Monthly Archives: October 2014

The Fall Markets Review — Mustering Up a Mild Rally or Settling in For the Season?

As we say goodbye to October, colder weather is setting in just as the markets could be warming up.

More than a few analysts are pointing to soy meal as a driver of the sustained rally we’ve seen in the grain markets recently, but the move is now beyond “rational levels”. With an increase in price of 30% in just one month to almost $400 per short ton, supply and demand factors don’t really justify the current levels (i.e. the fundamental glove doesn’t fit). Combined with precariously tight ending stocks, the behind-schedule U.S. soybean harvest has created problems for some crushers, in addition of having to compete with exporters (U.S. soy meal commitments and shipments are up 61 per cent year-over-year in the current marketing-year at 6.25 million tonnes).

Additionally, there’s are more speculators joining the market as managed money increase their bets on a prices rising, which can compound movements as these new players don’t have to hold the physical product. This is all in mind, because soy meal is a high protein feed ingredient, other grains (i.e. corn or wheat) can be substituted but this can also be compromised by the current rail logistical issues in the U.S.. Overall, both domestic and export demand has helped maintain price increases, creating more than just an argument that the bottom has been priced in.

While the U.S. harvest progresses, other bullish catalysts surround seeding – specifically the U.S. winter wheat, Black Sea winter wheat, and Brazilian soybeans. In the U.S., the portion of winter wheat seeded rated good-to-excellent came in at 59%, well below pre-report expectations of 68%. In Russia, the condition of the winter wheat crop is well below the last five-year average but one should keep in mind that the area has had three continuous years of bumper crops. Agrokultura, one of the largest corporate farms in Russia, is saying that 20 per cent of its fall-seeded crops have emergence issues and are “not well prepared to face the winter.” Thanks to drier weather, fall-seeded winter wheat acreage went up by more than 2.5 times from last year’s rain-hampered fall drilling to more than 65,000 acres this year. Analytical company SovEcon has suggested that this year’s winter kill could mirror that from the 2009/10 season, which saw 12.6 per cent of the crop lost. Keep in mind, that the resulting increase in global wheat prices didn’t start to get seen until May/June of 2010. Accordingly, production of wheat may fall below 50 million tonnes in Russia for the first time in two years. And finally, in Brazil, seeding conditions are starting to finally improve after a lack of moisture available to help the crop get a head start on the growing season.

The minimum volume requirements legislation enacted by the Canadian government last spring on CN and CP railroads could possibly be a thing of the past in a month’s time, as grain movement in Canada continues to flow. Despite smaller harvests in 2014, Canada has already exported 3.9M tonnes of wheat and 1.9M tonnes of canola, up 16% and 41% respectively over 2013 but one could easily argue that a lot of that grain exported could’ve been carryover from the 2013/14 season. Louis Dreyfus was one grain company who flexed its muscle against CN railroad, filing a service complaint in May, and the CTA has ruled in favour of the major grain buyer (which contrasts a similar service complaint tabled by the Canadian Canola Growers Association which was rejected earlier this month). On that basis, various grain company industry associations (also known in some circles as lobbyists) still suggest that “rail service continues to be inadequate, uneven, and unpredictable.” This is most evident in the producer car ordering system as cars ordered in “not-easy-to-reach” areas for movement months ago still have yet to be seen or even heard about.

Finally, one macro variable effect that may be in the back of the market’s mind is the general downturn we’ve seen over the past year or so in the overall commodity sector. More market analysts are suggesting a peak has already been reached in the commodity super cycle (usually lasts 20-30 years). Here in Canada, those effects are more pronounced as the Great White North is commodity-rich, export-driven economy. According to a recent MacLean’s article, “the 15-year commodity boom – which gave Canada its Teflon-like strength during the deep global recession and helped make us the envy of the world – has run its course.”

The effects are being felt elsewhere possibly though as it looks like COFCO, the Chinese state grain-buying agency will take a hit of almost $168 million due to soybean prices tanking over the first nine months of 2014. Not to say that commodity prices can’t bounce back, but when economic growth starts to slow in emerging markets, those same markets don’t demand the same amount of commodities/goods/services to fuel their growth. Other countries may look to their central bank to provide “quantitative easing” (that is, providing more liquidity to the market) so as to help propel growth, such as Japan did recently and the U.S. Federal Reserve had done for the last six years up until this month. This all being said, we continue to be advocates of “pencil farming” at this time of year: re-evaluate monthly/quarterly expenses and what sort of monthly/quarterly sales and at what prices you should be making.

The post The Fall Markets Review — Mustering Up a Mild Rally or Settling in For the Season? appeared first on Real Agriculture.

Time to Price ’15 and ’16 Crops? A Bearish Theme Prevailed at Cereals NA Conference

Are you ready for corn prices down around $2.70/bushel, or soybeans under $7 next fall? Those numbers were included in some of the projections shared in Winnipeg this week, as market analysts and traders from around the world gathered for the second annual Cereals North America market outlook conference.

The conference was organized and co-hosted by CWB Market Research Services and Chicago-based advisory firm AgResource Company.

Despite the recent rally led by soymeal in grain and oilseed markets, the need for farmers and grain buyers to adjust to lower prices for the next few years was a recurring theme at the event.

“We’re lacking a demand driver, and as we think forward, we need to build demand with lower prices over numerous years,” explained AgResource president Dan Basse in the video above, noting the two main demand drivers over the last few years — growth in the biofuel market and China’s economy — are both slowing demand.

He described the recent rally as a short-term bump in prices due to logistical challenges with soybean meal in the U.S.

“A lot of this rally is due to railcar dislocations in the United States. Unfortunately, railcars will find their ways to the right spots and we’ll find availability of supply. We’re double-booking on meal, both on truck and rail,” he noted. “I think this is a short-term phenomenon, maybe over in the next week or two.”

That means the current market should be viewed as a pricing opportunity, not only for next year’s crop, but for 2016 as well, suggested Basse.

 

The post Time to Price ’15 and ’16 Crops? A Bearish Theme Prevailed at Cereals NA Conference appeared first on Real Agriculture.

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Genetic Engineering Keeps Pest Populations in Check — For Human and Crop Health

Genetically engineering insects is no longer a vision for the future. In fact, one group of GE mosquitoes, Oxitec Ltd’s OX513A, have moved from proof of principle to deployment, and have been used in open field trials in Malaysia, Grand Cayman, and now in Brazil. The mosquitoes are hoped to control their non-modified counterpart, Aedes aegypti, the primary mosquito vector of dengue fever.

Severe dengue fever, or Dengue Haemorrhagic Fever, was first recognized during epidemics in the Phillippines and Thailand in the 1950s. Only nine countries then experienced severe dengue epidemics, but the disease continues to spread. Today, dengue fever is endemic in more than 100 countries, with now over 40% of the world’s population at risk, and, according to World Health Organization (WHO) estimates, 50-100 million dengue infections occurring per year.

OX513A males are released to mate with with female A. aegypti and any progeny resulting from their courtship die as late larvae or pupae. Allowing for a subsequent generation means the doomed insects compete for resources with wild-types, increasing their overall effectiveness at reducing dengue-vectoring populations.

There’s a very clear space for improvements in control of diseases borne by insects, but Oxitec doesn’t deal with public health alone. Another major part of their portfolio is finding potential solutions to high agricultural pest populations, including the scourge of many a Canadian canola field — the diamondback moth.

In order to find out more about genetically engineered insects (and how a company based in the United Kingdom can get away with that kind of work), we caught up with Simon Warner, Chief Scientific Officer of Oxitec Ltd, at the recent Agricultural Biotechnology International Conference in Saskatoon.

More from the 2014 Agricultural Biotechnology International Conference

 

 

The post Genetic Engineering Keeps Pest Populations in Check — For Human and Crop Health appeared first on Real Agriculture.

Genetic Engineering Keeps Pest Populations in Check — For Human and Crop Health

Genetically engineering insects is no longer a vision for the future. In fact, one group of GE mosquitoes, Oxitec Ltd’s OX513A, have moved from proof of principle to deployment, and have been used in open field trials in Malaysia, Grand Cayman, and now in Brazil. The mosquitoes are hoped to control their non-modified counterpart, Aedes aegypti, the primary mosquito vector of dengue fever.

Severe dengue fever, or Dengue Haemorrhagic Fever, was first recognized during epidemics in the Phillippines and Thailand in the 1950s. Only nine countries then experienced severe dengue epidemics, but the disease continues to spread. Today, dengue fever is endemic in more than 100 countries, with now over 40% of the world’s population at risk, and, according to World Health Organization (WHO) estimates, 50-100 million dengue infections occurring per year.

OX513A males are released to mate with with female A. aegypti and any progeny resulting from their courtship die as late larvae or pupae. Allowing for a subsequent generation means the doomed insects compete for resources with wild-types, increasing their overall effectiveness at reducing dengue-vectoring populations.

There’s a very clear space for improvements in control of diseases borne by insects, but Oxitec doesn’t deal with public health alone. Another major part of their portfolio is finding potential solutions to high agricultural pest populations, including the scourge of many a Canadian canola field — the diamondback moth.

In order to find out more about genetically engineered insects (and how a company based in the United Kingdom can get away with that kind of work), we caught up with Simon Warner, Chief Scientific Officer of Oxitec Ltd, at the recent Agricultural Biotechnology International Conference in Saskatoon.

More from the 2014 Agricultural Biotechnology International Conference

 

 

The post Genetic Engineering Keeps Pest Populations in Check — For Human and Crop Health appeared first on Real Agriculture.

Cargill Closing Manitoba Grain Handling Facility

Cargill has announced it will be closing its grain handling facility at Swan River, Manitoba as of May 31st, 2015.

The site, which includes two elevators, “would require significant and costly upgrades in order to maintain the high level of safety and efficiency standards at Cargill,” said Jeff Wildeman, the regional manager for Cargill AgHorizons, in a statement released Thursday.

cargill_logo4According to the company’s website, the facility at Swan River has capacity of 11,360 metric tonnes.

The process of decommissioning the grain elevators has started, and demolition is expected to be complete by December 2015.

For producers affected by the decision, the closest Cargill elevators are at Dauphin and Yorkton.

The company’s crop input retail business in Swan River will remain open.

The post Cargill Closing Manitoba Grain Handling Facility appeared first on Real Agriculture.