Saturday, June 03, 2006

GMO Pundit's Ag Commodity Trade Stoush: Updated News on Agricultural Commodity Trade.

This post collects breaking news items and links on farming commodities and agricultural trade.

A regular digest and discussion of items on this topic appears at the GMO Pundit Main Page.

(See also The Full Monty on Agricultural Economics and Trade for longer analysis of this topic.)

Index to GMO Pundit Trade Stoush with the newest items at the top:

  1. Hawaii sugar production up 12%. November 20, 2006.
  2. US farmers plant 5 to 10% more wheat as prices boom on KCBT. Nov 2006.
  3. Soybeans set for records in the US? Nov 2006
  4. Australian grain output hit for 6 by 2006 drought; ABARE Oct 27th 2006.
  5. ABARE Stock feed demand projections within Australia. 2003
  6. Australian wine revenues his by global glut. Oct 2006
  7. Bumper Indian cotton crop disturbing oil markets as growers shift to cotton. Sep 28 2006
  8. Oil (seed) glut over? Sept 2006
  9. Problems for trade created by GM rice accidental presence in the US. Aug 2006
  10. Rabobank forecasts expansion of global cotton export trade, India, China key players. Aug 2006
  11. USDA: ag exports will break records in 2006, 2007. Aug 2006
  12. BP and DuPont consider butanol from British beet for biofuel. Aug 2006
  13. Will bio-ethanol drive up corn prices? Aug 2006
  14. Bio-ethanol 40% of Brazilian gasoline/fuel market. Aug 2006
  15. Cargill reports strong sales increase, solid profits for 2006. Aug 2006
  16. Touch and go in the early stages of GM wood-chips for biofuel. Aug 2006
  17. IFPRI chief says opportunities and trade-offs, including high food prices will come from the biofuel boom. August 2006
  18. India cotton expected to double use of GM seeds next year, with rising yields. Aug 2006
  19. Call for Biofuel inclusion in US Farm Bill. 10th Aug 2006.
  20. Corn price rise coming due to ethanol demand Jul 2006
  21. Argentine soybeans to grow due to profitability boost plus no-tillage increases. Jun 2006 FAS USDA
  22. Biofuel ethanol forces changes in South African maize mealie market.
  23. US organic meat shortfall ready to be filled by Australia
  24. Good News from the Fourth Season of GM Cotton in India. May 2006.
  25. Increased planting of GM crops foreseen in France and the Czech Republic for 2006
  26. More Emergency Financial Support (Aid) for Soybeans in Brazil May 2005
  27. The Good Oil from AOF on International GM Canola Markets and Prices May 2006
Here's the available extra details and links, in reverse order of posting, freshest at the top of the stack, nice and warm, ready to eat (but no maple syrup):

Hawaii sugar production up 12%
Pacific Business News (Honolulu) - November 20, 2006

Pacific Business News are flagging expected higher yield for pushing production of sugarcane for sugar and seed in Hawaii at 29.8 million tons this season.This is 12 percent better than last year.

Business News say sugarcane growers intend to harvest 908,800 acres, down 1 percent from last year, but the yield forecast is for 32.8 tons per acre, four tons better than the last year. Thus fewer acres will produce more sugar if the forecast holds.

US farmers to plant more wheat as prices soar

Australia Farm Online
Friday, 17 November 2006

United States grain growers have planted 4- 15pc more land to hard red winter wheat than last year after prices rallied to reach 10-year highs.

Kansas, the leading wheat state, has an estimated 10-15pc more HRW acres planted this year, while Oklahoma and Texas have about 5pc more.

Allan Fritz, Kansas State University professor of agronomy, says that state's higher acreage was "all driven by price".

"Just driving around the state, there's a lot of fields that would have been left open for summer crops that have been planted for wheat," Mr Fritz says.

Futures of HRW wheat, which is used to make bread, hit 10-year highs at the Kansas City Board of Trade last month at $US5.56 a bushel, driven by global supply concerns due in part to the devastating drought here in Australia.

Prices for December KCBT wheat settled at $US5.18 on Tuesday.

"Five dollars a bushel does not go unnoticed in the wheat world," says Travis Miller, associate head of the Department of Soil and Crop Sciences at Texas A&M University.
SOURCE: FarmProgress, Rural Press, USA

Soybeans set to break records
By Dave Nilles, Biodiesel Magazine

2006 could be a record-setting year for soybeans in the United States. The USDA is forecasting 3.2 billion bushels of soybean production this year, which would be the largest U.S. crop on record.

The projection is up slightly from October and 5 percent above 2005. Yields are expected to average 43 bushels per acre, which would be equal to last year’s record high yield....

USDA WASDE-440 November 9, 2006 on Soybeans

OILSEEDS: U.S. oilseed ending stocks for 2006/07 are projected at 16.7 million tons, up 0.3 million tons from last month due to increased production. U.S. total oilseed production is projected at 97.0 million tons, up 0.7 million tons from last month. Soybean production is forecast at a record 3,204 million bushels, up 15 million bushels from last month based on a soybean yield of 43.0 bushels per acre. Soybean crush is raised slightly this month due to
improved soybean meal export prospects. Soybean ending stocks are raised 10 million bushels to 565 million.

Soybean and product prices are all raised this month. The U.S. season-average soybean price for 2006/07 is projected at $5.40 to $6.40 per bushel, up 50 cents on both ends of the range reflecting year-to-date price movements and strength in the corn market. Soybean meal prices are projected at $165 to $190 per short ton, compared with $147.50 to $177.50 last month. Soybean oil prices are projected at 24 to 28 cents per pound, up 1 cent on both ends of the range.

Global oilseed production for 2006/07 is projected at a record 392.5 million tons, up 2.1 million tons from last month. Foreign oilseed production is increased 1.5 million tons primarily due to higher sunflowerseed and cottonseed production. Sunflowerseed production for Russia and
Ukraine are each raised to record levels this month based on higher-than-expected yields. Higher yields are in part due to increased use of hybrid seed in the past 2 years.
Sunflowerseed production is also raised for Bulgaria based on higher yields and increased area. Global cottonseed production is raised this month as increased production for China, Uzbekistan, and the United States is only partly offset by reduced production in EU-25. Other changes include reduced rapeseed production for Australia, where drought has reduced yields by 50 percent from last year.

Global oilseed crush is raised this month reflecting increased sunflowerseed crush in Russia and Ukraine, and increased soybean crush in Argentina and the United States. Global oilseed stocks are raised as higher stocks in the United States more than offset a small reduction in foreign stocks, including lower rapeseed stocks for Canada and reduced soybean stocks for Argentina.

Grape glut hits price of wine exports
From Farmonline Australia
Tuesday, 10 October 2006

Australia’s wine glut has resulted in the first slide in value of year-on-year wine exports since the industry started keeping records in 1991.

The decline reflects entirely lower export prices, not volumes.

Average export price dropped to $A3.77 a litre - the lowest in nine years.

The figures were released yesterday by the Australian Wine and Brandy Corporation (AWBC).

Even so, wine exports still totalled $2.78 billion...

India eyes bumper cotton harvest

- Financial Express, 9/29/2006

This report from from AHMEDABAD, Sept 28 (Reuters): says India's cotton harvest is gaining pace and industry officials are optimistic of a bumper yield of 26 million bales (170 kg each) in the year ending September 2007, according to traders.

Harvesting is well underway in the major cotton growing states of Gujarat, Punjab and Madhya Pradesh, while scattered rains have delayed work in coastal areas of Maharashtra, and in Andhra Pradesh, they said.

India produced a record 24.2 million bales of cotton in 2005-2006 (Oct-Sept), 12 per cent up on a year earlier...

"The cotton quality is good and we are expecting plenty of export orders."

Farm ministry officials said they expect much of the output to be exported to China, Taiwan and the Middle East...

"A reduction in the prices of transgenic cotton seeds and plenty of rainfall have given a very high yield. High profit margins have also lured farmers to shift to cotton cultivation," said K.B. Patel of the All Gujarat Cotton Producers' Association.

Traders said 90 per cent of Gujarat's area under cotton was growing transgenic varieties, while 65 per cent of the area in Maharashtra and 40 per cent in Punjab were under Bt cotton...

Industry officials also said many farmers in Gujarat have switched to cotton from groundnut cultivation as they expect cotton to fetch attractive prices.

Oil glut over?
Market Analyst Worries Over Drop in Oilseed Acres
Analyst says for the first time in three years demand for oilseeds will exceed production.
(9/26/2006) Farm Futures staff

A Dow Jones interview with Hamburg-based analyst Thomas Meilke notes that demand for 10 major oilseeds on the world market will outstrip production for the first time in three years. Oilseed production in the next year is forecast at 385.79 million metric tons from 388.61 million tons in 2005-2006 - but consumption could rise to 392.3 million tons in 2006-2007 from 380.8 million tons. Meilke is editor of Oil World.

According to the report, that would lead to a marginal decline of 0.7% in output versus an increase of 3% in consumption. This is not expected to be a concern in the near term with oilseed stocks where they are...

Meilke's estimates, if they pan out, would drop oilseed supplies by 10% in the next marketing year. He sees a global shift in crop acres from oilseeds to grain.

USDA: ag exports will break records in 2006, 2007

Secretary of Agriculture Mike Johanns on Wednesday announced record U.S. agricultural export forecasts for fiscal years 2006 and 2007, with horticulture products, corn and soybeans accounting for most of the expansion.

Exports are expected to reach a record $68 billion in fiscal 2006, eclipsing the old record of $62.5 billion set in fiscal year 2005. For fiscal year 2007, the U.S. Department of Agriculture forecasts U.S. agricultural exports will reach a record of $72 billion, $4 billion above this year.

"These export numbers clearly illustrate the importance of opening and maintaining export markets for U.S. agricultural products," Johanns said. "Growing sales boost farm income and create close to a million jobs, benefiting the entire American economy."
Will ethanol produce a bull market in corn?
By Darrell Jobman, Editor-in-Chief, 08.07.2006 CBOT commentary.

Selected Quote:
Demand bullish
But you can make a strong bullish case for corn on the demand side. The biggest factor, of course, is corn usage for ethanol. Major credit for that goes to high prices for energy, the reason for the weather watch on the coasts where many energy production and refinery facilities are located. USDA estimates 2.15 billion bushels of corn will be used for ethanol in the 2006-07 season, up almost 35% in just one year. Within just the last few years, ethanol has grown into a major outlet for corn, accounting for about 18 percent of corn usage in this year’s projections.
As a result, total corn usage of 11.65 billion bushels estimated for this season is a billion bushels more than in 2004-05, and it would take another bumper crop of well over 11 billion bushels to maintain high stock levels. By the end of the 2006-07 season, USDA estimates corn carryover could be sliced about in half to just over 1 billion bushels. With the corn surplus evaporating, you can imagine what could happen to corn prices if there is a weather or other production problem in 2007 or 2008.
Studies by agricultural economists suggest it could mean a whole new dimension for a number of agricultural markets. Josh Roe at Kansas State University and Bob Jolly and Bob Wisner at Iowa State University have developed half a dozen scenarios about what could happen. With the price of ethanol at $2.11 per gallon, the average price from May 2005 through April 2006, an ethanol plant could afford to pay $4.29 a bushel for corn and still have a positive net margin in one of their scenarios.

Jump the price of ethanol to $3.00 per gallon, the going rate in early May, and the breakeven
price that ethanol plants can pay for corn is $6.69 a bushel in another scenario. These estimates are far above the average cash price of $1.74 a bushel that Iowa farmers received from 1996- 2006. If such a drastic rise seems unimaginable, think about what has happened to prices of crude oil, copper and a number of other commodities in the last year.
If ethanol demand does drive up corn prices, it would likly increase corn acreage and decrease the area planted to other crops next year, boosting those prices as well. The Roe-Jolly-Wisner study projects that by 2012 U.S. farmers would need to plant almost 14 million more acres of corn than they did in 2005 to meet the demand of livestock feeders, ethanol plants and exporters if China is a corn importer. Unless acreage increases that much, competition for corn could become very intense from these three sources of buyers.

Cargill reports strong sales increase, solid profits for 2006

Carried by by Pete Hisey on 8/21/2006 for

Meating place are reporting that privately held Cargill Inc., Minnetonka, Minn., reported a $4.1 billion increase in revenues for fiscal 2006, with record earnings excluding one-time charges related to its majority ownership in The Mosaic Company, a major fertilizer supplier.

The item says altogether, the company reported revenues of $75.2 billion, up 6 percent and, excluding the one-time charge of $190 million, net earnings were $1.73 billion, up 13 percent from $1.53 billion a year ago, but t5hat fiscal 2005 earnings were higher, at $2.1 billion, including a one-time gain of $578 million related to Mosaic.

Cargill offers few details about results of its various businesses, which range from beef to biofuel, with its largest businesses in commodity crops and byproducts...

"Although the food ingredients and applications segment lagged the year-ago level, earnings advanced in several of Cargill's edible oils, sweeteners, meat and poultry businesses around the world," said Warren Staley, chief executive...

India: GM Cotton Cultivation Expected to Double in 2007

MUMBAI: The coming season, cultivation of genetically modified cotton in India is expected to double over the next year, said K F Jhunjhunwala, president of the East India Cotton Association here on August 10. The president further pointed out that farmers are opting for more disease-resistant seeds amid a rise in the total cotton production in the country.

Jhunjhunwala said that of the total area of 8.8 million hectares under the crop in the year to the end of Sept 2006, 1.3 million were planted with transgenic Bt cotton and the coming season it should be around 3.2 million hectares.

However the total area under cotton cultivation was likely to remain around 9 million hectares as over a period of time, Bt cotton may touch 70-75 percent of the production. The switchover to genetically modified seeds was seen as the main reason for the increase in production as it offered protection against major pests.

During 2002, India allowed farmers to plant transgenic cotton containing a gene from bacillus thuringiensis, a bacterium species, which causes lethal paralysis in the digestive tract of bollworm. Jhunjhunwala also informed that total cotton crop in the season ending September 2006 would be 24.5 million bales, slightly higher than the 24.3 million produced a year ago.

Further exports would surge to a record 4.5 to 5 million bales from 1 million during the same comparable period because of carryover stocks and a good harvest. Whereas production next year could easily touch 27 million bales, if there was a slight increase in yields, he added.

Argentina Soybeans Forecast To Increase Due To Higher Profitability
FAS, USDA June 2006
Argentina’s 2006/07 soybean production is forecast at 41.3 million tons, up 2 percent from last
year, which is largely due to an increase in area. The USDA forecasts Argentina’s area at 15.4
million hectares, which is 3 percent above last year’s record yield of 15.0 million. Argentina’s
area has been steadily rising since the 1980’s, and there is evidence that this trend will continue
based on soybean profitability, agronomic practices, and seed technology. Soybeans remain the most profitable crop for grain and oilseed farmers across Argentina. \
Additionally, biotechnology has resulted in increasingly shorter cycle soybeans, which have allowed double-cropping in areas previously planted with one crop per growing season. Further supporting the increase of soybean area, no-tillage practices have allowed areas to be cropped which were previously unsuitable for agriculture, such as in the expansion areas of the north and west. While area and production have increased, USDA forecasts Argentina’s soybean yield at 2.7 tons per hectare, which is unchanged from 2005/06 and 2004/05 soybean yields. (For more information, contact Nicole Wagner at 202-720-0882.)

The mealie vs Event 3 272
Mail and Guardian Online, RSA
Kevin Davie
02 June 2006 08:45

Ethanol, made from crops such as sugar cane and maize, is attracting interest internationally as a relatively benign, renewable energy source that is cost-effective at current oil prices The genetic modification (GM) battlefield has been extended to biofuels production, with South Africa featuring among a number of countries that are being asked to allow the import of GM maize to make ethanol.

The GM industry worldwide wants to use GM to boost the energy properties of crops for ethanol production, says an environmental lawyer.

Ethanol is attracting interest internationally as a relatively benign, renewable energy source that is cost- effective at current oil prices...

Syngenta South Africa, a subsidiary of the Swiss agrochemical giant, gave notice last month of its intention to seek commodity clearance to import its GM maize, Event 3 272, into South Africa to be used to produce ethanol.

Syngenta, which employs 19 000 people, is a market leader in GM [sic]. Its GM business, which includes a special seed to boost ethanol production, is growing revenue at 45%, says Jim Cramer of

GM is controlled in South Africa by the Genetically Modified Organisms Act of 1997. GM is used in both maize and soya cultivation for human consumption and for cotton and cotton oil for non-food use.

The application has been launched simultaneously in the United States, the European Union and China.

Environmental lawyer Mariam Mayet says Syngenta’s Event 3 272 application is the first GM application in the world for commercial approval for a non-food (fuel) use of a food crop (maize)...

...Freese and Mayet say the enzyme in Event 3 272 is derived from novel deep-sea organisms that have never been a part of the human food supply.

“Very little is known about organisms of the Archaea domain, as they were only recently discovered, and are ubiquitous mainly in inaccessible regions such as the deep sea.”...[sic! Freese and Mayer need to do their basic biology courses again;Pundit]

More vroom
Syngenta South Africa’s head of regulatory affairs, Kulani Machaba, said the application was for a commodity clearance, meaning that Event 3 272 will be imported and not grown in the country.

He said he could not see how Event 3 272 could contaminate the maize supply as it would not be grown in South Africa and would have to be ground at the port of entry.

He said Syngenta was ready to address concerns and that GM had to pass rigorous testing otherwise it would not be brought to market...

Syngenta’s public notice reads:

“This is to inform the public that an application for commodity clearance of genetically modified Event 3 272 maize has been submitted by Syngenta South Africa. Upon receiving official authorisation; Event 3 272 maize could be imported in South Africa.

“Event 3 272 maize contains the amy797E gene derived from micro-organisms of the archeal order Thermococcales and the pmi gene from Escherichia coli. The amy797 E gene encodes the thermostable amy797E alpha-amylase enzyme, which catalyzes hydrolysis of starch into smaller and less complex carbohydrate molecules during the starch liquefaction step of the dry-grind ethanol process. The pmi gene encodes the PMI enzyme as a selectable marker. PMI allows transformed cells to use mannose as a primary carbon source during the process of regenerating plant material after transformation. [i.e. it avoids antibiotic resistance markers objected to by some critics]

“In those countries where Event 3272 maize will be cultivated, the grain will be used in the dry-grind fuel ethanol process. It is not intended to be used in other processing applications (for example wet-milling and dry-milling processes) or to be exported as a commodity crop. However, it cannot be excluded that the harvest originally intended to be used in the dry-grind fuel ethanol industry or the by-products of this processing could enter international trade routs at extremely low levels. This is not an application for cultivation or release into the environment.”-- Kevin Davie

Imports go home
GrainSA will be opposing Syngenta’s application to import Event 3 272, says Fanie Brink, not because it is anti-genetic modification (GM) or new technology, but because farmers cannot grow these mealies since this technology is yet to be approved for use as a cultivar in South Africa.

This means that South African farmers are competitively disadvantaged.

“We have no problem with GM,” says Brink, manager of industry services at GrainSA. “But farmers can’t plant that cultivar because it is not approved by the local Act.”

Brink says he suspects the new cultivar will be grown in the United States. This raises the prospect that South African farmers will be asked to compete against a cultivar that they are not permitted to grow and the heavily subsidised US maize farmer.

We are trying to develop a biofuels industry to help both the emerging and commercial farmer,” says Brink. “[Importing Event 3 272] goes against all these plans.” -- Kevin Davie

FEED GRAINS future supply and demand in Australia

abare e Report 03.21 (2003)
Prepared for the Grains Research and Development Corporation
Amhed Hafi and Peter Connell

From the Summary
Base case
Total use of all main ingredients (wheat, barley, maize, sorghum, oats, triticale, lupins, peas, faba beans, soybean meal, sunfl ower meal, canola meal, cottonseed meal, cottonseed, mill mix and rice pollard) in all demand regions in Australia is projected to increase from 8.9 million tonnes in 2003-04 to 10.5 million tonnes in 2007-08 largely refl ecting the projected growth in animal numbers over this period. The projected growth in feed use is expected to be driven by the cattle feedlot industry, with consumption of feed ingredients by this industry increasing by 29 per cent over the fi ve year period. Of the other industries, consumption of feed grains is forecast to increase by 12 per cent in the pig industry, 15 per cent in the broiler industry and 7 per cent in the dairy industry.
Over the projection period, demand for main feed ingredients is projected to increase strongly in northern New South Wales and Queensland, refl ecting the concentration of beef feedlot industries in these areas, and in the Victorian eastern, the New South Wales Hunter and the Queensland southern demand regions where the poultry meat industry is most heavily represented.
Around 30 per cent of all main feed ingredients consumed is projected to be used in each of New South Wales and Victoria, with the main feed ingredients used in Queensland accounting for just over 20 per cent of total Australian use.
In 2007-08, approximately 400 000 tonnes of feed, mainly wheat, lupins and barley, is projected to be shipped from Western Australia and South Australia to east coast regions, particularly Victoria and the Queensland central and New South Wales north and Sydney southern regions.

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