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News Flash: September 11, 2014



Corn Declines to Four-Year Low as USDA Sees Bigger Crop

Corn and soybeans fell to four-year lows after the U.S. forecast record harvests and expanding global inventories that will help limit gains in food inflation. Domestic farmers will collect 14.395 billion bushels of corn in the season that started Sept. 1, while the soybean harvest will climb to 3.913 billion bushels, the USDA said today. Those are the biggest crops ever and topped forecasts. Three months of rain and mild weather created almost ideal growing conditions, as the USDA forecast yields at all-time highs for both crops. Two years after the worst U.S. drought in a century cut output and sent prices to the highest ever, bigger harvests are lowering costs for buyers, particularly large food companies. Corn futures for December delivery fell 1.4 percent to close at $3.41 a bushel. on the Chicago Board of Trade. Prices earlier touched $3.3575, the lowest since June 30, 2010. Domestic reserves of corn on Aug. 31, 2015, before next year’s harvest, will total 2.002 billion bushels, compared with 1.808 billion (45.93 million metric tons) forecast in August, the USDA said. Analysts surveyed by Bloomberg were expecting 1.995 billion, on average. Global inventories at the end of the marketing year will be 189.91 million tons, up from 187.82 million predicted in August, according to USDA. Larger supplies are helping to keep global food inflation in check, with the United Nations reporting today that prices in August fell to the lowest in almost four years. Soybean futures for November delivery dropped 1.2 percent to $9.815 a bushel on the CBOT, after touching $9.695, the lowest since July 2010. World soybean inventories before the start of the 2015 Northern Hemisphere harvests will rise to a record 90.17 million tons, from 66.91 million predicted this year, the USDA said. Traders expected reserves to rise to 86.08 million, on average. Wall Street Journal



Palm Oil, Rubber Prices Hit 5-Year Lows

Prices of palm oil and rubber have fallen to five-year lows on abundant supply and slow demand. With the El Niño weather phenomenon yet to play out amid a uptick in production due to seasonal factors and the looming prospects of a record U.S. soybean crop, prices of palm oil lost their footing with consumers flocking to soybean oil and other vegetable oils. On Wednesday, Malaysia reported flat palm oil exports in August despite a 22% increase in the month’s production and end-month stockpile level. Inventories hit 2.05 million tons, the highest level since March 2013. To help stem a sharp decline in prices, the country last Thursday said it would waive an export tax on crude palm oil for the months of September and October. Wall Street Journal

India and China behind Asia’s growth in palm oil consumption

In spite of a recent downturn in prices, there is still cause for optimism for Indonesia’s palm oil producers as a result of growing consumption by China and India. According to a new report, this downturn will be short-lived, and at the same time, Asia’s two economic superpowers are demanding more edible oils. Food Navigator

Palm-Kernel to Coconut Oil Exports Are Seen Advancing

Shipments of palm-kernel oil and coconut oil are expected to climb in 2014-15, rebounding from a year-earlier slide in part as coconut production in the Philippines recovers from typhoon damage, Oil World reported. Exports of both fats, known as lauric oils for their high content of lauric acid, may climb to 5.4 million metric tons from 5.01 million tons in 2013-14, the oilseed-industry researcher wrote in their report. Philippines coconut-oil production is predicted to climb to 1.34 million tons, after slumping to 1.22 million tons in 2013-14 from 1.62 million tons a year earlier due to typhoon damage. The slide left coconut oil prices at a $225 per ton premium to palm-kernel oil as of Sept. 3. Palm-kernel oil in Rotterdam traded at $870 a ton last week, unchanged from the end of August, while coconut oil was also stable at $1,090 a ton, according to the report. Typhoon Haiyan, which hit the Philippines in November 2013, damaged 33 million coconut trees in the Philippines’ Eastern Visayas region alone, and new trees take six to eight years after planting to reach full production potential, according to the United Nations Food & Agriculture Organization. Production of palm-kernel oil will rise to 6.73 million tons in the year through September 2015 from 6.47 million tons, with output in Indonesia climbing to 3.42 million tons from 3.22 million tons, the researcher forecast. Coconut oil output is forecast to rise to 3.25 million tons from 3.16 million tons, led by the increase in the Philippines. That would still be down from 3.45 million tons in 2012-13. World palm kernel-oil exports are predicted to advance to 3.45 million tons from 3.13 million tons, while shipments of coconut oils will probably climb to 1.95 million tons from 1.88 million tons, Oil World wrote. Global consumption of lauric oils is seen rising to a record 9.99 million tons from 9.53 million tons in 2013-14 and climbing 3.2 million tons from a decade ago. Bloomberg


Corn Price Falls as Crop Flourishes

U.S. corn prices have fallen to the lowest level in four years as expectations of a record harvest mount. The nation’s corn crop is in prime health thanks to near-perfect weather this year, and farmers could see the highest yields in history, according to forecasts by the U.S. Department of Agriculture and a handful of private firms. “We’ve reached a point where supply is swamping demand, and because of that we’re having a price adjustment like we haven’t seen for years,” said Don Roose, president of U.S. Commodities, a brokerage in West Des Moines, Iowa. Wall Street Journal


Destructive diseases of soybean: Sudden death syndrome and white mold observed in Illinois

Signs and symptoms of a few soybean diseases have begun to show up in some areas of the state over the last few weeks, and two of these diseases, sudden death syndrome (SDS) and Sclerotinia stem rot (white mold), are likely to cause economic losses in some growers fields this year, said a University of Illinois plant pathologist. Cool and wet weather after planting along with recent rainfall received in parts of the state have been favorable for infection and disease development and are the reasons that SDS incidence is high in some areas this year. SeedQuest

AMS FR, 9/10/14 – Soybean Promotion, Research, and Consumer Information Program: Amendment of Procedures and Notification of Request for Referendum

The Agricultural Marketing Service (AMS) is affirming without changes its interim rule to amend the procedures to Request a Referendum at 7 CFR Part 1220 by removing the specific number of soybean producers eligible to request a referendum under the Soybean Promotion, Research, and Consumer Information program, commonly known as the Soybean Checkoff Program. The number of soybean producers will be replaced with language that allows the Secretary of Agriculture to update this number based on information provided by the USDA. Federal Register Vol. 79/ No. 175



Weak world vegetable oil prices influence sunflowers

Weak world vegetable oil prices continue to influence nearby and new crop sunflower prices, according to the National Sunflower Association. Lower priced palm oil is one of the major factors impacting the market, according to John Sandbakken, executive director of the NSA. “Malaysian palm oil futures slid to near a five-year low following losses in overseas soy markets,” Sandbakken noted. “The lower palm oil futures have acted like a lead weight around the neck of CBOT soyoil values, dragging them further toward new market lows this week.”In the meantime, the market continues to monitor sunflower crop development as well as growing conditions, which continue to be very positive for oilseed development throughout the Midwest. Another factor is that fears of an El Niño are fading in Southeast Asia and the lack of that event will contain the upside in palm oil prices. The sunflower harvest is progressing in Texas well ahead of last year and the five-year average. As of Aug. 25, 45 percent of the Texas crop had been harvested, which compares to 13 percent last year and the five-year average of 12 percent. Meanwhile, in the Dakotas, sunflowers are still blooming. In North Dakota 92 percent of sunflowers are blooming, which is ahead of the 86 percent posted last year at this time and on part with the five-year average of 93 percent. In South Dakota 84 percent of sunflowers are blooming, which is behind the five-year average of 92 percent and also behind last year’s pace of 88 percent.Sunflowers in the two states are in good condition. According to the latest crop condition report from the National Ag Statistics Service, 83 percent of North Dakotas sunflowers are reported in good (70 percent) to excellent (13 percent) condition. Sixteen percent of the crop is rated fair and 1 percent is rated in poor condition. South Dakota reports 4 percent of its crop in excellent condition with 60 percent good, 35 percent fair and 1 percent poor. Minnesota’s sunflower crop is rated 39 percent in good (32 percent) to excellent (7 percent) condition, with 54 percent of the crop rated fair and 7 percent poor. Farm & Ranch Guide