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News Flash – February 20, 2014

SOYBEAN

Quality of U.S. soybean crop even higher – Checkoff-funded crop quality survey shows less regional variation in protein, oil levels

The average protein and oil levels in the 2013 U.S. soybean crop increased, according to the soy-checkoff-funded Crop Quality Survey. Average oil levels jumped to 19%, a 0.5- point increase from 2012 levels, while average protein levels grew by 0.4 percentage points to 34.7%. The food industry uses the majority of soybean oil for human consumption and the rest for biodiesel. The higher the protein and oil levels in soybeans, the more products are available for customers, leading to greater demand and a better price. The study found less regional variation in protein and oil levels in 2013 than in previous years. Seedquest

 

South America Dryness Seen Slowing World Soy Stockpile Growth

With dry weather in South America, global stockpiles of soybeans will increase by a smaller amount than previously expected by, Oil World said. Global inventories may be 12 million to 13 million metric tons larger than a year earlier at the end of the 2013-14 season. This amount is less than annual growth of 16 million tons expected in January, the researcher said. Oil World plans to update its estimates for stockpiles for the season ending August 31 in a report that is due next week. Bloomberg

 

Crop values drop 9.8% in 2013 as prices fall

The value of U.S. crops fell 9.8% last year as prices declined for major crops, including corn and soybeans, from 2012’s record high levels, the U.S. Department of Agriculture said in its annual estimate. The value of field crops fell to $166.95 billion in 2013, down from $185.12 billion in 2012. The value is determined by multiplying the average price for a crop from Sept. 1 to Aug. 31 by the total production. Corn and soybean harvests declined during the drought of 2012, driving prices to record highs and increasing the value of field crops. But in 2013, an abundance of grain — owing to the record 13.9 billion bushels of corn and third-largest soybean crop — sent prices downward. While corn prices are expected to remain lower, there is some debate about whether prices will be as low as some are predicting. Darrel Good, an agriculture economist at the University of Illinois at Urbana-Champaign, wrote in a paper released Monday that estimates of corn in the mid-$3 range for the next several years may be too low. Associated Press

 

CANOLA

Getting paid for the oil

Some canola growers have been considering the possibility of “component pricing” for their canola, that is, receiving payments based on the oil content of the canola they deliver. Oil is what the crushers want and oil content varies on a variety of conditions, such as heat and sunlight, flowering, and, in particular, pod filling. Farmers know a little about affecting protein levels but aren’t sure how to affect the oil content due to the many environmental factors involved. That doesn’t mean there should or shouldn’t be a system to compensate the grower though. Canada’s transportation backlog has also been considered, since growers are bound by the limited available rail transportation, hampering their ability to market their crop. “If I want to and sell some more canola next month or today, I might have to wait until May or June to sell it because it’s booked up that far ahead,” said one farmer. “So, if I want to sell it tomorrow or next month, I just better hope somebody will take it. It’s almost like I have no power. It’s not whether I’m getting a premium because I have higher oil or not.” Some new varieties that have hit the market contain a higher oil potential. For any new variety to be accepted today, it needs to have a minimum oil level. According to Véronique Barthet, PhD, program manager of the oilseeds section at the Grain Research Laboratory of the Canadian Grain Commission located in Winnipeg, crop growing conditions are very important and there are many things growers can do to achieve higher oil content, such as getting the right seed for your area, and fertilizing properly. Grain Views

 

INDUSTRY

U.S farmers to face lower grain, oilseed prices in 2014-15

U.S. farmers will plant more soybeans, and cotton in 2014-15, mostly at the expense of corn, the U.S. Department of Agriculture said on Thursday. At its annual Agricultural Outlook conference, the USDA forecast lower prices ahead for most major U.S. crops as the impact of the severe 2012 drought continues to fade. “Prices for most row crops are expected to fall to the lowest levels since 2009-10,” said Joseph Glauber, USDA’s chief economist. “A return to normal yields … could see soybeans and corn set new production records.” Plantings of the eight major U.S. crops will be 253.8 million acres in 2014-15, according to the USDA, an 0.7 percent decline on the year. Soybean plantings were forecast at a record high 79.5 million acres, up almost 4 %on the year, while corn acres, seen down 3.5 percent at 92 million acres, would be the lowest since 2011-12. In early trading in Chicago, November soybean futures were up 0.24 percent and December corn was down 0.27 percent. Cotton plantings were pegged at 11.5 million acres, up 10.5 percent on the year. That was about two percent higher than an industry survey released earlier this month. The USDA earlier this month estimated net cash income for U.S. farmers in fiscal 2014 at $102 billion, down almost 22 percent on the year but still more than $5 billion above the average of the previous 10 years. Farmland values are forecast to dip as well. Still, U.S. farmers are in mostly good shape after seven years of high crop prices, Glauber said. Since 2006, more than $1 trillion has been added to U.S. farm equity, largely through increased land values. “Overall, the financial health of the agriculture sector is strong as it

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enters a period of lower crop prices,” he said. Aggregate farm debt in fiscal 2014 is projected to be the lowest since the USDA’s Economic Research Service started calculating the measure in 1960, at just 10.5 percent. Western Producer

 

BIOFUEL

USDA predicts modest growth in corn demand through 2023

The USDA predicts that lower corn prices and increasing meat production will result in gains in feed and residual corn use. The report specifies that a slowdown in the growth of distillers grains will also support increases in the use of grains in feed. Food and industrial use of corn, other than for ethanol production, is expected to increase over the next decade. Exports are also expected to increase, responding to strong global demand for feed grains to support meat production. Over the projected period, the USDA predicts the U.S. will account for about 40 percent of the global corn trade. Corn exports to China are expected to show a particularly strong increase. Mexico is also expected to be a significant importer of U.S. corn. Africa and the Middle East are also described as key growth markets for corn exports. In the European Union, the USDA predicts the use of corn for ethanol production will increase over the next decade. The E.U. is also expected to become a larger net importer of corn and is projected to remain the world’s largest importer of biofuels. The USDA’s long-term projections are published annually. According to the USDA, the projections are developed by interagency committees. The projects do not represent a USDA forecast, but a conditional, long-run scenario based on specific assumptions about farm policy, weather, the economy and international developments. The projections do not reflect the provisions of the recently passed, 2014 Farm Bill. Ethanol Producer

 

PALM

Palm Oil Rises to 17-Month High as Soybean Outlook Boosts Demand

Palm oil climbed for a sixth day to a 17-month high on speculation that dry weather will damage soybean crops in Brazil, boosting demand for this edible oil. The contract for May delivery advanced as much as 0.7% to 2,734 ringgit ($829) a metric ton on the Bursa Malaysia Derivatives, the highest level since September 2012. Futures rallied 27% from a three-year low of 2,137 ringgit in July on concern dry weather in parts of Indonesia and Malaysia may hurt production. Soybeans rallied to the highest since December due to a drought. “Soybean oil is providing a lot of support to palm,” said Gnanasekar Thiagarajan, head of trading and hedging strategies at Kaleesuwari Intercontinental Singapore Pte. “Stockpile in Malaysia will come down because of rising exports.” Palm oil shipments from Malaysia climbed 27 percent to 595,125 tons in first 15 days of the month, compared with the same period in January, SGS (Malaysia) Sdn. said Feb. 17. Soybean oil for delivery in May fell 0.2 percent to 40.58 cents a pound the Chicago Board of Trade today after climbing 3 percent yesterday to the highest level at close for a most-active contract since Dec. 11. Soybean futures were little changed at $13.4675 a bushel after jumping to $13.4925, the highest level since Dec. 10. Bloomberg