South Africa corn output forecast down 1.6 percent on drought

South Africa has cut its corn output forecast by 1.6 percent due to drought in some growing regions, according to the country's Crop Estimates Committee. The number is now 11.6 million metric tons of corn, down from the 11.8 million metric tons predicted in March.
South Africa produced 12.8 million metric tons of corn in 2010, the country's largest crop since 1982. “Prolonged dry spells in the Northwest and Free State provinces” reduced the forecast, said Marda Scheepers, a spokeswoman for the committee.
Farmers will probably sow 516,600 hectares of wheat, 1.1 percent more than the area planted last season, according to the committee. The country’s farmers planted 551,200 hectares of wheat in 2012, the smallest area since the start of record keeping in 1931. South Africa is expected to harvest 1.92 million metric tons of wheat this season.

Corn shortage prompts ethanol plant to suspend production

An ethanol plant in Macon, Mo., is suspending production February 1 because the extended drought has made it almost impossible to get enough corn to make the fuel, a plant spokesman said January 25.
POET Biorefining plans to keep its Macon facility open and all 44 employees will keep working, spokesman Matt Merritt said. The company plans to move ahead with $14.5 million in plant upgrades, and workers will use the down time to help with some of the upgrades.
"There's just really no corn in the immediate [Macon] area available," Merritt told the Associated Press. Shipping in corn from elsewhere wasn't an option because of the cost. Merritt added that POET will continue to purchase corn for future use when it becomes available. There is no timetable for when production will resume.
POET operates 27 plants in seven states and is based in Sioux Falls, S.D. The Macon plant has been in operation since 2000.

US 2012 corn crop cut one-fourth due to drought

The final U.S. Department of Agriculture report on the 2012 crop-growing season showed U.S. farmers harvested 10.78 billion bushels of corn, less than three-fourths of what the USDA predicted in spring 2012, due to the record-breaking drought that ruined the crops.
At the same time, demand created by the drought made the crop the most valuable ever, with prices remaining above $7 per bushel for most of summer and fall, according to the report. Overall, the crop was worth $85 billion, said Chad Hart, an agriculture economist with Iowa State University. The harvest was also still the eighth-largest in U.S. history, in spite of the drought.
Iowa had its driest year since 1989 but was still the largest corn producer, with 1.87 billion bushels, down 20 percent from the 2011 harvest year. Minnesota was second with 1.37 billion bushels, Nebraska was third with 1.29 billion bushels and Illinois was fourth with 1.28 billion bushels. Corn production in Illinois fell 34 percent from 2011 and Nebraska’s production was down 16 percent. Minnesota, where the drought was not as severe as in other states, produced 14 percent more corn in the 2012 harvest year than in 2011.
The year-end average yield was 123.4 bushels of corn per acre, according to the USDA.

Philippines typhoon does P3.04 billion corn crop damage

The damage to corn crops in the Philippines caused by typhoon Pablo has increased to P3.04 billion (US$74.3 million), according to area farmers, affecting 30,000 hectares and destroying 210,000 metric tons of corn.
Philippine Maize Federation President Roger Navarro has asked for immediate assistance from the government, saying that the industry needs as much as P3 billion (US$73.4 million) to start over. Navarro has also requested that the government provide genetically modified seeds to farmers in affected areas for quick turnaround planting to replace damaged crops. But agriculture officials have said that such a thing could be too expensive.

"One of their recommendations is to make it 50–50, meaning the farmer will shoulder half of the cost of [genetically modified] seeds," said Navarro. "Whatever the government decides to do is okay with us as long as they act immediately." In the meantime, the federation has asked the National Dairy Authority to buy the damaged corn as an emergency purchase. "At this stage, the corn cannot be accepted by corn traders and feed millers," said Navarro. "However, it is very desirable to the dairy industry for silage."

National Corn Growers Association requests extension for ethanol waiver comments

The National Corn Growers Association has requested a 30-day extension on the Environmental Protection Agency's 30-day comment period regarding the Renewable Fuel Standard waiver requested by multiple members of the U.S. government and agriculture industries.
According to association President Garry Niemeyer, the current comment period, which began the last week of August, does not provide sufficient time for a thorough analysis of the waiver, coming as it does during the beginning of harvest season — one of the busiest times of the year for farmers. "Also, with the crop still in the field, it is too early to determine this year’s final corn supply,” said Niemeyer. Currently, the comment period will close at the end of September. After that time, the Environmental Protection Agency will have an additional 60 days to make a decision. The association said it plans to submit comments before the deadline.

Georgia governor latest to call for ethanol mandate waiver

Georgia Governor Nathan Deal has become the latest to petition the U.S. Environmental Protection Agency requesting that the Renewable Fuel Standard be waived in light of the current drought plaguing the Midwest.
The University of Georgia has reported that the state’s poultry producers are spending $1.4 million extra per day on corn due to the drought and the upward pressure on corn prices caused by the demand created by the Renewable Fuel Standard for ethanol. This translates to over $516 million per year if these market conditions continue, said Deal. “It is abundantly clear that substantial evidence exists now within the existing reports of the [U.S. Department of Agriculture] regarding expected crop yields and within private sector forecasts of crop yields that current and futures pricing of corn will result in severe economic harm in the poultry and livestock sectors,” he said. “It can also be reasonably projected that this harm will continue well into 2013, if not beyond 2013, and that the decreasing availability of stocks of grains will only be eased when a new crop season provides an abundance of supply.”
Deal is the fifth governor to request that the agency waive the Renewable Fuel Standard, joining the governors of Maryland, Delaware, North Carolina and Arkansas. His petition comes just a day after the Environmental Protection Agency said it is issuing a Federal Register notice opening a 30-day public comment period on waiving the Renewable Fuel Standard requirements. This statute provides the agency with 90 days in which to make a decision.

Tight corn supplies will force cuts, losses

The bulk of the bad news regarding the 2012 crops should be in by now, according to Tim Brusnahan with Brock & Associates Inc. Brusnahan, together with Dr. Chris Hurt of Purdue University, was a speaker at WATT’s August 13 webinar, “August Crop Report: Analysis and Implications.”
Brusnahan noted that with corn at $8.00 per bushel, there has been a shifting to alternatives such as feed wheat. Unfortunately, there is not enough feed wheat available to significantly impact corn demand. “So overall, we still have a fairly tight supply around the world,” he said.
Brusnahan also observed that erratic rainfall throughout the Midwest still leaves some volatility in the soybean sector, as final yields may come in lower than U.S. Department of Agriculture estimates. This will also provide opportunities for South America to plant large crops and take advantage of high prices.
He summarized that in regard to money flow, the large speculator remains long corn, soybeans, soybean meal, wheat, cattle, hogs and Class III milk. As to U.S. corn and soybeans, corn prices indicate zero carry and soybeans have a large inverse that should cause producers to move their crop to market at harvest. For ethanol, margins have improved and remain in a state of rebalancing. For DDGS, supplies and use are a little uncertain until more is known of Midwest corn quality.
Hurt, a professor of agricultural economics at Purdue, noted that the current drought will most likely end up being the second or perhaps third largest natural disaster in the U.S. in the last 30 years, after Hurricane Katrina and the 1988 Midwestern drought. “Bottom line, there’s not going to be enough corn to go around,” Hurt said.
For the animal industry, Hurt described conditions in the short run as being “very bleak.” He indicated that there will be losses for all species across the board for the next 12 to 14 months. “This will result in some liquidation of herds, it’s going to reduce supplies, and over time it’s going to bring up retail prices of those animal products and, therefore, the wholesale prices and the farm-level prices.”
However, Hurt said this will ultimately give cause for some long-term profits in late 2013 and into 2014 and 2015. The challenge, he noted, will be getting through the next 12 to 14 months.
Both Brusnahan and Hurt addressed a number of questions at the end of the webinar relating to various aspects of the crop report.
To view an archived version of this webinar, go to: www.wattagnet.com/ondemandwebinars.aspx

US government reviewing ethanol policy in wake of calls for changes

The U.S. government is reviewing the country's ethanol policy in the wake of numerous calls for a suspension of the existing mandate due to the continued drought, which has lowered predicted corn yields and raised prices.
Ethanol production was 817,000 barrels a day the week of Aug. 5, down 15 percent from a record in December 2011. Stockpiles dropped 3.9 percent to 18.7 million barrels, the lowest level since Dec. 30, 2011, according to Energy Department data. “I would simply say that the [Environmental Protection Agency], in consultation with the Department of Agriculture, is looking at this,” said Jay Carney, the White House press secretary. “I don’t have a statement one way or the other predicting what the experts are going to say.”
Ethanol producers have said they're being unfairly blamed for supply pressures, and that roughly one-third of the corn processed to make ethanol is then converted into dried distillers grain, a form of animal feed. In addition, detractors say that a prolonged interruption in ethanol production could produce a spike in the price of gasoline. “You can’t suddenly go to a business that’s manufacturing 9 million barrels a day of gasoline and say ‘Were going to get rid of ethanol,’” said Tom Kloza, publisher of the Oil Price Information Service. “You’d have chaos.” 

USDA expected to cut US corn production forecast again

The U.S. Department of Agriculture is expected to cut the U.S. corn production forecast by another 15.4 percent due to damage from the continuing drought when it releases its latest supply-and-demand report on Aug. 10, according to a Dow Jones Newswires poll of analysts.
The report is likely to forecast corn production of 10.97 billion bushels for 2012, down from its July forecast of 12.97 billion bushels, according to the Dow Jones poll. Production in 2011 was 12.36 billion bushels. Analysts are predicting a corn-crop yield of 126.2 bushels per acre, down 13.6 percent from the USDA’s forecast in July of 146 bushels per acre.
U.S. soybean production estimates will also be cut, by 8.7 percent to 2.79 billion bushels, from the USDA's last projection of 3.05 billion bushels. Analysts say they expect a soybean yield forecast of 37.2 bushels per acre, down 8.1 percent from a previous forecast of 40.5 bushels per acre.
Due to the production shortfalls, analysts say corn inventories at the end of the 2012–2013 marketing year are likely to be at the lowest level since the 1995–1996 year. Soybean inventories, or ending stocks, will probably be forecast at their lowest since 2003–2004. Analysts expect the USDA to cut its estimate of corn ending stocks for 2012–2013 by 45 percent, to 651 million bushels. Soybean ending-stocks for 2012–2013 will be cut by 11.5 percent, to 115 million bushels.

Zambia makes deal to ease Zimbabwe corn shortage

Zambia has made a deal to sell 300,000 tons of corn to help ease food shortages in Zimbabwe, reducing Zambia's food surplus by half, according to the Zambian state Food Reserve Agency.
Zimbabwe needs about 2.2 million tons of corn per year, but there is currently a deficit of 800,000 tons due to depleted stocks and erratic rains. In November 2011, the United Nations said 1.5 million Zimbabweans would need food aid through 2012 and called for $258 million in donor funding. Since 2000, about 4,500 white farmers have been forced to leave their Zimbabwe properties because of a land redistribution program for blacks that Zimbabwe’s President Robert Mugabe said was intended to correct colonial-era imbalances in land ownership. Prime properties were handed over to military and security chiefs and Mugabe party loyalists, and much of the land has been left to lie idle.
The Food Reserve Agency in Zambia said current harvests are expected to leave a surplus of more than 1 million tons of corn that the country no longer has the capacity to store, and that it is tapping regional export markets. Zambian corn sells for about $170 a ton. Imports into southern Africa in the past decade from as far away as Canada and Argentina have gone for more than $300 per ton.

US corn surplus larger than expected on early harvest

The U.S. corn surplus on August 31 will be larger than previously estimated as farmers begin harvesting early after a warmer-than-usual spring in the Midwest, and as more wheat is used to feed livestock, according to reports.
Unsold supplies will come to 801 million bushels, up from the average estimate of 715 million bushels, though still down from 2011's 1.128 billion bushels, said U.S. Department of Agriculture data. “The USDA is saying that rising wheat supplies will bridge the gap in corn supplies before the U.S. harvest begins,” said Roy Huckabay, an executive vice president of the Linn Group. “Corn supplies are tight, and that will increase attention on crop conditions and weather forecasts the next three months.” Corn futures for May delivery fell 1.4 percent to $6.49 a bushel On April 9 on the Chicago Board of Trade. The commodity has dropped 16 percent in the past year on forecasts that world wheat reserves will rise to the highest since 2002.
Estimates say that 4.6 billion bushels of corn will be used for animal feed, 5 billion for ethanol and 1.7 billion for exports. Global corn consumption will reach 867.29 million tons, an increase from 848.06 million last year, according to the USDA.

South Africa corn stocks reach nine-month lows

South Africa's corn stocks reached nine-month lows in February on increased exports and a smaller-than-expected harvest, falling to 1.88 million metric tons from 2.56 million metric tons during the same time in 2011, according to the South African Grain Information Service.
The stocks, which include 1.27 million metric tons of white corn and 608,000 metric tons of yellow corn, are the lowest since May 2011. “The harvest for the marketing year that ends in April has been about 400,000 tons smaller than we expected,” said Theo Venter, market analyst at Senwes Ltd. “Exports have been higher than predicted, and this has lowered stocks.” The country began importing yellow corn in December 2011, the first such shipments since the season through April 2010.

Global wheat, soy, corn reserves declining

Global inventories of wheat, soybeans and corn are dropping more than forecast as farmers find themselves unable to keep up with rising demand for food, livestock feed and biofuel, according to reports.
Wheat stockpile forecasts for May have been cut by 1.7 percent to 209.6 million metric tons, while soybean reserves for August are now estimated to reach a three-year low of 57.3 million metric tons, according to the U.S. Department of Agriculture. Corn is expected to reach a 16-year low of 801 million bushels.
Soybean production in Brazil and Argentina, the two biggest growers after the U.S., will drop to 115 million metric tons from 124.5 million metric tons in 2011 and the 127 million metric tons forecast in December 2011, according to the USDA. The latest number is now lower than three years ago, when the harvest was damaged by weather. Global soybean production, at 245.07 million metric tons, is also expected to be about 19 million metric tons lower than 2011, the biggest drop since 1965.
Global use of wheat in livestock feed will reach a record 131.06 million metric tons, up from the 130.66 million metric tons estimated in February, said the USDA.

Minnesota farmers concerned over tight seed corn supply

Seed corn may be in short supply for Minnesota farmers, causing growing concern as the spring planting season draws nearer, according to John Mages, president of the Minnesota Corn Growers Association. Syngenta, which has its seed headquarters in the Minneapolis-St. Paul area, saw its production fall 15 to 25 percent short of expectations in the summer of 2011. This has left the company limited in its ability to supply farmers preparing for spring, said corn genetics portfolio manager Eric Boersma.

Brazil lowers corn crop harvest estimates

Brazil lowered its harvest estimates for the 2011-2012 summer corn forecast, saying a 13-week drought has caused corn growers to reduce output in a key growing region in that country.
Brazil lowered its corn forecast by 4.3 percent from December 2011's estimated 36.44 million metric tons to 34.88 million metric tons, according to AgRural Commodities Agricolas. According to the crop forecasting firm, Brazil harvested 35.93 million tons over the same period last year. 
AgRural said Brazil's southern states of Rio Grande do Sul, Santa Catarina and Parana reduced output by 13 percent to 12.86 million tons due to an extended dry season followed by heavy rains. 

Kenya corn production may decline due to fungus

Kenya's corn production may decline as a result of a fugal disease that has already destroyed more than 1,000 acres of the corn crop in the southwest part of the country, according to the Kenya Plant Health Inspectorate Service.
The fungus is still undergoing testing for identification. Symptoms include leaf discoloration and wilting.

Vietnam animal feed manufacturers face raw material shortage

A shortage of raw materials in Vietnam has led to domestic animal feed manufacturers depending on imports for up to 70% of their materials, according to the Ministry of Industry and Trade.
Vietnam businesses depend mainly on the U.S., India and Argentina for the imports of raw materials used to produce the country's animal feed. Domestic corn meets roughly 70% of Vietnam's demand, while the local soybean supply can satisfy only 5% to 10% of demand, according to the Ministry.
The Vietnam Animal Feed Association is suggesting that the government push the development of local raw materials. Currently, the country has 233 feed manufacturers, of which 50 are foreign-invested and 11 are joint-ventures. The remaining firms are domestic, but 60% of the market share is held by the foreign companies, according to the association

North Carolina urging corn aflatoxin testing after hurricane

North Carolina corn growers are being encouraged to have their corn tested for aflatoxin to prevent contamination of feeds and food in the wake of Hurricane Irene coupled with a hot summer.
Aflatoxin is a byproduct of the mold Aspergillus flavus and can be harmful to both humans and livestock. “The hot summer and the heavy rains from Hurricane Irene have increased the potential for aflatoxin in corn,” said North Carolina Agriculture Commissioner Steve Troxler. “It’s very important that farmers have their corn tested.”
Samples submitted for insurance purposes must go through a U.S. Department of Agriculture-certified grain marketing location.

Japan corn imports drop on tainted meat concerns

Japan's corn imports may drop 5% to 15.4 million metric tons overall in 2011 as a result of concerns about radiation-tainted meat, which have curbed livestock production, according to reports.
Beef imports rose 11% after it was discovered that stores sold meat from cattle fed with hay contaminated by radiation from the Fukushima nuclear plant. Japan’s corn purchases in the first five months of 2011 fell 4.5% to 6.47 million metric tons, according to government data. Cargoes of feed corn fell 8.2% to 4.05 million metric tons.

Corn futures up on global inventory drop

World corn inventories pre-2012 harvest will fall to 115.66 million metric tons.

U.S. corn futures for December closed at $6.58 per bushel on the Chicago Board of Trade on July 12, gaining 25.25 cents (4%) since June 29 and 68% from the same time in 2010.
Numbers have been affected by U.S. government predictions that corn stockpiles will be smaller than expected, with inventories before next year's harvest coming in at 870 million bushels, the lowest since 1996. Original estimates mentioned 1.029 billion bushels. In addition, the U.S. Department of Agriculture has said that a record 5.15 billion bushels of corn will be used to make ethanol, more than originally estimated.
At the same time, global corn consumption continues to rise. In the year that begins October 1, it will rise 4.1% to 877.6 million metric tons, up from an already record 842.8 million metric tons in the current year, according to the USDA. World inventories before the 2012 harvest will fall to 115.66 million metric tons and stockpiles will be equal about 13% of consumption, the lowest since 1974.