China issues new rule on U.S. DDGS imports

ddgs-usgcChina says it wants all imports of distiller’s dried grains (DDGS) from the U.S. to be officially certified free of the MIR 162 GMO trait. The new requirement is effective immediately.

But U.S. Grains Council (USGC) president and CEO Tom Sleight says China is asking for something that cannot be done.

“This certificate they’re asking for does not exist,” Sleight says. “It cannot be produced from a U.S. government authority.  They do not inspect for biotech traits.”

China stopped issuing import permits for U.S. DDGS in June on concerns it might contain the trait, which has not been approved for import by China’s agricultural ministry.

Grains Council chairman Julius Schaaf, a farmer from Randolph, Iowa, says it’s time for China to approve the MIR 162 trait.  But he’s not convinced it’s just about GMOs.

“If this is a supply issue and China has plenty of corn and they really don’t need our grain right now, let’s call it what it is—a supply issue,” Schaaf says. “Let’s don’t blame it on biotechnology, which is pushing back on an industry and a development area that grain farmers desperately need for the future to stay competitive and provide global food security.”

AUDIO: Julius Schaaf (2:25 MP3)

Trade issues with China are expected to be a big part of the discussion at next week’s summer annual meeting of the USGC in Omaha.

Strong week for new crop soybean, corn sales

USDA reports combined old and new crop corn, soybean, and soybean meal export sales for the week ending July 17 were larger than expected, while soybean oil and wheat were within pre-report estimates. Shipments of soybeans and wheat were more than what’s needed weekly to meet USDA projections for their respective marketing years, but corn fell short of its mark.

Wheat came out at 443,200 tons (16.3 million bushels). Japan picked up 92,800 tons and Nigeria bought 71,300 tons, while unknown destinations canceled on 45,000 tons. Around a month and a half into the 2014/15 marketing year, wheat sales are 328.2 million bushels, compared to 451.8 million early in 2013/14.

Corn was reported at 291,500 tons (11.5 million bushels), down 49% from the week ending July 10 and 21% lower than the four week average. Japan purchased 216,200 tons and Spain picked up 70,000 tons, but unknown destinations canceled on 220,100 tons. For the 2013/14 marketing year to date, corn sales are 1.907 billion bushels, compared to 735.6 million in 2012/13. Sales of 1,143,400 tons (45.0 million bushels) for 2014/15 delivery were mainly to unknown destinations (644,000 tons) and Japan (268,400 tons).

Soybeans were pegged at 226,700 tons (8.3 million bushels), up from both the previous week and the four week average. China bought 158,800 tons and Indonesia purchased 103,600 tons, while unknown destinations canceled on 87,400 tons. At this point in the marketing year, corn sales are 1.907 billion bushels, compared to 735.6 million this time last year. Sales of 2,451,100 tons (90.1 million bushels) for 2014/15 delivery were primarily to China (1,238,500 tons) and unknown destinations (949,600 tons).

Soybean meal came out at 93,900 tons, 12% higher than the week before and 33% larger than the four week average. Mexico picked up 26,200 tons and Honduras bought 12,400 tons. So far this marketing year, soybean meal sales are 10,039,900 tons, compared to 9,708,800 a year ago. Sales of 348,900 tons for 2014/15 delivery were mostly to unknown destinations (232,600 tons) and Honduras (20,000 tons).

Soybean oil was reported at 2,900 tons, a decline of 65% on the week and 72% from the four week average. Mexico purchased 2,100 tons and Nicaragua picked up 600 tons. Cumulative soybean oil sales are 782,500 tons, compared to 900,300 last year.

Net beef sales totaled 10,800 tons, up 20% from the previous week, but down 13% from the four week average. The reported buyers were Japan (3,100 tons), Mexico (2,600 tons), Canada (1,800 tons), South Korea (1,500 tons), and Hong Kong (600 tons).

Net pork sales totaled 4,300 tons, 26% more than the prior week, but 59% less than the four week average. The listed purchasers were Japan (1,400 tons), Mexico (600 tons), South Korea (600 tons), Hong Kong (500 tons), and China (200 tons), with a cancellation by Canada (100 tons).

CWT accepts 17 export assistance requests

Cooperatives Working Together (CWT) has accepted 17 requests for export assistance from Dairy Farmers of America, Michigan Milk Producers Association, Northwest Dairy Association (Darigold) and Tillamook County Creamery Association to sell 3.646 million pounds of Cheddar cheese, and 661,387 pounds of whole milk powder to customers in Asia, Europe, North Africa, Central and South America and Oceania. The product will be delivered July 2014 through January 2015.

 

Year-to-date, CWT has assisted member cooperatives in selling 78.024 million pounds of cheese, 48.767 million pounds of butter and 16.067 million pounds of whole milk powder to 41 countries on six continents.

We’re watching them, they’re watching us

Spurred by higher prices, milk production in the 28-member European Union was up 3.8 percent in May with January-through-May deliveries well-above year-ago levels.  Dairy Market News reports the Netherlands and Germany are nearly 4.5 percent higher, France is up 6 percent, Irish production is 8.5 percent above the same period in 2013 and the U.K. is up nearly 12 percent.  In Eastern Europe production in Poland in May was up nearly 8 percent, the Baltic States are more than 12 percent above May of last year and Romanian production is up more than 17 percent.

Of particular interest: U.S. dairy exports increased 15 percent from January through May with butterfat exports up 84 percent compared to the same period in 2013.  Dermot Carey, senior vice president for Darigold Incorporated recently told a Wisconsin forum we still produce more milk than we consume so the export market is very important.  He noted his company exports around 42 percent of the milk it takes in daily.  That makes people a bit nervous about that difference between the global prices and domestic prices.  He also told the group that while China’s demand has slowed a bit they still import a lot of dairy as their milk production is hobbled by the lack of clean water.  Cheese Market News says Carey told the attendees, “People are using our futures markets to price exports and the futures market also can indicate what’s to come.  We watch it for clues.”

In Oceania, the new production year is just getting started, most dairy farmers have signed contracts for the new season with beginning prices above the last several years.

 

Wheat inspections top estimates

USDA reports wheat export inspections for the week ending July 17 were larger than expected, while soybeans were within pre-report projections and corn was below all estimates.

Wheat came out at 515,283 tons, up 127,883 from the week ending July 10, but down 144,225 from the week ending July 18, 2013. For the 2014/15 marketing year to date, wheat inspections are 3,234,684 tons, compared to 4,409,864 in 2013/14.

Corn was reported at 939,791 tons, 6,522 less than the previous week, but 676,820 more than this time last year. At this point in the 2013/14 marketing year, corn inspections are 41,010,793 tons, compared to 15,661,245 in 2012/13.

Soybeans were pegged at 96,915 tons, a decline of 21,278 on the week and 9,561 on the year. So far this marketing year, soybean inspections are 42,909,855 tons, compared to 35,296,744 a year ago.

Sorghum inspections totaled 114,122 tons. That’s a decrease of 149,981 from the week before, but an increase of 86,444 from last year. 2013/14 sorghum inspections are 4,012,896 tons, compared to 1,527,781 in 2012/13.

Danone buys into another African company

French dairy giant Danone is buying a 40-percent stake in East Africa’s largest dairy company.  Brookside has 40 percent of Kenya’s dairy market with sales of around $176 million in 2013.  The company sells a variety of dairy products in Kenya, Uganda and Tanzania.  It takes-in milk from 140,000 farmers in the region.

This is Danone’s third acquisition in Africa in the last two years; it bought a 49-percent share in West Africa’s Fan Milk International and owns 67 percent of Morocco’s top dairy company, Centrale Laitiere.

With China’s economy slowing, companies see Africa with a growing middle class as the next great growth market.

Based in Paris, Danone has more than 190 production plants around the globe with sales exceeding 21 billion Euros ($28.4 billion).  60 percent of Danone’s sales are in emerging countries.  Brand names include DANNON and Activia yogurt products and Evian water.

Economics in agriculture are changing

The economics of the ag industry are changing.  As projections for the 2014 corn crop continue to grow, margins for farmers are becoming tighter.  Purdue ag economist Mike Boehlje says farmers are going to have to be better managers of risk.

But, he says, these aren’t new ideas.  “It’s actually returning to what we did before we had this price run up,” he says.  “Many of the things we need to do now are dust off the old playbook, think about how margins were tighter at the earlier part of this century, and think like we’re back in the 1990’s.”

Boehlje tells Brownfield it’s about returning to the basics of farming.  “We do need to know our costs,” he says.  “We have to have a tighter handle on our cost structure and we need to not do all of our costs by acre, in my judgment, but rather per bushel.  Ask ourselves how much do I have to get out of each bushel to make my land costs – because I don’t sell acres, I sell bushels.”

Knowing cost structure, he says, also allows farmers to know what the major cost items are, control them, and hopefully reduce inputs.

AUDIO: Mike Boehlje, Purdue Ag Economist (6:20mp3)

Corn export sales solid

USDA reports corn export sales for the week ending July 10 were larger than expected, while wheat was below all estimates and soybeans and soybean products were within what analysts were anticipating. Physical shipments of soybeans were above what’s needed weekly to meet USDA projections for the current marketing year, but corn and wheat both fell short of their respective marks. The 2014/15 marketing year for corn and soybeans starts September 1.

Wheat came out at 320,700 tons (11.8 million bushels). Japan purchased 115,100 tons and China bought 60,000 tons, while unknown destinations canceled on 38,100 tons. Roughly a month and a half into the 2014/15 marketing year, wheat exports are 311.9 million bushels, compared to 427.5 million early in 2013/14.

Corn was reported at 573,700 tons (22.6 million bushels), up 58% from the week ending June 3 and sharply higher than the four week average. Japan picked up 246,900 tons and Colombia purchased 94,300 tons. At this point in the 2013/14 marketing year, corn exports are 1.896 billion bushels, compared to 736.7 million in 2012/13. Sales of 495,000 tons (19.5 million bushels) for 2014/15 delivery were mainly to unknown destinations (198,900 tons) and Japan (150,400 tons).

Soybeans were pegged at 37,700 tons (1.4 million bushels), down 33% from the previous week and 71% lower than the four week average. Taiwan bought 44,000 tons and China picked up 6,400 tons, but unknown destinations canceled on 28,500 tons. For the marketing year to date, soybean sales are 1.676 billion bushels, compared to 1.335 billion this time last year. Sales of 561,000 tons (20.6 million bushels) for 2014/15 delivery were primarily to China (365,000 tons) and unknown destinations (149,500 tons).

Soybean meal came out at 83,800 tons, 72% larger than the week before and 33% more than the four week average. Morocco purchased 20,000 tons and Mexico bought 19,900 tons, while unknown destinations canceled on 35,400 tons. So far this marketing year, soybean meal sales are 9,946,000 tons, compared to 9,524,800 tons a year ago. Sales of 89,600 tons for 2014/15 delivery were mostly to unknown destinations (55,700 tons) and Egypt (27,000 tons).

Soybean oil was reported at 8,300 tons, 35% smaller than the prior week and 25% less than the four week average. Mexico picked up 5,400 tons and Nicaragua purchased 1,600 tons. Cumulative soybean oil sales for the current marketing year are 779,500 tons, compared to 897,000 last year.

Net beef sales totaled 9,000 tons, down 50% from the previous week and 37% lower than the four week average. The listed buyers were Japan (3,500 tons), Mexico (1,900 tons), South Korea (1,400 tons), Canada (1,200 tons), and Taiwan (300 tons).

Net pork sales totaled 3,400 tons. That’s a decline of 62% on the week and 70% less than the four week average. The reported purchasers were Japan (800 tons), China (500 tons), Mexico (400 tons), the Philippines (400 tons), and South Korea (400 tons). Hong Kong canceled on 100 tons.

India: Number 1 in dairy and growing

NDDBIndia says their milk production will increase by six percent this year taking total production to 140 million metric tonnes.  The world’s largest dairy producing country had 132.4 million metric tonnes last year.  By comparison, the U.S. produced 91 million metric tonnes last year and is projected to produce over 93 million this year.  The National Dairy Development Board (NDDB) expects they will need 200 million metric tonnes by 2022.

Created in 1965 by an act of Parliament, the National Dairy Development Board was charged with extending the success of one dairy cooperative to other parts of India.  A program called Operation Flood, launched in 1970 and financed by the World Bank sought to increase production, improve farmer income and provide fair prices for consumers.  By 1996 India had become the largest milk producing country in the world.

The second phase of the plan, launched in 2010 seeks to expand production of milk and milk products and improve quality.  In its annual report; NDDB says with rising incomes comes the demand for more and diversified dairy products.  Right now about 70 percent of the milk produced in the country is used in its raw form and the rest is processed into dairy products.  The value-added dairy products share is growing by around 25 percent per year and that pace is expected to continue through 2019-20.

The profitability of fluid milk ranges from 4 to 5 percent while value-added products return 12 to 18 percent.  That profitability is attracting private investment from around the globe; France’s Lactalis recently purchased Tirumala Milk Products in a deal estimated at $275 million.  Danone and Fonterra are looking while investors like Sequoia Capital, Cargill Ventures and Rabobank are already in.  The World Bank is also helping finance an effort to increase production per cow.

Read the latest NDDB Annual Report here:

Global Dairy Trade prices decline again

The semi-monthly Global Dairy Trade Auction on Tuesday saw the overall price decline another 8.9 percent from the July 1st sale.  This is the biggest drop since the April 1st sale and the tenth decline in the last eleven sales.  Since early February, the GDT Price Index has plunged from 1,482 to 961, the Index is the lowest it has been since October 2, 2012.

No lactose or milk protein concentrate was sold, everything else saw a price decline.  Butter slipped 1.1 percent, cheddar cheese down 1.6 percent, butter milk powder declined 4.6 percent, skim milk powder down 7.1 percent, rennet casein dropped 8.9 percent, anhydrous milkfat tumbled 10 percent and whole milk powder dumped 10.9 percent from the previous sale.

Read the latest GDT report here: