Archived Posts

News Flash: June 12, 2014

INDUSTRY

U.S. grains: Corn falls to 3-1/2 month low as weather favours crops

U.S. spot corn futures fell to a 3-1/2 month low on Monday as very favorable weather in the U.S. Midwest raised expectations for record production, and China reported that it would halt import permits for a corn-based feed ingredient. In addition to the good weather, the progress of the corn market was strained by news that quarantine authorities in China had stopped issuing permits for the import of U.S. distillers dried grains (DDGs), a corn byproduct used in feed, due to the presence in some shipments of an unapproved genetically modified corn variety. Reuters

SOYBEAN

New Approach to Studying Fungus’ Attack on Soybeans

A new laboratory technique developed by USDA Agricultural Research Service scientists could speed the search for soybean plants with resistance to the fungus that causes Phomopsis seed decay (PSD) in the legume crop. A disease primarily caused by the fungus Phomopsis longicolla, PSD physically degrades the soybean seed and reduces the quality of its protein and oil. In 2012, outbreaks of PSD and other fungal diseases cost soybean producers in 16 southern states more than 2 million bushels in losses. USDA Agricultural Research Service

North Central Soybean Research Program’s Soybean Research & Information Initiative now live – New website makes finding soybean research easier

The North Central Soybean Research Program (NCSRP) recently launched the Soybean Research & Information Initiative (SRII), designed to provide easy access to expert information and news about soybean pests, diseases and agronomics. The new website, www.soybeanresearchinfo.com, replaced the former Plant Health Initiative. SRII, funded by the soybean checkoff, is a one-stop-shop for farmers or anyone with an interest in soybean production to quickly find the latest research and information about ongoing projects. Seedquest

Rising temperature heats up soybean farmers’ stress levels

With the heat wave still continuing in central and northern India and predictions of below normal rainfall, soybean farmers from Madhya Pradesh are worried over the prospects of the upcoming kharif crop. Monsoon wise, the next ten days are critical for soybean crop as sowing generally begins from the third week of June. News of lesser rainfall has already pushed up prices of soybean seeds in the futures market. Economic Times

 

PALM

Indonesian Minister and RSPO open to collaboration on joint sustainable palm oil standard

The Roundtable on Sustainable Palm Oil (RSPO) and the Indonesian Vice Minister of Trade have announced that they are open to a collaboration to create a joint sustainable palm oil standard. Speaking at the RSPO European roundtable in London, Dr Bayu Krisnamurthi proposed to convert RSPO into an ‘open source’ standard available also for non-RSPO members, while commenting on the struggle to achieve 100% certified sustainable palm oil. “We are building a plane while flying it,” he said, and emphasized the need to make sustainable palm oil a viable business to all of Indonesia’s palm oil growers and small-holders. Food Navigator

 

Palm Imports by India Falling as Refiners Buy Soybean Oil

Palm oil imports by India, the world’s largest buyer, probably declined in May as refiners and traders bought more soybean and sunflower oils amid forecasts for record global supplies. Shipments of the main crude and refined palm oils dropped 12 percent to 668,000 metric tons, the median of estimates from six processors and brokers compiled by Bloomberg show. Purchases of crude soybean oil more than tripled to 186,000 tons, while sunflower imports more than doubled to 150,000 tons, the survey showed. Soybean oil’s premium over palm, the world’s most-used cooking oil, narrowed to average $91 a ton this year from $244 a ton in 2013, according to data compiled by Bloomberg. That’s spurred importers to stockpile soybean oil and cut purchases of palm, says Sunvin Group, a broker in Mumbai. World output of seven major oilseeds will be a record 487.5 million tons in the year to Sept. 30, according to Oil World in Hamburg. “The soybean oil-palm oil gap was very narrow two months ago, encouraging commitments for soybean oil imports,” Sandeep Bajoria, chief executive officer of Sunvin, said by phone on June 9. “The gap has started increasing in the last two weeks and Indian importers have started looking at palm oil again.” India imports more than 50 percent of its cooking oil demand, shipping palm from Indonesia and Malaysia, and soybean oil from the U.S., Brazil and Argentina. Stockpiles at ports and due to arrive to India may total 1.35 million tons at the start of June, Bajoria said. Reserves fell to 1.17 million tons a month ago, the lowest since January 2011. “The possibility of a monsoon failure and an El Nino have also motivated some people to buy in advance,” Ashok Sethia, executive director of Sethia Oils Ltd., said from Kolkata. The monsoon, which provides more than 70 percent of annual rainfall, will be 93 percent of a 50-year average from June to September as an El Nino emerges, the India Meteorological Department said on June 9. An El Nino weather pattern, which brings drought to the Asia-Pacific region and heavier-than-usual rain to South America, may be established by August climate experts predict. Palm oil production may decline as much as 15 percent if El Nino occurs and futures may trade between 2,650 ringgit ($827) a ton and 2,850 ringgit a ton from August, IOI Corp. Chief Executive Officer Lee Yeow Chor said yesterday. Futures fell 0.3 percent to 2,379 ringgit a ton on the Bursa Malaysia Derivatives, the lowest price at close for a most-active contract since Oct. 14. Prices are down 11 percent this year. Total vegetable oil imports, including for industrial use, increased 8.9 percent to 1.06 million tons from 917,964 tons, according to the survey. Vegetable oil imports in the six months through April dropped 2 percent to 5.16 million tons, according to the extractors’ association. Bloomberg

CORN

Corn Prices Fall to Nearly 4-Month Low on Forecast for Record U.S. Crop

Corn futures slumped to a nearly four-month low Wednesday after federal forecasters reiterated expectations for a record U.S. crop this autumn and projected higher-than-expected global stockpiles. In a closely watched monthly crop report, the U.S. Department of Agriculture said favorable weather to begin this year’s growing season prompted it to leave unchanged its forecast last month for corn output of 13.935 billion bushels. That would top last year’s record crop of 13.925 billion bushels. The USDA raised its estimate for global supplies in the 2014-15 season, citing increased production this year in Brazil and India. Global stockpiles at the end of the 2014-15 season will total 182.7 million metric tons, the government said, above analyst forecasts for about 182.1 million. Corn for July delivery dropped 4 1/2 cents, or 1%, to $4.41 a bushel at the Chicago Board of Trade, the lowest settlement price for a front-month contract since Feb. 13. Corn prices have tumbled 33% in the past 12 months, pressured by last year’s crop and the auspicious start to the current growing season. Rainy weather in the Midwest over the past month has improved soil conditions. About 75% of the crop was in good or excellent condition as of Sunday, the best rating for the second week of June since 2010, according to the USDA. The government, on Wednesday, left unchanged its forecast for average U.S. corn yields this year of 165.3 bushels an acre, which would break the previous record of 164.7 bushels in 2009. Any shift in weather conditions in the Farm Belt in the next two months could alter the outlook for the crop, analysts noted. In 2012, for example, the corn crop appeared healthy early in the season, but a severe drought that took hold in July resulted in a sharp decline in production. “The corn crop looks fantastic now, but historically speaking, crop ratings early in the year aren’t great indicators of your final yield,” said Jason Britt, president of Central States Commodities Inc., a Kansas City, Mo., brokerage. The government said U.S. corn stockpiles at the end of the 2014-15 season next August would total 1.726 billion bushels, slightly below analyst estimates. U.S. soybean futures fell to the lowest in more than two months on Wednesday, weighed down by the government’s forecast for higher-than-expected global supplies of the oilseeds. The USDA left unchanged its forecast for U.S. soybean production and yield this year. The government estimated the crop would total a record 3.635 billion bushels on a yield of 45.2 bushels an acre. The agency said U.S. soybean inventories at the end of the 2014-15 season will total 325 million bushels, below last month’s forecast for 330 million. Soybean futures for July delivery dropped 17 cents, or 1.2%, to $14.45 1/2 a bushel, the lowest settlement price since March 28. Wall Street Journal

CANOLA

Prospects look good for oilseed rape harvest

Harvest prospects for oilseed rape growers look encouraging. With some sunshine in June, yields should be good and help offset the slide in rapeseed prices. Crop experts are forecasting average yields to be about 3.5t/ha after a mild winter and relatively good weather during the critical flowering period. There are concerns that the sclerotinia disease was spurred by wet conditions in May and a lack of sun that could curb yields, but most are cautiously optimistic about the harvest. Farmer’s Weekly (UK)

Soybean Farmers See Rally Ending on Record U.S. Harvest

Soybean production in the U.S., the world’s largest grower, will jump 10 percent this year to an all-time high of 3.631 billion bushels, and inventories before the 2015 harvest will be double a year earlier, a Bloomberg survey of 25 analysts showed. Macquarie Group Ltd. said soybeans may drop 15 percent to $10.50 a bushel, cutting feed costs for cattle, hog and poultry producers that are boosting output because of high meat prices. “It’s a major shift to excessive supplies,” said Bill Gary, the president of Commodity Information Systems Inc. in Oklahoma City, who has worked in grain markets since 1960 and expects prices to drop below $10 during the harvest. “The rate of soybean usage is starting to level off, and production is ramping up. We will have too much.” The planting of soybeans expanded this year as a slump in corn prices encouraged farmers to switch crops. Demand also surged for soy-based livestock feed, particularly from Chinese hog producers, which will leave U.S. inventories on Sept. 1 at 127 million bushels, or 3.8 percent of domestic use and exports, the lowest since before 1965, Bloomberg data found. Once the 2014 crop is collected, stockpiles before the 2015 harvest will jump to 319 million, according to the survey. Soybean futures for July delivery are up 16 percent this year to $14.625 on the Chicago Board of Trade, the most to start a year since 2009, and July soybean meal gained 21 percent to $484.50 per 2,000 pounds. Over the same period, the Standard & Poor’s GSCI Spot Index of 24 commodities rose 2.4 percent, the MSCI All-Country World Index of equities advanced 4.5 percent, and the Bloomberg Treasury Bond Index is up 2.7 percent. Speculators are becoming less bullish on soybeans, cutting their net-long positions to 104,150 futures and options contracts, down more than half from 208,493 on March 4, government data show. Short positions, or bets on lower prices, are the highest since August, and futures for November delivery, after the harvest, traded at $12.295, a discount to the July contract of $2.33, almost double what it was Jan. 2. Cheaper soybeans will help livestock producers already benefiting from corn prices that are about 19 percent lower than a year ago. Most animals are fed a mix of both crops until they are large enough to be slaughtered, and U.S. farmers are expected to produce a record corn crop for a second straight year, to 13.94 billion bushels, the Bloomberg survey showed. With much of the U.S. crop three months from being harvested in the Midwest, there’s still time for output to be hurt by dry weather. Societe Generale SA said in a report on June 4 that the U.S. government is overly optimistic about production and that demand will top estimates. The Paris-based bank raised its fourth-quarter price forecast to $13.66. “Demand for soybeans and soybean meal continues to be strong both in the U.S. and in the export market,” SocGen analysts led by Michael Haigh, the head of commodities research, said in the report. “Despite increasing South American supplies, we see a much tighter inventory picture.” While U.S. supplies are tight, output will be a record for a second straight year in South America, including an all-time high of 87.5 million metric tons in Brazil, the top exporter, USDA data show. World production may rise 6.1 percent to 301.2 million tons in the 12 months ending in July 2015, which would include crops that South American growers start planting in October, Oil World announced last week. Global stockpiles on Aug. 31, 2015, probably will rise to a record 81.98 million tons from 66.79 million expected this year, a Bloomberg survey showed. That’s equal to more than 29 percent of estimated use, up from about 21 percent in 2012, when futures reached a record $17.89. “The U.S. could lose 200 million bushels of production without significantly tightening the world inventory,” said Chris Gadd, an analyst for Macquarie Group in London. Bloomberg