Expert: Farmers will see lower grain prices this year

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  Farmers can expect to see lower grain prices this year because of abundant production.

  From WATTAgNet:
  A crops market specialist at Iowa State University says farmers can expect to see lower grain prices this year because of abundant production that could result in more than $2 billion in losses at harvest time.
  Record corn and soybean yields in 2014 have lowered demand and caused prices to drop.
  “It’s not necessarily a major problem, but (farmers) are going to have to figure out how to run their businesses given the lower prices now,” said Chad Hart of Iowa State University.
  “Some of that price drop is offset by the larger production in the last couple of years, so it is not that they are suffering the full hit of the price drop, because they do have some extra bushels to sell.”
  In Iowa, corn prices hit a record average high of $6.94 per bushel in the 2011-12 marketing year. Soybeans saw a record average of $14.54 the same year.
  But Hart said current price levels are often less than half what they were two or three years ago.
  Farmers “will have that previous income from the past couple years that will help fill in the hole, and then there’s a fairly good safety net that exists for producers through the Farm Bill and crop insurance,” Hart said.

IGC: World grain stocks to end season at 30-year high

The International Grains Council (IGC) expects world grain stocks to hit their highest level in some 30 years, deviating from an earlier forecast of a drop in world grains output for the year.
The upgraded inventory figure represents a gain of 30 million metric tons year-on-year, and the most since the mid-1980s, the council said.
The raised forecast for global grain inventories, comprising of stocks of wheat and coarse grains, reflected an upgrade of 12 million metric tons to 2.002 billion metric tons. The largest factor in the changed forecast was due to an upgrade to a record high in its corn harvest estimate, Agrimoney reported.
The estimate for world corn output in 2014-15 was hiked by 10 million metric tons to 992 million metric tons, which would make it the largest harvest on record. The IGC highlighted "bigger-than-previously-forecast corn crops in Argentina, Brazil, the European Union and Ukraine."


IGC, USDA figures differ
The revised IGC data for corn in slightly shows a divergence on estimates for world corn inventories between the IGC and the U.S. Department of Agriculture.
The USDA's estimate for corn stocks is, at 189.2 million metric tons, approximately 3 million metric tons lower than the IGC estimate.
USDA and IGC agree on wheat inventories, with both anticipating a harvest reaching 196 million metric tons.
On soybeans, the IGC’s year-end stocks were projected at 42 million metric tons, significantly less upbeat than the USDA, which sees inventories finishing the season at 90.8 million metric tons.

Global grain use, production estimated up for 2013/2014

Projected global 2013/2014 corn use has been increased 100 million bushels in December, split evenly between fuel ethanol and exports, according to the latest U.S. Department of Agriculture feed outlook.
Margins have been very favorable for ethanol mills, with higher ethanol and distillers' dried grains prices on the revenue side combined with lower corn prices on the input side. Exports have benefited from lower corn prices and increased global consumption. Increases in use have been offset slightly by a 5-million-bushel increase in projected imports.
Production and feed and residual are unchanged. Projected carryout is tighter by 95 million bushels, at 1.8 billion bushels, but still double last season's estimate of 824 million bushels, according to the USDA. The 2013/2014 season-average farm price for corn is projected 10 cents lower at the midpoint of $4.40 per bushel, with the range narrowed to $4.05 to $4.75 per bushel based on prices reported to date.
World coarse grain production for 2013/2014 has been projected higher in December, led by increases for Canadian corn and barley, Australian barley, and Ukrainian corn. Global coarse grain use prospects increase slightly more than production increases, trimming expected global ending stocks.
U.S. feed grain supply estimates for 2013/2014 changed little in December, as projected corn imports were bumped up 5 million bushels, largely due to increased Canadian production forecasts, said the USDA. U.S. feed grain production is unchanged at 371.5 million metric tons, 30 percent higher than 2012/2013. Projected supplies are 398.1 million metric tons, up 24 percent from 2012/2013.
Forecast U.S. feed grain use is up 2.5 million metric tons at 349.4 million metric tons, on higher corn use for ethanol and exports. This pushes total use up 18 percent from 2012/2013. The higher projected use leaves December's carryout down 2.4 million metric tons at 48.6 million metric tons, but still more than twice the 23.6-million-metric-ton ending stocks level estimated for 2012/2013.

Register for Farm Journal, WATT 'Grain & Meat Outlook' webinar

The third "Grain & Meat Outlook" will be presented on October 15.

Join Farm Journal, Pro Farmer editor Chip Flory and Dr. Tom Elam, president, FarmEcon LLC, for the third installment of the WATT Global Media/Farm Journal "Grain & Meat Outlook" webinar series for 2013.
The webinar will be held Tuesday, October 15 at 10 a.m. CT. To register for the webinar, visit www.WATTAgNet.com/Upcoming_Webinars.aspx.
Farm Journal will present its 2013 harvest estimates and the implications this will have for grain purchasers in terms of supply and prices. The impacts of the projected harvest on the meat and poultry sectors will be forecast by Dr. Elam, including expectations for meat and poultry supply and prices for the remainder of 2013 and into 2014.
Attendees will learn:
o The most up to date estimates of what the harvest numbers will be for soybeans and corn in the U.S.
o Analysis of the impact of current crop conditions on the expected final yield and harvest
o Strategies for feed users
o Wholesale meat and poultry supply and pricing for the remainder of 2013 and into 2014

International Grains Program hosts two grain courses

Understanding current grain markets and the U.S. grain handling system are crucial when working in grain trading or similar environments. The International Grains Program at Kansas State University teamed up with the USDA Cochran Fellowship Program to host two courses, held August 26-September 6, 2013. A total of 10 individuals, four individuals for the USDA Cochran Indonesia Grain Handling and Storage Course and six individuals for USDA Cochran Tunisia and Morocco Grain Management and Storage Course, traveled to IGP to attend these trainings.
The Cochran Program provides participants from middle-income countries or emerging markets with high-quality training to improve their local agricultural systems and enhance trade links with the U.S. Since starting in 1984, the program has provided training for more than 14,300 participants from 123 countries.
Participants began their courses at the International Grain Program Conference Center. Jay O'Neil, senior economist for IGP, and Carlos Campabadal, IGP specialist in feed manufacturing and grain storage, served as the course managers for these trainings. During the two weeks, participants had the opportunity to tour the KSU O.H. Kruse feed mill, a Cargill grain terminal, a local coop, Kansas Grain Inspection Services, Bob Haselwood Farms, Ron Roth Farms, as well as the USDA Center for Grain and Animal Health Research, the Hartland Innovation Center and the Kansas Wheat Commission Innovation Center.
"Trading mechanism and storage handling was my favorite part. Based on the information I received here, I will be able to make a recommendation to the board of directors about how and when anything related to soybean trading happens," says Cahvaningtiyas Rispinatri, grain manager for Perum Bulog in Indonesia.
Her company works as a state trading enterprise that belongs to the Indonesian government. Rispinatri attended this course because the company started trading soybeans, in addition to rice, and soybeans were new territory for everyone.
During the weekend that these groups were in the U.S., they each traveled to different places. The Indonesia group traveled to Topeka and Kansas City to see the sights and tour in the area. The Morocco-Tunisia group traveled to New Orleans where they toured grain facilities, FGIS offices and Bluewater Shipping as well as sightseeing.
One participant attended the course to gain expertise about grain trading, due to her lack of knowledge in this area and her company just starting in this industry.
"In Tunisia, there are few women in the industry. I came to this course to gain knowledge and confidence because I am also new," says Galia Benenita, manager for Les Grand Solios Du Nord in Tunisia.
The company that Benenita works for stores wheat, corn and now soybeans for the Tunisian government. She was able to take advantage of this course opportunity through U.S. Embassy and the USDA. She has learned not only how to understand contracting, but other important aspects of grain purchasing as well.
"Jay taught us that the contract is the most important thing every time. I will now pay more attention to all of the contracts that I make because the contract is so important."
This is one example of the trainings offered by IGP. In addition, IGP faculty also lead courses in flour milling and grain processing, grain marketing and risk management, and feed manufacturing and grain management. 

US feed grain supply estimates down on reduced harvest projections

July's projected 2013-2014 U.S. feed grain supplies are slightly lower, reflecting a reduction in harvested acres for corn and sorghum, according to the U.S. Department of Agriculture's latest feed outlook report. U.S. feed grain production is projected at 370.2 million tons, down 2.1 million from June numbers but up 84.4 million tons from the 2012-2013 estimate.
Corn planted acres for 2013-2014 are forecast to total 97.4 million acres, up slightly from the 2012-2013 estimate of 97.2 million acres, and 97,000 acres larger than March producer intentions. Prolonged wet conditions in parts of the Western Corn Belt reduced plantings, but area increases in the Eastern Corn Belt, Central Plains and across the South more than offset these losses, according to the USDA.
U.S. corn import forecasts for both 2012-2013 and 2013-2014 are increased in July, and exports for marketing year 2013-2014 are cut 50 million bushels as a late harvest is expected to delay the time when U.S. export prices become competitive. Brazil's corn exports for trade year 2012-2013 are up 0.5 million tons in July to a record 27 million tons. There are no changes in forecast corn prices, according to the report.

World grain harvest to grow 7 percent in 2013–2014

The global grain harvest is predicted to grow 7 percent in the 2013–2014 season due to increased planting and better yields, according to the International Grains Council. Output may reach 1.91 billion metric tons, up from 2012–2013's 1.78 billion metric tons, rebuilding depleted stocks.
Drought in the U.S., Ukraine and Russia hurt corn and wheat production in 2012. In 2013, U.S. farmers are expected to sow the most acres of corn in 77 years, according to March U.S. Department of Agriculture data. For corn, “output is forecast to increase 10 percent year-on-year, with harvested area and average yields both projected to be higher,” said the council. “Closing stocks will be very tight at the end of 2012–2013, but are set to increase sharply, rising to above-average levels in 2013–2014.”
World corn production may increase to 939 million metric tons in 2013–2014 from 851 million metric tons in 2012–2013, according to the report. Stocks will climb to 143 million metric tons at the end of the season from 117 million metric tons. The global wheat harvest may reach 680 million metric tons, up from 655 million metric tons in 2012–2013, according to the council. Stocks may increase to 181 million metric tons from 179 million metric tons.

Partnership to develop jet fuel from feed grains extended by federal agencies

The United States Department of Agriculture and Federal Aviation Administration on April 15 signed a five-year extension to an agreement to work for the development for jet fuel made from feed grains produced in the U.S.
Agriculture Secretary Tom Vilsack and Transportation Secretary Ray LaHood signed the agreement, which Vilsack called "an innovative, creative partnership to help build biorefineries that will produce more drop-in fuel."
The use of feed grains for fuel may not be popular for poultry and livestock producers, who rely on that grain supply for their animals. But Vilsack said during a radio address that it would be beneficial to the U.S. in terms of creating jobs and developing fuel domestically, instead of relying on foreign countries for the fuel supply.
"Today's announcement, I think, underscores the fact that the future for this country lies in energy security and controlling our own destiny by producing our own fuels in a creative and innovative way," said Vilsack.
The goal of the agreement is to be able to produce one billion gallons of fuel a year within five years. 

Farmers intend to plant more feed grains in 2013

Poultry and livestock producers got a bit of welcome news as farmers are expected to plant more feed grains for the 2013 seasons. All of the major feed grains will increase in acreage in 2013, according to the U.S. Department of Agriculture's Planting Intentions report, with the exception of soybeans, which will decrease less than 1 percent.
"If these early planting and yield projections are realized, corn and soybeans stocks will increase, which would ultimately lead to lower feed costs for livestock and poultry farmers," said American Farm Bureau Federation crops economist Todd Davis.
The combined acreage of corn and soybeans listed in the report, released on March 28, would make 2013 the highest year on record, said USDA chief economist Joe Glauber.
Corn
Growers are expected to plant 97.3 million acres of corn, which is up just slightly from the 97.16 planted in 2012. The 2013 estimate is a 6 percent increase from 2011. If the 2013 projection is realized, this will be largest acreage in the U.S. since 1936, when an estimated 102 million acres were planted.
The state with the biggest percentage increase in corn production is Georgia, where acreage is expected to jump from 345,000 acres to 495,000 acres — a 43 percent leap. It drops the most in California, but that is only an 8 percent decrease from 610,000 acres to 560,000 acres.
Iowa, the nation's leading corn-producing state, will stay steady at 14.2 million acres.
Soybeans
The projected 7.71 million acres of planted soybeans is only 72,000 acres less than planted in the U.S. in 2012, but if realized it will still be the fourth-largest year for soybeans in U.S. history.
Planting in the Great Plains is expecting to decline, with the exception of Illinois and North Dakota, which are expecting large increases, according to the report. Illinois leads all states in total anticipated acreage at 9.4 million acres.
Georgia, while not a major soybean-producing state, will have the largest increase, going from 220,000 acres in 2012 to 280,000 in 2013.
Wheat
An estimated 56.4 million acres of wheat will be planted in 2013, which would be a 1 percent climb from 2012.
Iowa is expected to have the biggest increase in acreage percent-wise, going from 18,000 acres to 40,000 acres. Kansas, the nation's top wheat-producing state, will drop about 2 percent, going from 9.5 million acres to 9.3 million acres. North Dakota, which ranks second, will also see a 2 percent drop. Oklahoma and Texas — also top producers — are expected to have near-equal acreage.
Sorghum
Sorghum acreage will grow by a larger percentage in 2013 than any other feed grain. It will jump 22 percent from 6.2 million acres in 2012 to 7.6 million acres.
Texas is expected to surpass Kansas as the nation's leading sorghum producer, going from 2.3 million acres to 3 million acres. However, Kansas is also expected to increase its production, going from 2.5 million acres to 2.9 million acres.
Arizona and Missisippi — neither large producers of sorghum — are the only two states whose acreage is expected to decrease.
Oats
Oat production in the U.S. will see a 5 percent jump from 2.76 million acres to 2.9 million acres.
The biggest mover in terms of percentage is Nebraska, which will see an 80 percent increase to reach 135,000 acres. Texas, the nation's largest producer, will jump 20 percent in acres planted, going from 500,000 acres to 600,000 acres. Oklahoma, its neighbor to the north, will decrease from 75,000 acres to 40,000 acres, the largest drop nationwide.

Grain prices to rise in first half of 2013

Grain prices are predicted to rise in the first half of 2013 before dropping in the second half as production recovers from 2012 weather challenges and creates a global surplus, according to Rabobank.
While prices have fallen somewhat from their summer highs, Rabobank said they need to rise again to slow demand and offset currently limited supplies. The high prices will in turn increase production, "resulting in a rebalancing of fundamentals and weaker price outlook in the second half of 2013," said the bank.
Chicago Board of Trade corn prices are predicted to average $7.90 per bushel in the first quarter of 2013 and then fall 24 percent to $6 per bushel during the U.S. harvest in the fourth quarter of 2013. Front-month December corn on November 28 traded around $7.60 per bushel on the Chicago Board of Trade.
Soybean prices are expected to average $14.75 in the first quarter of 2013 before falling almost 12 percent to $13 in the fourth quarter of 2013, according to Rabobank predictions. Nearby January soybeans on November 28 traded around $14.45.
Chicago Board of Trade wheat prices are forecast to reach $9.10 in the first quarter of 2013 and then fall 23 percent to $7 by the fourth quarter of 2013. Nearby December wheat on November 28 traded around $8.80.

Pilgrim's reports fourth quarter loss of $85.4 million due to grain volatility

Pilgrim's reported a net loss of $85.4 million for its fourth quarter 2011, ending a challenging year for the company that included extreme grain volatility and increased cost inputs, according to Bill Lovette, Pilgrim's CEO. The company also saw an overburden of finished goods inventories and overproduction in the first half of the year and weak chicken prices relative to costs throughout all of 2011. But Pilgrim's changed its operating model, focusing on a strategy and management realignment as well as growth of value-added exports. "This transformation brings forth a goal of more effective working capital management, an improved cost structure and a more profitable sales mix," said Lovette. "Pilgrim's has also changed its pricing strategy, creating less dependence on one-year fixed price contracts and [creating something] more reflective of markets."

EU soymeal imports rise as rapemeal supplies drop

European Union imports of soymeal are expected to rise 10% to 24.4 million metric tons by the end of the marketing year (September 30) as grain prices continue to rise and rapemeal supplies decline, reaching second-highest levels ever, according to reports.
Argentina’s soymeal exports to the EU will rise 13% to 13.3 million metric tons and Brazilian shipments are expected to rise 17% to 10.3 million metric tons. India will ship 300,000 metric tons, up from 39,000 tons in 2010, according to reports.

Europe’s largest wheat ethanol plant to temporarily close

The Ensus bioethanol plant in the UK will temporarily shut down production for up to four months due to a combination of global grain prices, low demand and competition from the U.S., according to reports.
The plant currently uses more than 1 million metric tons of wheat annually to produce ethanol, animal feed and carbon dioxide for the food and drink industry. “Ensus remains committed to operating and growing our European business,” said the company in a statement. “However, to ensure the long-term health of the business for both our customers and our employees we have decided to temporarily shut down our facility while market conditions remain depressed. We fully expect the market to improve in the coming months.”

Production, profitability now driven by grain costs and exports, says Tyson COO

Jim Lochner, chief operating officer of Tyson Foods Inc., has said a new paradigm exists in the supply and demand fundamentals in U.S. protein production: grain costs and exports are replacing domestic demand as chief drivers of profitability and production.
This shift in input costs began in the mid 2000s, which coincides with the U.S. government's mandate that a portion of the nation's gasoline be mixed with ethanol at a level of 10%. Ethanol in the U.S. is made primarily from corn, which is also a primary ingredient in livestock feed. Today, about 40% of the U.S. corn crop is used in ethanol production.
This new demand has contributed to high corn prices for producers. High input costs, along with increasing global demand for protein, have reduced the amount of meat and poultry available, according to Lochner. "Total production of major proteins appears to be about flat versus last year, but with extremely strong exports, it's likely there will be even less meat and poultry per capita," he said.
According to Lochner, Tyson is dealing with this paradigm shift by focusing on customer service, innovation and insight-driven food solutions; optimizing commodity businesses and driving out inefficiencies; focusing on multinational expansion, particularly in Mexico, China, Brazil and India; and upgrading raw material through initiatives like renewable energy from animal fat and other technologically advanced platforms.

DLA Group, Raisio sign feed ingredient procurement agreement

An agreement to work together on feed ingredient procurement has been signed by two of the largest grain product organizations in Scandinavia, Denmark's DLA Group and Finland's Raisio.
DLA coordinates wholesale trading activities for 31 cooperative and privately owned raw materials companies in Denmark, Norway, Sweden and the Baltic States, while Raisio is Finland's largest industrial grain processor, operating also in the UK, Sweden, Poland, Russia, Ukraine and Baltic countries. The two companies have agreed to cooperate mainly in the procurement of feed raw materials and other production inputs. They will also explore opportunities for cooperation in Eastern Europe and plan to set up a working group to explore these possibilities. 

Feedtech-Croptech Asia in Bangkok to highlight alternative feed ingredients

The Feedtech-Croptech Asia 2011 Conference, held March 9 by VNU in association with WATT, during VIV Asia in Bangkok, will focus on future trends in animal feeds. With grain prices soaring, the discussion will include the potential for using alternative ingredients to manage feed costs.
Presentations by guest speakers Dr. Budi Tangendjaja, U.S. Grains Council, and Dr Chinnadurai Sugumar, Kemin Industries, will focus on whether agricultural co-products or other crop products might be used instead of conventional energy and protein sources in Asian feeds for poultry and pig.
Alternative ingredients offer more options and therefore more control over the future when supplies of the main grains or proteins may be limited, these presenters point out. Often the candidates for consideration are available locally at relatively low prices, although they tend to be rather bulky and therefore transportation costs might be higher. Moreover, their quality is inconsistent at times and certain anti-nutritional factors may be present. Palatability and digestibility must be taken into account, as well as the potential risk of contamination.
However, positive aspects include not only a lower cost, but also the fact that these co-products do not generally find a use in human food. To assist poultry and pig feed formulation there is a growing amount of knowledge on where and how such alternative feed ingredients can be employed without depressing the performance of the animals or birds, together with the arrival of technology to overcome their disadvantages and allow higher inclusion rates.

Rising poultry feed costs highlighted at EuroTier

Increases in world grain prices during the second half of 2010 have had a dramatic effect on the cost of feeding broiler chickens, according to calculations quoted by poultry consultant Gordon Butland at an international poultry panel held in Germany during the EuroTier 2010 exhibition.
As recently as June 2010, the total amount of corn contained in feeds for the world’s broilers represented a cost of approximately US$46million per day.
By the time of the panel at EuroTier in November 2010, this grain cost had risen by US$36 million to US$83 million daily.

Slow harvest raises prices

A rain-slowed harvest in the U.S. is increasing feed costs, as corn closes in on $4/bushel and soybeans at nearly $10/bushel, say reports. This further hurt producers who were already suffering from weak demand for meat during the economic downturn.
Corn, with a $1/bushel increase, is expected to impact chicken farmers. A J.P. Morgan analyst cut earnings estimates for Tyson Foods because of the higher grain prices.
The U.S. Department of Agriculture estimates the corn harvest is 22% behind the five-year average for corn acreage harvested at this time. Cool, rainy weather is blamed for the lag on what was to be a record corn yield. More wet weather is predicted.
Most significantly impacted has been Illinois, which only has 6% of its crop harvested. Other impacted states include Missouri, Tennessee and Kentucky, which all are 35% behind typical averages.

Hog producer against ethanol

Smithfield Foods CEO C. Larry Pope compared ethanol usage to “burning the carpet in your house to stay warm in the winter,” while speaking at a conference, according to reports.
Smithfield Foods, whose revenues exceeded $12 billion in fiscal 2009, has seen profits from hog production decline. Pope attributes this to competition for grain resources, a commodity also used by ethanol.

USDA predicts rise in corn, wheat production

Latest crop production data from the U.S. Department of Agriculture show that corn-planted area estimates remain unchanged at 35.2 million hectare, 5% higher than last year, as reported in the weeklytimesnow.com.
Wheat production is predicted to increase by 2.8 million metric tons to 659.3 million metric tons.
Chris Brown, wheat trading manager at CBH Group, anticipates a downward pressure on world feed grain prices due to the rise in corn production.