance against its U.S. peer as Canada’s growth has picked up along with the American economy, which grew at a 4.2 percent annualized second-quarter pace, the Commerce Department said yesterday from Washington. Bank of Canada Governor Stephen Poloz has said it will take another two years to use up slack that built up in the world’s 11th largest economy.

“Even though the headline data came in stronger than the market was expecting, it wasn’t that much stronger that it’s going to cause the Canadian dollar to appreciate too much,” David Bradley, director of foreign exchange trading at Scotia Capital Inc., a unit of Bank of Nova Scotia, said by phone from Toronto. “We had a little bit of a move down to the lows we’ve seen recently” for the U.S. dollar, he said.

The loonie, nicknamed for the image of the aquatic bird on the C$1 coin, rose 0.2 percent to C$1.0844 per U.S. dollar at 9:04 a.m. in Toronto. It touched C$1.0831 after climbing to C$1.0829 on Aug. 27, the strongest since July 29.

The loonie’s weekly gain of 0.9 percent gave it a monthly advance to 0.6 percent. It’s still down 1.6 percent this quarter and 2 percent year-to-date.

The yield on Canada’s benchmark 10-year bond rose to 2.01 percent after touching 1.979 percent yesterday, the lowest since May 2013. It’s down from a 2014 high of 2.80 percent on Jan. 2.

GDP Growth

Canada’s gross domestic product rose at a 3.1 percent annualized pace from April to June, Statistics Canada said today in Ottawa, faster than the 2.7 percent economists forecast in a Bloomberg survey. Exports surged 17.8 percent on gains in automobiles, farm and forest products, and household expenditures gained 3.8 percent.

Poloz said Aug. 25 that persistent slack in the country’s labor market and a tendency toward part-time job creation means the central bank has the scope to keep its main interest rate at 1 percent, near historic lows, even if employment picks up.

The Canadian data followed U.S. economic-growth figures that were revised up yesterday from an initial estimate of 4 percent, and following a first-quarter contraction.

“North America in general benefits from a U.S. economic recovery,” Omer Esiner, chief market analyst at currency brokerage Commonwealth Foreign Exchange Inc. in Washington, said in a phone interview. “But it’s still a buy-on-dip situation for USD-CAD. I can see the pair going up to C$1.15.” It last touched C$1.15 in July 2009. 

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


market-prices supply/demand with relative strength trading
trend: line joining highs with highs, lows with lows=direction 
trading-activity+volatility+movement+prevalent strength 
targets-projected length of move

net position/tuesday report, hedgers-sold long, funds-sold short
trends: prices-flat, open interest-lower, supply-estimated higher
trading-net buying, less narrow, up, resistance@365 penetrated
targets: 444-424-391-365            momentum=consolidation

net position/tuesday report, hedgers-sold long, funds-covered short
trends: prices-now flat, open interest-lower, supply-estimated higher
trading-net buying, less narrow, up, resistance@570 penetrated
targets, 570-546-519-497            momentum=initial break-out

net position/tuesday report, hedgers-bought long, funds-sold long
trends: prices-lower, open interest-higher, supply-estimated higher
trading-net buying, narrow, flat, test of bottom@1033
targets, 1285-1201-1134-1033     momentum=less bearish
net position/tuesday report, hedgers-covered short, funds-sold short
trends: prices-lower, open interest-higher
trading-net buying, narrow, flat, support@9205-made lower high
targets 9244-9205-9140-9088     momentum=less bullish

Heating oil-
net position/tuesday report, hedgers-inactive, funds-sold short        
trends: prices lower+open interest-up@new high
trading-net selling, moderate, up, penetrated-closed below trend
targets 308-301-293-282              momentum=less bullish
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German reveals quality setbacks in huge wheat crop

Germany's farm ministry lifted ideas on the size of the domestic wheat harvest, but cautioned over some loss of quality to persistent rains which had left some crops not worth harvesting.

The ministry pegged the German wheat crop, the European Union's second biggest after that in France, at 27.94m tonnes, a rise of 11.7% from last year's 25.02m-tonne crop, and well above expectations from some other forecasters.

The US Department of Agriculture has pegged the harvest at 25.6m tonnes, and industry group Coceral at 25.38m tonnes.

The ministry's figure includes an estimate for winter wheat of 27.57m tonnes, up 11.9% year on year, and above expectations from the DBV farmers' association of 26.2m tonnes, and of 26.04m tonnes from ADM Germany, formerly Toepfer International.

'High milling premiums'

However, the ministry cautioned over the impact of "frequent" harvest-time rains in many areas which had, in later crops, encouraged sprouting and rendered some crops not worth harvesting.

Indeed, the quality of the crop was "very varied", the ministry said, with a "mixed picture" on bushel weights and an average protein level, placed at 12.0% from initial samples, which was below last year's result of 12.7%.

"Overall, many wheat consignments are able to be used only as a feed grain," the ministry said.

"Accordingly, significant premiums for bread-making wheat are currently being paid."

'Heavily committed on quality sales'

The results would appear to limit Germany's potential for filling the void in quality wheat presented by the damage to crops in many other European countries - notably France, the EU's top producer and exporter - from harvest-time rains.

On average protein, the samples from German, renowned as a supplier of hard wheat, are measuring little better than those in the UK, a grower primarily of feed supplies, where protein levels are averaging 11.9% according to consultancy Adas.

Last year, the UK crop came in at 12.1% protein, although this was above the typical rate of a little under 12%.

Besides, German merchants "are already heavily committed on quality sales to the Middle East", also limiting the country's potential to export elsewhere in the EU, said David Sheppard at Gleadell, the UK grain merchant.

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Nato warning over Russian troops sends wheat prices higher

Wheat futures soared 3% as concerns over Ukraine flared up again, after Nato claimed that "well over 1,000" Russian troops have crossed the border, reviving concerns over the region's important grain exports.

Wheat for December hit $5.79 ¼ a bushel in Chicago, the highest since a spike on Ukraine concerns three weeks ago, before easing back to close at $5.71 ¾ a bushel, a gain of 1.7% on the day.

In Paris, November wheat touched a three-week high of E177.25 a tonne before retreating to close at E175.00 a tonne, up 0.9%.

The gains followed Nato's warning of a "severe escalation" in Russian military action against Ukraine, with the organisation claiming that satellite pictures present "additional evidence Russian combat soldiers equipped with heavy weapons are operating inside Ukraine".

Besides the alleged 1,000 Russian troops within Ukraine – a claim that Moscow denies – Nato said that a further 20,000 were massed at the border.

Petro Poroshenko, the Ukraine president, said in a televised statement that he had cancelled a planned trip to Turkey after "Russian troops entered Ukraine", also calling for emergency meetings of the UN Security Council and the EU Council of Ministers to "discuss the "deteriorating situation".

Close to port

Wheat prices have acted somewhat as a barometer for Russia-Ukraine tensions, given the region's status as a large source of competitively priced supplies, with support, like tensions, typically proving transient.

"Wheat rallies spurred by bad Russia behaviour have repeatedly sputtered," said Richard Feltes at Chicago broker RJ O'Brien.

However, this time, the market had extra support from the increasing action in south eastern Ukraine, near to Mariupol, one of the country's main ports of handling grain exports.

 Furthermore, chart factors turned helpful, with Chicago's December contract on course for what would be only its second close above its 50-day, and 40-day, moving averages in more than three months.

'Better technical support'

"Wheat markets are also showing better technical support," Minneapolis-based Benson Quinn Commodities said.

"While wheat has come well off its highs, trade above the 50-day moving average in Chicago has triggered a round of short covering in that market," with many investors putting great store in chart signals.

"The key to further upward momentum would be forcing additional short-covering by the fund community in Chicago futures," Benson Quinn said.

Hedge funds held a net short of 50,000 in Chicago wheat futures and options as of Tuesday last week, the latest data available.

Stronger export data

Furthermore, wheat futures continued to gain some support from concerns over the impact of persistent rains on the US spring wheat crop, with worries over the threat to quality, as well as in slowing harvest progress.

"Concerns about the pace of harvest progress and potential quality issues in the North American will remain a front burner issue," Benson Quinn Commodities said.

Meanwhile, there are renewed fears over dryness in Australia, with an Australian Bureau of Meteorology forecast of dry weather in the east of the country for the rest of 2014 sparking concerns of losses of up to 2.5m tonnes in central New South Wales alone.

And weekly US wheat export sales data were stronger, at 403,600 tonnes, nearly double those of the week before and in line with market expectations.

These included a particular recovery in hard red winter wheat sales to 205,000 tonnes, from net cancellations of 25,000 tonnes the week before.

Kansas City hard red winter futures for December added 1.1% to $6.44 ¾ a bushel, closing over its 40-day moving average for the first time in three months.

Corn gains

Some of the strength in wheat carried through into fellow grain corn, although the spread between the two grains widened above $2.10 a bushel at one point, up $0.13 on the day.

US weekly corn export sales were decent, at 696,000 tonnes for 2014-15, at the top end of market expectations.

However, repeated reports of strong yields from the early US harvest, in the South, and a lack of a weather threat to Midwest remained a weight on prices.

Forecasts continue to show little chance of an early frost heading into early September.

December corn ended 1.2% higher at $3.69 ¼ a bushel.

Large exports

Soybeans gained too, with talk of sudden death syndrome in the US Midwest crop, and strong export sales, offsetting some of the weight from strong yield reports from the South.

"Early soybean yields from the Delta have been impressive with some as high as 75-90 bushels per acre," said CHS Hedging.

"With harvest getting underway in Louisiana, there have been reports of 50-80 bushels per acre versus last year's state average of 48 bushels per acre."

Export sales, however, came in at 1.29m tonnes for 2014-15, more than twice expectations of many traders, and including 655,000 tonnes to China, the top importer.

China financing

That further eased jitters over sale to China, after a report earlier in the day from Shandong Changhua Food Group over an easing in a commodity financing squeeze.

"Some banks that had stopped lending to us have started to gradually resume co-operation with Changhua, allowing our commodities trading operations to return to normal," the company, a major palm oil and soybean importer, said.

Furthermore, the prospect of a long US weekend, and an extra day without being able to trade, encouraged position closing in a crop in which hedge funds have an, unusual, net short position.

November soybeans closed 0.5% higher at $10.28 ¾ a bushel.

'Premature flowering'

Among soft commodities, raw sugar managed small gains, adding 0.2% to 15.61 cents a pound for October delivery, helped by support from Commerzbank and Job Economia, which said it was "time to buy" the sweetener.

And arabica coffee for December stood up 1.0% at 200.20 cents a pound, looking for its first close in three months above 200 cents.

The rise was helped by a drop in coffee stocks, to 2.41m bags, held for delivery against New York futures, besides by continued talk of crop damage in Brazil to drought, which will affect the 2015 harvest as well as already curtailing 2014 output.

"Traders keep buying the market due to the loss reports from Brazil and drought reports from Central America," Jack Scoville at Price Futures said.

He also noted "more talk that some recent rains in Brazil created premature flowering and that these flowers could be aborted", undermining 2015 harvest prospects.

In Indonesia too, a major producer of robusta beans, "there was talk that early rains in had created some flowering that could hurt production if it turns hot and dry again," with flowering a month earlier than normal.

Still, robusta for November delivery dropped 0.4% to $2,039 a tonne in London.

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Don't Call the Corn Crop a Record Yet

Don't Call the Corn Crop a Record Yet | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

Odds heavily favor the 2014 corn crop setting a new yield record, yet challenging conditions since early spring in key western Corn Belt states may prevent this year’s harvested corn from eclipsing last year’s production record.

On Aug. 22, Pro Farmer released its 2014 corn and soybean estimates. Pro Farmer pegs 2014 U.S. corn crop at 14.093 billion bu.; Average yield of 169.3 bu./acre and the U.S. soybean crop at 3.812 billion bu.; Average yield of 45.35 bu. /acre. Read more about Pro Farmer’s estimates.

The Story Behind the Numbers

"The crop isn’t in the bin yet," Chip Flory, Pro Farmer editorial director and western Midwest Crop Tour director, cautioned at the final night’s program of the tour in Rochester, Minn. Moreover, the crop is so tall in states like Illinois that some harvest challenges could materialize, he says. Because of that, he cautions producers against letting corn sit too long in fields in an attempt to reduce drying costs.

"We expected a big corn crop, the market expected it, but we didn’t confirm anything bigger," says Brian Grete, Pro Farmer editor and Eastern Midwest Crop Tour director. Even in Illinois, a state the tour projects at a whopping record 197 bu./acre, scouts still did not find evidence of the 300 bushel/acre yields in some fields that some market observers have suggested. The highest Illinois sample was 284.

"It’s questionable whether we’ll have record U.S. production but we should have record yields," Grete says. He quickly adds, however, that the Illinois crop still is well on its way to a record and has delivered on its advance billing. The Illinois crop appears out of the woods for an early frost, unlike states further west. "Illinois has the best corn in any state," Grete says. Crops in Indiana and Ohio also are in very good shape, scouts confirmed.

Yet for as good as this year’s corn crop is and market chatter than yields could top 170 bu./acre, "170 is possible but very difficult to do," says Flory. "You have to put big numbers in."

Further challenging the crop in setting an all-time record, Grete adds that USDA may be high on its harvested acreage projection on corn, and possibly "a tad high" on soybean acreage. It’s late in the growing season, but weather between now and harvest will loom large on whether records are hit, he says.

For example, last year’s corn crop was highly immature in many states late August but was saved by a late fall. In Ohio—and this applies to other states as well—"a lot of corn is in the dough/dent stage," says Mark Bernard, eastern tour agronomist. "It needs two to three weeks yet." That’s less true in Illinois and Indiana.

While the eastern leg of the tour was largely a story of near perfection—with the notable exception of eastern Iowa pounded with two months of very dry weather—several states in the western leg of tour displayed problems.

South Dakota’s crop appears to be good but average, but corn in Nebraska and Minnesota face an uphill battle this year. "Some skips are out there," Flory said of irrigated corn in Nebraska hurt by a June frost. So overall, the Nebraska crop will not post record numbers like some of its eastern neighbors. And in Minnesota, the wettest spring in history caused nitrogen losses in field and was followed by two months of extremely dry weather.

"We only had 85/100 of an inch in July and 2/10 of an inch until Monday night," says Denny Rollenhagen, veteran scout who farms near Wells, Minn. Flory thinks USDA may have overstated Minnesota yields in its August report.

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Are USDA Corn Yield Forecasts Getting Better or Worse over Time?

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A widespread view in the trade is that the final yield estimate for the U.S. average corn yield in 2014 will be well above the USDA August forecast of 167.4 bushels per acre, perhaps as large as 175 bushels.  Much of the expected yield increase is based on the concept that "big crops get bigger," with support also coming from relatively high crop condition ratings late in the season.  A recent farmdoc daily article (August 20, 2014), however, revealed that not all big crops have gotten bigger in the past and that weather conditions this summer may not have been consistent with a large increase in the USDA yield forecast from August to January.  An implication of the expectation that the USDA yield forecast will increase substantially in future Crop Production reports is that the August forecast this year will have an unusually large forecast error.  The purpose of this article is to examine trends in the accuracy of USDA corn yield forecasts in recent years in order to provide an additional perspective on the debate about the U.S. corn yield in 2014.  Two previous farmdoc daily articles (August 19, 2011September 1, 2011) and a research report earlier this year examined the accuracy of USDA corn yield forecasts.  We update those analyses here.

USDA Forecasting Procedures

We begin with a review of the procedures used by the USDA to generate corn yield forecasts and estimates.  A key to understanding the forecasts is the fact that USDA uses two types of surveys to collect data for the monthly USDA production forecasts in August through November.  These are referred to as the Agricultural Yield Survey (or the farmer-reported survey) and the Objective Yield Survey (or the field measurement survey).  The sample of farm operations for the Agricultural Yield Survey (AYSis drawn from those who responded to the survey of planted acreage in June.  The sampling design to select the operations to be surveyed uses multiple control items, such as number and type of commodities planted and desired sample size for each commodity, to determine the probability of selecting a particular operation.  The same operations are interviewed each month from August through November.  Most of the survey data are collected in electronic form using computer-assisted telephone interviewing.  Each state in the survey is expected to achieve a minimum response rate of 80 percent.

The monthly AYS data are reviewed for consistency with previous surveys for the individual respondents and an across-record review is conducted to identify any extreme values that need to be re-checked.  A summary program which accounts for sampling weights and includes an adjustment for non-respondents is used to generate an indication of expected average yield for Agricultural Statistics Districts (regions within states) and for each state surveyed.  The yield indications from the survey reflect the judgment of respondents (farmers) and historical relationships indicate that respondents tend to be conservative in estimating final yields (under-estimate yield potential) particularly under drought conditions.  This tendency is quantified and factored into the official yield forecasts.

The Objective Yield Survey (OYS) is designed to generate yield forecasts based on actual plant counts and measurements, eliminating some of the biases associated with the farmer-reported yields.  The sample of fields selected for the OYS survey is selected from farms that reported corn planted or to be planted in the June survey of acreage.  Records from the June survey are sorted by state, district, county, segment, tract, crop, and field.  A random sample of fields is drawn with the probability of selection of any particular field being proportional to the size of the tract.  Two counting areas, or plots, are randomly selected in each field.  Objective measurements (such as counts of plants and ears) are made for each plot each month during the survey cycle.  When mature, the plots are harvested and yield is calculated based on actual production minus an allowance for harvest loss.  Enumerators count all fruit and fruiting positions in corn and, if ears have formed, a sample of ears is measured for length and circumference.  Just before the field is harvested, both plots are hand harvested and weighed by the enumerator.  Four ears are sent to the USDA lab for shelling and measurement of moisture.  These data are used to compute gross yield at 15.5 percent moisture.  Harvest loss is measured in separate units near the yield plots.

Prior to maturity and harvest, the OYS corn yield is forecast based on the forecast of the number of ears, the forecast of the weight per ear, and the forecast of harvest loss.  Forecasts are based on conditions as of the survey date and projected assuming normal weather conditions for the remainder of the growing season.  The state average gross yield for the OYS is the simple average of the gross yields for all the sample fields.  In addition, a state yield forecast is also made by first averaging the forecast or actual yield factors (such as stalk counts, ear counts, and ear weight for corn) and then forecasting the state average yield directly from these averages.  This forecast is based on a regression analysis of the historical relationship (15 years) between the yield factors and the state average yield. Historical relationships indicate that OYS yield indications tend to over-estimate yield potential when estimating final yields.  This tendency is quantified and factored into the official yield forecasts.

The survey and forecasting procedures described here produce a number of indictors of the net yield of corn.  In August these indicators include: i) average field level yields from the OYS, ii) average state level counts from the OYS, and iii) the average yield reported by farm operators in the AYS.  After harvest begins, yields reported by farmers are also included as an indicator of final yield.  Each of the indicators results in a point yield forecast for which forecast errors are computed based on the historical relationships between forecasts and actual yield.  The range of yields is evaluated relative to all of the pieces of available data to assist in the selection of the official yield forecast.  This process is completed independently in each state and at the national level.  A formal Agricultural Statistics Board (ASB) consisting of 7 to 10 statisticians is convened to review regional yield indicators and determine an official yield forecast.  Data for the final estimates released in January are collected in the December Agricultural Survey in which respondents report actual acres harvested and the actual yield or production.  More detailed discussions of USDA crop yield forecasting procedures can be found in this farmdoc daily article (August 28, 2013), a Marketing and Outlook Brief, and in the USDA publications found here and here.

USDA Forecast Accuracy

To evaluate the historic accuracy of the USDA corn yield forecasts, the August, September, October, and November forecasts are compared to the "final" yield estimate released in January (we say "final" because January estimates are sometimes revised based on the Agricultural Census conducted every five years). The differences between the forecasts and the final estimates in percentages over 1990-2013 are presented in Figures 1 through 4.  When interpreting the errors, note that a positive error implies an under-estimate on the part of USDA and a negative error implies an over-estimate.  As is well-known, errors associated with the USDA corn yield forecasts are occasionally very large, such as 1993 and 1995.  These examples of large errors are not surprising due to the unusual weather events that occurred in those years.  It is interesting to note that USDA corn yield forecast errors in 2012 were extremely small, with the August forecast exactly equal to the final estimate, and thus, having a zero forecast error.  This is surprising given the magnitude of drought conditions that prevailed in 2012 (farmdoc dailyApril 17, 2013) and the difficulty of forecasting corn yields under these circumstances.  The figures suggest a clear downward trend in USDA corn forecast errors over time. Forecast performance since 2011 has been particularly impressive.






The USDA corn yield forecasts are examined for both bias and changes in accuracy through time.  The average percent errors for each forecast month for the entire sample period and for sub-samples formed from 1990-2001 and 2002-2013 are presented in Table 1.  The average error calculations presented in Table 1 reveal no consistent patterns in the magnitude of the average errors and reveal no bias in the forecasts.  The smallest average error was 0.04 percent for the August forecast in 1990-2001 and the largest average error was 0.63 percent for the August forecast in 2002-2013.  Given the small size of the average errors, it is not surprising that no statistically significant bias estimates were found across months or sub-samples.



Table 2 presents the average absolute percent errors in the corn yield forecasts for each month and sample period.  As expected, the average absolute error declines as the growing season moves from pre-harvest through harvest.  For the entire sample period, for example, the absolute error averaged 4.19 percent for the August forecast and only 0.74 percent for the November forecast.  Examining the two sub-samples, the absolute percent errors were smaller in 2002-2013 for every forecast month except November, where the average errors were very close in both sub-samples.  The decline in the October absolute forecast error is marginally statistically significant with a p-value of 0.10.  Changes through time are also examined by regressing the absolute percent errors against a constant and a linear time trend:

                                    |NASS Percent Errorm,t|= a + bTrendt + et

where Trendt is a time trend variable for crop year t that takes a value of 1 in 1990, 2 in 1991, and so on and et is a standard, normal error term.  The estimated trend coefficients are negative for the August, September, and October yield forecasts.  The estimated coefficients for both September and October are statistically different from zero at the 5 percent level (the downtrend in absolute errors is statistically significant even if 2012 is dropped from the sample). For example, the absolute percent error associated with the September forecasts declined by an average of 0.18 percent per year over this period. While the trend coefficient for August was not statistically significant, the magnitude was very similar to that estimated for September and October.  Overall, the results confirm the patterns observed in Figures 1 through 4 and provide convincing evidence that USDA corn yield estimates have improved through time, in the sense of absolute forecast accuracy.




Our analysis of USDA yield forecasts for corn over 1990-2013 did not reveal any evidence of bias in August, September, October, or November.   There is compelling evidence that the accuracy of USDA corn yield forecasts has improved over time, particularly since 2011.  It is especially interesting to note that USDA corn yield forecast errors in 2012 were extremely small, with the August forecast exactly equal to the final estimate.  This performance was exceptional given the severe drought that occurred in the summer of 2012. What, if anything, do these results imply about the ongoing debate about the direction of USDA corn yield forecasts in remaining Crop Production reports during 2014?  While it is, of course, true that longer-term trends in accuracy will not necessarily dominate in any particular year, an unusually large August forecast error this year (5 percent or more) would definitely be counter to the trend towards increasingly accurate USDA corn forecasts over time.

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Sugar From Thailand Heading for NY Bourse Amid Global Glut

Traders may ship Thai raw sugar equivalent to 16 percent of the global surplus against the October contract on the ICE Futures U.S. exchange, the first deliveries from the Asian nation since 2012.

About 625,000 metric tons of the unrefined sweetener will be delivered when futures expire, according to the median of six estimates in a Bloomberg survey of analysts and traders. The forecasts, from companies including Green Pool Commodity Specialists and UBS AG, ranged from 300,000 tons to 2 million tons. The global surplus will be 4 million tons this crop year, according to the International Sugar Organization.

Sugar from Thailand, the world’s second-biggest exporter, has been shipped against ICE contracts only five times since at least July 2008, according to exchange data. Traders are renewing deliveries after Thai stockpiles swelled, contributing to a global oversupply that’s driven down U.S. futures by about 17 percent since June amid a bumper harvest in Brazil.

“The forward outlook now depends on resolving this low-quality surplus sugar, which we think is likely to end up being delivered onto the exchange,” Andrew Slinger, the managing director of Enerfo Sugar Ltd. in Singapore, said in an e-mail on Aug. 26. He didn’t participate in the survey.

Raw-sugar futures for October delivery fell 0.4 percent to close at 15.49 cents a pound on ICE. Prices dropped 5.9 percent this month after an 8.6 percent decline in July. Futures reached a high of 18.81 cents in June. The discount for October versus March widened almost fourfold in the past six months and reached 2.02 cents on Aug. 26.

Thai Reserves

Stockpiles in Thailand are estimated to surge 36 percent to a record 4.9 million tons in the season ending in November, according to the U.S. Department of Agriculture.

Inventories accumulated after competition from Brazil reduced demand for the Southeast Asian nation’s sweetener.

Exports declined 18 percent to 3.67 million tons in the first seven months from a year earlier, according to the Commerce Ministry. The delay in selling off stockpiles has hurt the quality and caused the color to darken, said Piromsak Sasunee, chief executive officer of Bangkok-based Thai Sugar Trading Corp., the nation’s top exporter.

The country will produce 12 million tons of raw sugar in the 12 months from November compared with 11.29 million tons a year earlier, Somsak Suwattiga, secretary-general of the Office of the Cane & Sugar Board, said in an interview last month. It may have to carry forward about 900,000 tons of raw and white sugar for shipment next year, Piromsak said by phone Aug. 26.

Contract Deliveries

The world market will have a surplus of 1.3 million tons in the year starting October, a fifth straight glut, and a small shortage the year after, Lindsay Jolly, senior economist at the International Sugar Organization, said in Indonesia this week.

Previous deliveries of Thai sugar into U.S. futures contracts were concentrated in March 2011 through March 2012, according to exchange data, when harvests soared to a record. Since at least 2008 traders typically settled U.S. contracts with shipments from Central and South America, the data show.

Open interest for October contracts in New York totals 433,450 contracts of 112,000 pounds, or 22 million tons, data compiled by Bloomberg show. The record for deliveries on the exchange was in October when Louis Dreyfus Commodities bought 1.45 million tons, according to two people at the time.

About 500,000 tons of raw sugar from Central America may also be delivered, said Wayne Gordon, an analyst at UBS in Singapore. Thai shipments may be about 1 million tons, he says.

“You have a situation where a substantial amount of sugar needs to be sold before 2015,” Gordon said. “The pressure is on because you see another reasonably large crop coming. Clearly you need more space by clearing the old stocks.” 

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Rentech Nitrogen Partners (RNF) Announces Quarterly Results

Rentech Nitrogen Partners (RNF) Announces Quarterly Results | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

Rentech Nitrogen Partners (NYSE:RNF) announced itsearnings results on Thursday. The company reported $0.47 EPS for the quarter, missing the Thomson Reuters consensus estimate of $0.69 by $0.22, AmericanBankingNews.comreports.

Shares of Rentech Nitrogen Partners (NYSE:RNF) opened at 15.40 on Friday. Rentech Nitrogen Partners has a 52-week low of $14.42 and a 52-week high of $29.81. The stock’s 50-day moving average is $15.96 and its 200-day moving average is $17.02. The company’s market cap is $599.1 million.

The company also recently announced a quarterly dividend, which is scheduled for Friday, August 29th. Stockholders of record on Friday, August 22nd will be paid a dividend of $0.13 per share. This represents a $0.52 annualized dividend and a dividend yield of 3.38%. The ex-dividend date is Wednesday, August 20th. This is a boost from Rentech Nitrogen Partners’s previous quarterly dividend of $0.08.

RNF has been the subject of a number of recent research reports. Analysts at BMO Capital Marketscut their price target on shares of Rentech Nitrogen Partners from $20.00 to $17.00 in a research note on Tuesday, August 19th. They now have a “market perform” rating on the stock. Analysts at RBC Capital cut their price target on shares of Rentech Nitrogen Partners from $17.00 to $15.00 in a research note on Monday, August 18th. They now have a “sector perform” rating on the stock. Four investment analysts have rated the stock with a hold rating, one has assigned a buy rating and one has issued a strong buy rating to the stock. Rentech Nitrogen Partners presently has a consensus rating of “Buy” and a consensus price target of $22.00.

Rentech Nitrogen Partners, L.P. is a provider of clean energy solutions and nitrogen fertilizer, to own, operate and grow its nitrogen fertilizer business.

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Cutting Postharvest Grain Losses in Brazil a Challenge

Cutting Postharvest Grain Losses in Brazil a Challenge | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

There's growing talk in parts of the central U.S. that once the combines start to roll this fall, getting that crop transported to where it will be stored or marketed could be a challenge.

But, the worries in the Plains and Corn Belt pale in comparison to the logistical hurdles farmers in parts of Brazil face with getting their crop moved to market. It's led specialists to renew their focus on crop losses incurred between the combine and terminal. The ADM Institute for the Prevention of Postharvest Loss at the University of Illinois is one such thinktank for the establishment and implementation of "economically viable technologies, practices and systems that reduce postharvest loss in staple crops such as corn, wheat, and oilseeds."

Logistics and infrastructure have long been a problem for Brazilian farmers, and as that country's crop land and production increases, it's only taxing the nation's dirt roads and rural highways further. And, that's been a big driver of as much as a 12% postharvest loss of grain because of simple transportation problems, namely because of a combination of that poor infrastructure and farmers' rush to get their crops harvested and to market. That hustle is made worse by the fact farmers plant, manage and harvest not 1, but 2 crops in Brazil each year.

"Clearly there are things that you can do to reduce loss—you can put bed liners in trucks, you can adjust your combine, you can harvest more slowly -- but for the farmers in Mato Grosso, it’s not a high priority," says University of Illinois ag economist Peter Goldsmith in a university report. "It doesn't seem rational. If you see soybeans bouncing off your windshield from the truck ahead of you and bands of soybeans along the berm, why wouldn't you try to prevent it? It appears that farm managers in Brazil actually allow loss to happen because the cost of reducing loss is greater than the benefits."

Goldsmith, long a student of Brazilian agriculture, works with the ADM Institute for the Prevention of Postharvest Losses to create practical, easy-to-implement solutions, but more importantly, foster understanding among farmers and farm managers in regions like Mato Grosso that by making a few key adjustments, crop income can rise by a considerable amount.

"Because they are in such a hurry to get the soybean crop harvested so they can get the maize crop planted before the rainy season, they may: harvest too fast, desiccate green soybean to advance harvest, or expose soybean to the weather during transport, all of which results in a 10% loss. The loss isn’t intentional but rather a level that the farm manager is willing to live with in order to get that second crop of corn," Goldsmith says. "When a farmer doesn’t think that harvest speed is important, they have more loss. Likewise, if a farmer doesn't think that combine adjustments are important they'll have more loss. Those who realize that maintaining equipment is important, have less loss. Consequently, technical training in the field with the equipment could be beneficial. But the cost of reducing loss further, using current technology, may exceed the benefits. Farmers may be unwilling to pay or invest in loss reduction."

Factors contributing to postharvest loss that Goldsmith and other specialists are honing in on for farmers in Brazil include:

  • Insect and rodent damage

  • Combine speeds

  • Truck conditions

  • Road maintenance

Goldsmith points out that while these may be obvious factors to consider to U.S. farmers, both a general lack of education and the growing rush to get the crop from the field to the marketplace tend to keep them in the back of Brazilian farmers' minds.

"Why wouldn’t farmers have agreed 100% that harvest speed contributes to loss? Insects and rodents seemed to be unimportant. Truck conditions and bad weather were the top factors to blame for loss, but truck conditions were mentioned by only 62%. These causes should be common knowledge so I don’t know why 100% of the responses didn’t agree that, for example, poor road and truck conditions contribute to loss," he says. "The lack of definitiveness about this may indicate  that loss is not a 'front-of-mind' issue for managers, which, in turn, has significant implications for policy makers seeking to reduce post-harvest loss.

"We may think of Brazil as sunshine and beautiful all the time, but farming is really tough in the tropics. There are pest pressures 24/7, soils are poor, there’s an extreme rainy season, distance to markets is great, and road conditions are very rough. All sorts of factors make farming tough, but this area of the world has the greatest potential to materially augment global grain supplies," Goldsmith adds.

Though these issues have major implications for farmer profitability in Brazil right now, there are also more global implications, both to the grain marketplace and issues well beyond the farm gate. And, how these issues are addressed will go a long way to establishing Brazilian farmers' roles in the global grain market down the road.

"This dominant class of medium- and large-tropical farm acreage operators who are producing most of the new grains are filling the gap between where we are now and where we need to be in 2050 to feed the world," Goldsmith says in a university report. "Sure, we can expand our crop among the developed countries of the world, but we’re only helping at the margin. The potential for new grain producers on new land is coming from farmers in the Southern Hemisphere."

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Brazil enters recession in election blow to Rousseff

(Reuters) - Brazil fell into a recession in the first half of the year as investment fell sharply and the country's hosting of the World Cup suffocated economic activity, a major blow to President Dilma Rousseff's already fading hopes for re-election in October.

Latin America's largest economy has suffered stagnant growth for more than three years under the economic policies of the left-leaning Rousseff, which have dented consumer and business confidence and caused heavy losses for financial investors.

The economy took an even bigger downturn in the second quarter, with gross domestic product contracting 0.6 percent from the first quarter, government statistics agency IBGE said on Friday. It also revised lower its estimate for first-quarter activity to a 0.2 percent contraction, meaning the economy entered a recession.


The data that confirmed the recession, Brazil's first since the global financial crisis of 2008-09, gives a powerful weapon to Rousseff's opponents in the Oct. 5 election at precisely the moment that her candidacy is at its most vulnerable.

Polls over the last week have shown Rousseff falling behind centrist candidate Marina Silva in the event of a second-round runoff, which appears likely.

Silva and the other main opposition candidate, Senator Aecio Neves, have strongly criticized Rousseff for being weak on inflation and ruining the economic momentum that made Brazil a Wall Street darling last decade.

"This is the last thing that the government would have wanted or needed. But I think it's too late to turn (the economy) around" before the election, said Neil Shearing, an economist at Capital Economics in London.

Brazil's economy grew an average 4 percent under Rousseff's predecessor, Luiz Inácio Lula da Silva, from 2003 to 2010. Growth under Rousseff's watch is set to average less than 2 percent.

Brazil's stock market rose slightly, as investors focused less on the bad economic report and more on the increasing possibility that Rousseff might not be re-elected. One equities investor on Wall Street e-mailed simply: "Hallelujah."

Despite Rousseff's recent drive to win back business confidence, investment slid 5.3 percent in the second quarter, its worst performance since early 2009. Manufacturing suffered its fourth straight quarterly decline, down 1.5 percent.

Business activity also slowed as Brazil hosted the World Cup soccer tournament in June and July. Many cities declared public holidays on game days to prevent traffic problems and other logistical issues. Some factories began ramping down production before the tournament started in anticipation of disruptions.

Rousseff and her economic team have blamed the slowdown on continued problems abroad, such as in southern Europe.

"I want to emphasize that even really organized countries are having problems getting better growth," Finance Minister Guido Mantega told reporters.

He said gross domestic product data suffered because of unique, seasonally related statistical effects, and stressed the unemployment rate has been low and stable. As a result, he said he believed Brazil's situation did not really constitute a recession.


Global demand for Brazil's major commodities such as iron ore, sugar and corn also slackened, compared to the glory days of last decade, when the economy often grew more than 5 percent a year, lifting some 35 million people out of poverty.

However, economists and business leaders said Brazil's recent problems are mostly home grown, and are far deeper than any short-term considerations such as the World Cup.

They have repeatedly complained of what they describe as Rousseff's heavy-handed management of the economy - such as alternately raising and lowering certain taxes. They said her policies have relied too much on stimulating domestic demand at the expense of investment.

Other Latin American countries such as Chile or Colombia, where trade accounts for a bigger percentage of the economy and the business climate is perceived as better, have enjoyed much stronger growth in recent years.

Economists said Brazil's next president - whoever it may be - would need to undertake deep reforms.

"We need a new economic program," said Eduardo Velho, chief economist at INVX Global, an investment fund in Sao Paulo.

Following the data, some economists said they would revise down their forecasts for full-year economic growth to zero.

Brazil's central bank raised interest rates earlier this year to counter a spurt in inflation, which contributed to the slowdown in the second quarter.

The second-quarter GDP drop was worse than expectations of a 0.4 percent contraction, according to the median forecast of 47 analysts polled by Reuters.

Other data released on Friday showed Brazil posted a primary budget deficit in July for a third straight month. Brazil's faltering growth has hurt tax revenues, making it harder for Rousseff's government to pay down debt. 

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US Chicken Businesses Lack Growth

US - In a year full of surprises, one that has become a bit lost is the lack of growth in the US chicken business, report Steve Meyer and Len Steiner.

Most analysts went into 2014 expecting US chicken companies to quickly ramp up production to take advantage of lower grain costs and their price advantage in the market place.

Chicken having a price advantage is nothing new but the situation this year set up perfectly for higher output and lower but still profitable prices which would provide an even larger than normal advantage against high priced beef and well priced pork.

Beef and pork have more than held up their end of that deal but chicken output growth has been a non-starter. But even those tighter than expected supplies — and thus availability/consumption — have not been able to light a fire under retail chicken prices.

What gives? Let’s go all the way back to 2011 and 2012 when livestock and poultry companies were paying through the nose for feed ingredients. Any thoughts of growth were canned as were, we understand, a large number of orders for breeder birds at the three major broiler genetics companies, Cobb Ventress (owned by Tyson), Hubbard and Aviagen. Those companies quite understandably reduced production capacity.

Fast forward to the winter of 2012-2013 when US companies were still paying huge prices for feed ingredients and Mexican broiler farms broke with avian influenza. Depopulation of Mexican breeder flocks created an opportunity for US breeders to sell genetics — primarily in the form of fertilised eggs, we understand — south of the border.

The reduction of breeder egg supplies continued well into 2013 even as the 2013 crop developed well, causing some optimism that exorbitant feed costs were behind us. The combination of cutbacks in the breeder flock and selling eggs to Mexico resulted in an aged flock as cost conditions changed.

We expected US chicken companies to begin ramping up their breeding flocks in mid-2013 just in case crops turned out large and costs fell. They were slow to do so but did increase flocks by over four per cent, year-on-year every month form August through November last year.

Then the wheels came off. US breeder flock growth slowed to about three per cent in December through February and then slowed even further this year as breeding companies ran into a number of production difficulties in associated with that aging flock. The result was significantly lower numbers of chicks placed versus eggs set.

Beginning of month broiler breeding flock inventories have begun to grow again, exceeding year?ago levels by 2.2 and 2.1 per cent in July and August. But those growth rates may be short lived as the number of broiler breeder chicks hatched fell to just 6.212 million in July, over 300,000 and 5.4 per cent fewer than one year ago. Lower numbers of breeder chicks will make it more difficult to support the renewed growth of the breeder flock which, in turn, will limit egg sets and placements of the actual broiler chicks that are grown for slaughter.

USDA’s August World Agricultural Supply and Demand Estimates has 2014 US broiler production growing by 1.5 per cent. Poultry production through 16 August is virtually unchanged from last year.

With two thirds of the year in the books at zero growth, September-December production would have to grow by 4.5 per cent to get the annual number to 1.5 per cent. We think that is very doubtful even though there are signs of improvement on the productivity front. After spending virtually all year within 1 per cent of year?ago levels, egg sets have grown by 2.1 per cent, on average, over the past four weeks.

Chick placements, which had been down fractionally versus last year for most of this year, have grown by 1.8 per cent and 1.2 per cent, year on year the weeks of 9 and 16 August. Those figures will not get the industry to +4.5 per cent but they represent improvement. USDA’s forecast for 2015 broiler output is 38.894 billion pounds, read?to?cook weight, an increase of 2.4 per cent from 2014.

BOTTOM LINE: US broiler companies have been profitable but have had their expansion efforts scuttled by production challenges. They are solving those problems and will move back to growth this fall and into 2015 but that growth will likely be slow by historical standards.

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South Dakota Ethanol Plant Reopens After 18 Months

South Dakota Ethanol Plant Reopens After 18 Months | Grain du Coteau : News ( corn maize ethanol DDG soybean soymeal wheat livestock beef pigs canadian dollar) |

A corn-based ethanol plant in the northeast South Dakota town of Rosholt has reopened after sitting idle for 18 months.

Thirty employees are working in production at the Red River Energy plant, which began grinding corn on Monday.

"The margins are good in ethanol, corn is abundant at this point with a record crop coming in," general manager Rick Serie told the Public Opinion in Watertown. "We're optimistic about our future here. We have to get up and operating at full capacity, but we see good margins being a success for the investors and the community"

Serie admitted there could be some hiccups after the plant sat idle for so long, "but we're working through them," he said. "We have a real experienced staff that knows how to fix and tweak as we start up."

Officials plan to ramp up annual production from 25 million gallons to 40 million gallons, and launch other projects including corn oil extraction and increased storage capacity for ethanol and distillers grains—a byproduct used as livestock feed.

The plant is operated by Kansas-based ICM Inc., under the management of Energy Management Solutions. A skeleton crew took care of the facility after it was idled in early 2012.

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World corn stocks to hit 27-year high, says IGC

The International Grains Council raised to a 27-year high its forecast for world corn inventories, citing improved hopes for crops in Brazil, Europe and Ukraine, as it hiked again its estimate for grain supplies.

The intergovernmental group raised by 3m tonnes to 190m tonnes its estimate for world corn stocks at the close of 2014-15 – up 17m tonnes year on year and "their largest since 1987-88".

The estimate, which takes the IGC's figure above the USDA forecast for a 15-year top in world inventories, reflected an improved forecast for global production, upgraded by 4m tonnes to 9763m tonnes.

"Northern hemisphere [corn] yield prospects continued to improve in August, including in the US, where crops have benefitted from a prolonged period of benign weather," the council said.

"The outlook for corn is notably higher, with a record outturn in the US and upward revisions for Brazil, the European Union and Ukraine."

Corn vs wheat

However, the council also, turning to consumption trends, highlighted the enhanced rivalry in the feed market with wheat, following a low quality harvest in many producing countries, such as France.

"The world [wheat] harvest will include an above-average proportion of low/medium grade supplies," the IGC said, a factor which would become evident in "strong competition in most markets" between corn and wheat.

The "increasingly tight outlook for premium quality [wheat] supplies", combined with Ukraine concerns, had also curtailed the decline in wheat prices despite improving overall production prospects here too.

The IGC lifted by 11m tonnes to a record 713m tonnes its estimate for global wheat output, citing "larger-than-expected crops in Russia, the European Union and China".

Rice stocks to drop

For grains overall, the IGC raised its production estimate by 17m tonnes to 1.976bn tonnes, just behind the 2013-14 record of 1.992bn tonnes.

The estimate for world inventories at the end of 2014-15 was lifted by 7m tonnes to 426m tonnes – up 22m tonnes year on year, and the highest in 15 years.

The council also, in its first forecast for world rice output in 2014-15, estimated production at 478m tonnes, up 2m tonnes year on year, but insufficient to cover increased output, viewing rising by 6m tonnes to 482m tonnes.

The dynamics will leave carryover stocks falling for a second successive season, albeit remaining at a historically high level of 105m tonnes.

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Wheat Extends Advance in Chicago on Black Sea Tensions

Wheat rose for a fourth day in Chicago on concern that escalating tension between Russia and Ukraine will reduce supplies from the Black Sea region.

Futures have rebounded 11 percent since touching a four-year low on July 29 as the conflict in the Black Sea region worsened. Separatists in eastern Ukraine are battling government forces on two fronts near the Sea of Azov and south of Donetsk after NATO reported a surge of Russian troops and advanced equipment into the war-zone. Ukraine and Russia account for 21 percent of global wheat exports, according to U.S. Department of Agriculture estimates.

“The situation in eastern Ukraine has put a strong bid into wheat, with the market concerned that wheat from either Russia or Ukraine shall not be available on the world market,” economist Dennis Gartman said in an e-mailed report today. “Things are still moving from the ports there, but clearly there is concern that should the ‘war’ escalate those exports will be stopped.”

Wheat for December delivery rose 0.7 percent to $5.76 a bushel at 7:37 a.m. on the Chicago Board of Trade, after touching $5.7925 yesterday in intraday trading, the highest since July 3. Prices are set to rise 2.4 percent this week and have rallied 8.6 percent in August.

In Paris, milling wheat for November delivery rose 0.4 percent to 175.75 euros ($231.69) a metric ton on Euronext, set for a 3.1 percent increase in August.

Soybeans for November delivery rose 0.2 percent to $10.3125 a bushel in Chicago, paring a monthly decline to 4.7 percent. Corn for delivery in December fell 0.3 percent to $3.68 a bushel, little changed this month. 

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ADM, Cargill may get harmed by sugar war crossfire

US tariffs on its $1bn sugar imports from Mexico could prove "painful" to the likes of Archers Daniels Midland, Cargill and Tate & Lyle if it spurs tit-for-tat levies on trade in corn-based sweeteners, Credit Suisse warned.

Indeed, a decision by Mexico to retaliate through tariffs on US exports of high fructose corn syrup (HFCS), would likely have a "disastrous impact" were it not for the low price of the corn used to maker the sweetener, and the concentrated nature of the US industry.

Although the loss of trade to Mexico would in theory deprive HFCS producers of a market equivalent to 15% of production, cutting their capacity utilisation rate to 70% and threatening a slump in profits, "the industry has a reputation for supporting a disciplined pricing structure", Credit Suisse said.

"This includes mothballing capacity when utilization rates get a little low. We would be very surprised if Cargill or ADM didn't close a site if capacities start to become a little loose."

'Flood of Mexican sugar'

The comments followed the US government's announcement this week that it was proposing the tariffs on sugar imports from Mexico as an anti-dumping penalty, following pressure from domestic producers.

The American Sugar Alliance claims that the "flood of Mexican sugar" into the US, of some 2m tonnes a year, "which is harming America's sugar producers and workers, is subsidised by the Mexican government".

Mexico has termed the proposed levy as running counter to Nafta trade agreements, and as a "backwards step in the integration and delicate balance in the sweeteners market in Mexico and the US".

It is uncertain yet that Washington will introduce the levy, which would not be imposed until early next year, or indeed that Mexico would retaliate by targeting HFCS, a rival sweetener to sugar in the likes of soft drinks, and which the country largely imports from the US.

'Not pretty'

However, history suggests that, if a levy is imposed, or even if Mexico's excess sugar simply supplants HFCS at soft drinks groups, the impact will be severe for US makers of the corn-based sweetener.

In the mid-1990s, Mexico imposed a tariffs against HFCS imports from north of the border which saw profits "collapse" at the US industry, prompting a the takeover of some independent co-operatives, MCP and ProGold, and the withdrawal of Golden Technologies, Credit Suisse said.

Ingredion, then Corn Products International, "saw a $160m profit in 1995 fall to a loss of $30m in 1997 – not pretty", the bank said.

It was only in 2010 that Mexico opened fully its borders to American HFCS, by which time the US industry had consolidated around the current, few producers.

The comments came as Credit Suisse restated an "underperform" rating on shares in Tate & Lyle, which relies on US HFCS for some 30% of profit.

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Ukraine woes support wheat price revival

Grains headed reasonably resilient into a long US weekend/month- end/ first notice day for September contracts, although whether they can stay that way afterwards…

For wheat, there remains good cause for investors to steer shy of heavy selling, with the Russia-Ukraine tensions remaining heightened.

Nato officials are holding an emergency meeting to discuss the crisis in eastern Ukraine, where pro-Russian separatists are trying to capture the strategic port of Mariupol, on the Azov Sea.

And US President Barack Obama blamed Russia for the escalation, if stopping short of terming its activity in Ukraine an invasion.

"There is no doubt that this is not a home-grown, indigenous uprising in eastern Ukraine," he said.

"The separatists are trained by Russia, they are armed by Russia, they are funded by Russia."

'Risk premium is being added back'

With Russia and Ukraine both major exporters of competitively-priced wheat, the wheat market has been something of a barometer of regional tensions.

"Supplies of wheat in the world are ample, but risk premium is being added back into futures prices as tensions in Ukraine escalate," CHS Hedging said, adding that "the West is still reluctant to call the situation a war, but things are moving in that direction".

Chicago soft red winter wheat, the world benchmark, added 0.6% to $5.75 a bushel for December as of 09:45 UK time (03:45 Chicago time), cementing its place above its 50-day moving average, which it closed over in the last session for the first time in three months.

Kansas City hard red winter wheat for December was 0.4% higher at $6.47 a bushel, holding its place above its 40-day moving average.

And Minneapolis hard red spring wheat, the type under threat from a wet US harvest, gained 0.5% to $6.35 ¾ a bushel, just below its 40-day moving average.

Calendar factor

For row crops, however, there remains plenty of bearish talk, with some suggesting that it is only the calendar that is preventing a fresh lurch lower.

After all, month-end is often associated with position closing which, given the extent of short positions in soybeans and wheat especially, might prove positive for prices.

Furthermore, the long weekend means an extra day without being able to trade, at a time of year when weather remains crucial, with the risk of a frost the last likely major setback to ideas of mega US crops.

In fact, the outlook is benign.

"Weather shows no threats of an early end to the growing season," said Brian Henry at Benson Quinn Commodities.

Baize forecast

Indeed, after the weekend, will markets be subjected to forces suggested by a bearish crescendo?

Among downbeat recent statements are one from respected commentator John Baize that soybean prices may fall to $8.50 a bushel, with rail transport problems adding to the pressure on values from a strong harvest – which he forecast coming in at a yield of 48 bushels per acre.

(The US Department of Agriculture has a figure of 45.4 bushels per acre.)

"We'd have big exports off the West Coast but we don't have rail capacity sufficient to move all the cargo," he said.

Prices rise – for now

At broker RJ O'Brien, Richard Feltes said that "US soybean ratings are the highest since 1992, late August/early Sept weather is ideal, there is no sign as yet of early frost and farmers are reporting great filling on above average pod set.

"Bottom line- evidence is mounting that end-2014-15 US soybean stocks may be closer to 600m bushels than 500m bushels, which suggests another $0.50-0.75-a-bushel minimum downside on November futures."

In fact, the November contract added 0.3% to $10.31 ¾ a bushel, failing, so far, to set a contract low for a third successive session.

EU corn import estimates

Corn couldn't quite muster the same strength, lacking the hefty fund net short position which would mean that position covering drove prices higher.

The December contract dropped 0.3% to $3.68 ¼ a bushel.

Among negative talk for the grain, besides expectations of a huge US harvest, is the idea that the European Union will never import the 11.0m tonnes of corn that USDA forecasts suggest, given the bloc's poor quality wheat crop providing an ample alternative source of feed.

The rain which has hurt wheat quality has boosted yield prospects for the EU's own corn harvest too.

"Analysts are increasingly questioning the USDA's EU corn import forecast," Mr Feltes said.

"Large EU feed wheat supplies suggest EU corn imports closer to 5m-7m tonnes which would trigger the EU's largest corn supplier [ie Ukraine] to aggressively price corn into traditional US corn export markets."

That is, of course, assuming no disaster in Ukraine.

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New guidelines reflect benefits of no-till farming

A quiet agricultural revolution is underway in North Dakota.

The change is hard to detect because it’s happening in the specialized field of soil fertility.

This summer, North Dakota State University unveiled new soil fertility recommendations for corn, which is planted on 3.85 million acres across the state.

The 11-page guide makes it clear that no-till soil is distinct from tilled soil. NDSU experts say farmers with fields dedicated to continuous no-till, for six years or longer, need 40 to 50 pounds less nitrogen per acre to grow corn than producers with tilled fields.

The recommendation is revolutionary because NDSU is the only land grant university in the U.S. that has adjusted its corn fertility recommendations to account for the benefits of zero tillage and conservation agriculture. 

The corn guidelines echo an earlier NDSU recommendation for spring wheat and durum, which gave a 50 lb. nitrogen credit for long-term no till practices.

Jill Clapperton, a soil consultant in Montana and former Agriculture Canada scientist in Lethbridge, said what’s happening in North Dakota is unprecedented.

“That is a really huge deal,” said Clapperton, who’s known for her expertise in the rhizosphere, which is the region where the plant roots interact with the soil.

U.S. land grant universities have developed soil nutrient recommendations in their individual states for decades. The guidelines aren’t etched on tablets but many U.S. farmers believe they are gospel, Clapperton said.

“When you get your soil test results and you’re in Idaho, it’s based on the recommendations set by the land grant universities. And nobody goes against them.”

Kristine Nichols, chief scientist with the Rodale Institute, an organic agriculture research centre in Pennsylvania, agreed the new NDSU guidelines are significant.

“It’s fallen on the land grant universities to provide new (soil fertility) standards based on conservation agriculture practices,” said Nichols, who was a U.S. Department of Agriculture soil microbiologist in North Dakota. 

“It was a very big step NDSU (took), in making those recommendations.”

Dave Franzen, NDSU extension soil science specialist, led the effort to develop the new recommendations. Instead of simply telling no-till farmers to use less nitrogen, Franzen has created tables according to the price of nitrogen and the market price of corn. He has developed tables for conventionally farmed soil and others for long term no-till soil, depending on geography and soil productivity. 

Franzen said the recommendations are based on analysis of no-till data in North Dakota that goes back to the 1970s.

“I started working on it in 2005 and we gathered another 50 to 60 sites,” he said. 

“No preconceived ideas. I just divided the sites into those that I knew were on a long-term no-till and those that I knew were conventional.”

Franzen was surprised by the results.

“If you look at a certain yield and the nitrogen it took to produce it in a no-till (system) … it took about 50 lb. of less N with the long-term no-till.”

Franzen said zero till combined with a diverse crop rotation enhances soil biology, which might explain the need for less nitrogen on no-tilled fields.

Clapperton was more absolute. She said improved soil biology is definitely the reason why no-till fields require less nitrogen.

“It’s very clear from NDSU’s data and data from various universities that work on no-till … showing we’ve got a lot more nutrients in the no-till soils,” she said.

Zero tillage and the associated increase in biological activity boosts the amount of nitrogen stored in the soil, she added.

“It’s like putting fertilizer in the bank because it (nitrogen) is bound in this organic form, which can be released later … which means (it) can then be turned into, through a process of mineralization, to an inorganic form that the plant can take up.”

Clapperton said the same process occurs in tilled fields, but there is significantly more biological activity in no-till soil. As a result, no-tilled soil can supply more nitrogen to the crop.

“With this much microbial activity in your soil and this much organic carbon … this is the potential of your soil to supply X amount of nitrogen.”

Nichols said the recommendations are an endorsement of a burgeoning agricultural movement in North Dakota, where zero tillage, cover crops and diverse rotations have become cornerstone values on many farms.

“There are people who are really excited … that (NDSU) has come out with these recommendations,” she said. 

“Having worked with Manitoba-North Dakota Zero Tillage Association … it’s always been a big part of their meetings to (see) how can we get new standards. They (the recommendations) weren’t keeping up with what we’re seeing in our systems.”

Nichols said it’s difficult to know if other land grant universities will follow North Dakota’s lead. Change is often slow at such institutions, and conducting the necessary studies may not be a priority.

“I think that’s been one of the biggest impediments to getting new fertility standards,” Nichols said. 

“We don’t have the funding and capital to re-evaluate for conservation agriculture.”

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