Archived Posts

News Flash: April 3, 2014

INDUSTRY

Oilseeds the star performer

A leading global grains analyst has a relatively bearish view on wheat for the next 12 months, but has more optimism about the oilseeds sector. Emily French, the founder of ConsiliAgra, a US-based consultancy business, said barring intervention from Mother Nature, she felt the cycle towards a buyer’s market was continuing, especially in corn. Speaking at this month’s Global Grains Asia conference in Singapore, Ms French said supply and demand sheets were tightest in the soybean complex out of the major crop grades. Ms French said ConsiliAgra continues to hold a bearish outlook for corn values throughout 2014, based on a few key assumptions. “This is based on no El Nino impacting the Australian crop, that China has got enough cover in terms of imports and that the EU maintains its exporting pace, along with the situation in the Black Sea not altering supply and demand too much. Farm Weekly Australia

 

Corn Futures Jump Again

Corn futures jumped to a fresh seven-month high as a U.S. government forecast for lower planting this spring continued to reverberate through the market. Corn prices also rose as chilly, wet weather in the Midwest prompted concerns that farmers will be delayed in completing spring field work that is already two weeks behind normal in some locations. Traders are concerned that adverse weather could delay corn plantings for the second straight year. Heavy rain is forecast to fall for at least the next three days, which combined with cold weather could delay spring field work in the U.S. Midwest and slow planting in the Mississippi Delta region, said Bryce Anderson, an agricultural meteorologist at private forecaster DTN. The weather pattern after that remains colder and wetter than normal, he said. U.S. soybean futures rose to a new six-month high Tuesday on speculation that U.S. stockpiles could be tighter than the 145 million bushels forecast last month by the government. Wall Street Journal

 

SOYBEAN

Do Soybeans Offer More Profit?

For some time now, market analysts have been assuming that we might see a fairly large acreage shift from corn back to more soybeans. This could be the case in general; however, be sure to stay focused on your individual numbers. The idea that producers will switch from corn to soybeans assumes there must be more profit potential in soybeans compared with corn, or that the cost of growing soybeans is significantly less and could reduce overall cash flow requirements. Planting more soybeans doesn’t neces­sarily mean more profitability or less risk. Consider the following factors as you analyze your final or last-minute rotation and planting decisions: What are the realistic yield prospects between corn and soybeans; gross income differences; and current risk management/marketing tools? Yield prospects for corn versus soybeans on an individual farm-by-farm basis can greatly vary. Assuming market prices stay at current levels, maximizing yield is the most effective way to improve profit potential. Look at your yield history and see which crop has been more consistent or provided the highest yields. Has continuous corn or your previous crop rotation been effective in the past? If so, ask yourself the reason for changing a success­ful pattern. I’m not advoca­ting planting more corn neces­sarily, but I am encour­aging every producer to analyze every acre for maximum profitability. Gross income is another consid­eration that affects produ­cers who rent land. High cash rents can make it virtually impossible to profitably grow soybeans without achieving maximum yield potential. Higher rent prices can easily account for 50% of production costs. Equipment should be important component. Analyze your current equipment costs on corn versus soybeans. If planting more soybeans requires additional equipment investment, be sure to correctly evaluate the cost. Adding more soybean acres doesn’t necessarily guarantee a reduction in equipment cost. Risk-management decisions go hand in hand as we evaluate profit opportunities between corn and soybeans. The primary challenge for many producers considering more soybean acres is the lack of revenue guarantee compared with corn. For example, many producers can purchase as much as $350 per acre more revenue coverage on corn than with soybeans. For most producers, the revenue coverage for private insurance and the agricultural risk coverage (ARC) through the farm program provide a substantially higher coverage level by planting corn. Actual production history (APH), county yield averages and the level of crop insurance coverage all have a direct impact on the best rotation for your farm. Marketing opportunities between corn and soybeans could be anyone’s guess during the growing season. Regardless of your acreage mix, be sure to continuously monitor your cost of production in order to have a clear understanding of exactly where your profits begin and end. Profit oppor­tu­nities will likely be short-lived on rallies this year. AgWeb

 

U.S. farmers expect to plant record-high soybean acreage

Producers surveyed across the United States intend to plant an estimated 81.5 million acres of soybeans in 2014, up 6 percent from last year and an all-time record high, according to the Prospective Plantings report released today by the U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS). If realized, soybeans will surpass the previous record of 77.5 million acres planted in the United States set in 2009. Planted acreage intentions for soybeans are up or unchanged in all states except Missouri and Oklahoma. The largest increase is

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expected in North Dakota with a record high 5.65 million acres, an increase of one million acres from 2013. If realized, the planted area of soybeans in Nebraska, New York, Pennsylvania, South Dakota and Wisconsin will also be the largest on record. Corn growers intend to plant 91.7 million acres in 2014, down 4 percent from last year and if realized the lowest planted acreage since 2010. Expected returns for corn are anticipated to be lower in 2014 compared with recent years. Colorado, Idaho, Iowa, Kansas, Maine, Massachusetts and Utah are expected to increase planted acreage from last year. If realized, planted acres in Idaho will be a record high. Seedquest

 

Brazil Farms Seen by Oil World Sowing Second Soy Crop on Prices

Farmers in Brazil and Paraguay are planting a second crop of soybeans this year after prices rose relative to corn, signaling oilseed supplies will remain ample and the market may soon turn bearish, Oil World said. The soybean harvest is currently under way in South America, and some farmers who usually replant fields with corn are now sowing a second round of soybeans, the researcher reported. Planting of second-crop soybeans in Brazil, the top exporter, may total 750,000 hectares (1.9 million acres), up from 130,000 last year, it said. Paraguayan farmers may plant 550,000 hectares this year, according to the report. Soybean prices rose about 3.4 percent in the past year even amid prospects of record South American harvests as demand from China, the biggest consumer, cut stockpiles in the U.S. Corn fell 24 percent in the same timeframe on the Chicago Board of Trade. South America’s additional soybean area means as much as 3 million metric tons will be produced in June and July from the second harvest, Oil World said. “In many regions farmers have planted soybeans after soybeans, ignoring warnings of agronomists that this is likely to raise the risk of increasing diseases and pests,” Oil World said. “The high soybean prices and the favorable soil moisture supplies, as well as the outlook for follow-up rainfall in April and May, have contributed to this development.” Soybean production in South America’s top five growing countries will be 151.45 million tons in the 2013-14 season, 5.5 percent larger than the prior year, Oil World said last week, raising its estimate from a previous forecast of 150.6 million tons. Brazil’s second soybean harvest will still be small compared with its so-called safrinha corn crop, which government forecaster Conab estimates at 43.76 million tons in 2013-14. Soybean prices may fall “in coming weeks” as large global supplies make up for shrinking U.S. inventories, and as Chinese demand slows, according to today’s Oil World report. U.S. stockpiles on March 1 were a 10-year low at 992.3 million bushels, the U.S. Department of Agriculture said yesterday. Slowing Chinese demand and some canceled shipments mean Brazil’s soybean exports may fall to as low as 5 million tons in April, compared with at least 6 million tons in March, Oil World said. That would mark the first drop in exports between those two months in at least 10 years, according to the report. “The U.S.A. is the bullish island in an otherwise relatively ample supply situation in the rest of the world,” Oil World said. “The question is how long soybean and meal prices can stay at current high levels in cash and futures markets. In our opinion, soybean and meal prices are overvalued.” Bloomberg

 

CANOLA

Sulfonylurea-tolerant canola eyed for 2016 launch

A U.S. genetics firm has picked up Canadian approval for a trait it plans to use to breed non-genetically modified canola tolerant to sulfonylurea herbicides. San Diego-based Cibus Global last week announced plant novel trait (PNT) approval from the Canadian Food Inspection Agency and Health Canada for its product, which it’s branded as SU Canola. The company, working with Winnipeg seed distributor BrettYoung, is aiming for a “limited” commercial release for SU Canola in Canada in 2016, pending variety registration and registration for a related sulfonylurea herbicide. AG Canada

 

Hybrids breed oilseed rape success in Germany

Conventional oilseed rape varieties are set to be left behind by their hybrid counterparts as the UK follows Europe’s lead in embracing a new breed of high-yielding crops. Luke Casswell visited Germany to see how one seed breeder was changing the landscape for oilseed rape. One of the major oilseed rape breeders for the UK has predicted hybrid varieties will double any future yield benefits from conventional varieties, with an increase of up to 15% seen in the next 10 years. The hybrid revolution has already hit continental Europe with major oilseed rape growing countries such as Germany growing over 85% hybrid varieties and for France it is in excess of 90%. Currently, about 65% of the winter crop is hybrid, with a good proportion of growers still preferring the cheaper seed of conventional varieties, which gives the added bonus of being able to save seed. However, in an increasingly uncertain climate and with hybrid breeding set to rapidly progress in the coming years, many growers could find themselves switching to hybrids. Farmers Weekly