Report discusses corn trade disruptions

Losses to the U.S. agricultural industry resulting from China’s rejection of corn shipments containing the MIR 162 trait could be as high as 2.9 billion dollars.

That’s according to a report released by the National Grain and Feed Association.  NGFA says the bulk of that loss is in an estimated 11-cent per bushel lower average price paid to farmers for their corn.  The estimate also includes losses to corn exporters and sellers of DDGs, as well as China’s rejection of several soybean shipments which it claims contained the banned corn variety.

In the U.S., the MIR 162 variety is marketed by Syngenta as Agrisure Viptera.  The report warns that more trade disruptions and economic losses are possible in the next marketing year due to the introduction of another Syngenta biotech variety into the supply chain.  That product, called Agrisure Duracade, is being planted in the U.S. for the first time this spring.

Viptera and Duracade have both been approved for use in the U.S., but have not received Chinese approval.

Beef exports hit marketing year high

USDA reports corn, soybean, soybean product, and wheat export sales for the week ending April 10 were within pre-report estimates. Physical shipments of corn and soybeans were more than what’s needed weekly to meet USDA projections for the 2013/14 marketing year, but wheat fell short of its mark.

Wheat came out at 438,000 tons (16.1 million bushels), up sharply from the week ending April 3 and 48% higher than the four week average. Brazil picked up 85,000 tons and Peru bought 64,600 tons, while Nigeria canceled on 50,000 tons. For the 2013/14 marketing year to date, wheat sales are 1.129 billion bushels, compared to 964.1 million in 2012/13. Sales of 359,900 tons (13.2 million bushels) for 2014/15 delivery were mainly to unknown destinations (211,600 tons).

Corn was reported at 601,900 tons (23.7 million bushels), down 9% from the previous week and 36% lower than the four week average. Japan purchased 161,000 tons and Israel picked up 120,000 tons, while unknown destinations canceled on 268,400 tons and China canceled on 168,000 tons. So far this marketing year, corn sales are 1.676 billion bushels, compared to 634.1 million this time last year. Sales of 192,600 tons (7.6 million bushels) were to Japan (141,800 tons) and unknown destinations (50,800 tons).

Soybeans were pegged at 19,200 tons (700,000 bushels), 76% less than the week before and 79% under the four week average. Indonesia bought 58,000 tons and Japan purchased 34,900 tons, but unknown destinations canceled on 68,200 tons and China canceled on 54,700 tons. At this point in the marketing year, soybean sales are 1.639 billion bushels, compared to 1.345 billion a year ago. Sales of 400,700 tons (14.7 million bushels) for 2014/15 delivery were primarily to unknown destinations (330,000 tons) and China (60,000 tons).

Soybean meal came out at 36,600 tons, 80% below the prior week and down 84% from the four week average. Venezuela picked up 40,000 tons and Mexico bought 23,300 tons, while unknown destinations canceled on 84,500 tons. Cumulative soybean meal sales for the current marketing year are 8,727,400 tons, compared to 8,388,900 last year. Sales of 84,000 tons for 2014/15 delivery were to unknown destinations (80,000 tons) and Mexico (4,000 tons).

Soybean oil was reported at 5,500 tons, 63% more than the previous week and 40% above the four week average. Mexico purchased 4,400 tons and Venezuela picked up 1,500 tons. 2013/14 soybean oil sales are 577,700 tons, compared to 829,000 in 2012/13.

Net beef sales were a marketing year high at 21,900 tons; that’s up 18% from the week before and 42% higher than the four week average. The listed buyers were Japan (7,800 tons), Mexico (3,800 tons), South Korea (3,500 tons), Hong Kong (2,400 tons), and Canada (1,500 tons).

Net pork sales totaled 8,600 tons. That’s larger than the prior week and 15% more than the four week average. The reported purchasers were South Korea (2,300 tons), Canada (1,800 tons), Japan (1,500 tons), Mexico (1,100 tons), and the Philippines (500 tons).

Board directs rail industry to provide delivery plans

Given the immediate need for fertilizer for farmers entering the planting season, the Surface Transportation Board will now require reports from the rail industry on its plans to ensure delivery of fertilizer to farmers in the upper Midwest.

Steve Sharp president of Consumer United Rail Equity applauds the STB’s decision.  He says, “It’s in the best interest of all parties to ensure that farmers have all the necessary inputs to produce a crop during the upcoming growing season.”

According to the STB, the Canadian Pacific Railway Company and BNSF Railway have been directed to report by April 18, 2014 their plans to ensure delivery of fertilizer.  The board further directed CP and BNSF to each provide weekly status reports, over the next six weeks, beginning April 25, 2014 regarding delivery on their respective networks.

Global Dairy Trade prices continue to decline

Global Dairy Trade Auction Tuesday saw overall prices decline 2.6 percent, the fifth consecutive decline at the auction but significantly less than the 8.9 percent tumble two weeks ago. In fact, this is the smallest decline since the February 18th sale. This is the lowest overall average price since February of 2013.

The only increase was anyhdrous milk fat up 0.6 percent. Whole Milk powder was down 1.6 percent from the last sale, cheddar cheese is 3.3 percent lower, rennet casein down 4.3 percent, skim milk powder declined 4.4 percent, butter down 4.9 percent, milk protein concentrate fell 7 percent and butter milk powder dropped 8.6 percent compared to the April 1st sale. No lactose was offered for sale.

The auction triggered a busy day in the nonfat dry milk market on the Chicago Mercantile Exchange although the price held steady. There were 11 loads sold, 10 bids unfilled and 1 offer uncovered.

Read more GDT results here

 

USMEF questions sustainability of Mexican market

U.S. beef exports to Mexico are strong so far this year, but there are questions about whether it can continue. The U.S. Meat Export Federation (USMEF) says the value of beef shipped to Mexico from the U.S. is up 40 percent. However, Meat Export Federation Regional Director Chad Russell says that level may be difficult to sustain.

“I think that the price point and the high prices of beef will still create challenges on behalf of the normal Mexican consumer being able to afford those cuts,” said Russell, in comments provided by the USMEF.

Mexican beef production suffered from the same drought affecting Texas and the Southwestern U.S. Plus, Russell says Mexico shipped a lot of their feeder cattle to the U.S.

“If our prices of U.S. beef were at historical levels, it would be great opportunity to ship more product down [to Mexico], but the problem is is our prices are not at that level at this point,” he said.

U.S. pork exports to Mexico are also strong so far in 2014 with 36 percent of Mexico’s market share.

Smithfield parent to offer IPO

The world’s biggest pork producer wants to raise some cash. China’s WH Group, the company that purchased Smithfield Foods says it will offer 3.65 million shares on the Hong Kong stock exchange. Estimates are the shares would sell from $1.03 to $1.45 raising between $4.1 and $5.3 billion (U.S.). The IPO price will be set next week with trading scheduled to launch April 30th.

WH Group was known as Shuanghui International Holdings prior to the Smithfield acquisition. Australia’s Sky News says most of the money raised by the sale would be used to pay off the loan the company took out to buy Smithfield less than a year ago.

In a related story, it is being reported that two top executives at WH Group are getting nearly $600 million in shares as a “reward” for making the Smithfield deal happen.

 

Wheat inspections top estimates

USDA reports wheat export inspections for the week ending April 10 were larger than expected, while corn and soybeans fell within pre-report estimates.

Wheat came out at 683,544 tons, up 57,140 from the week ending April 3 and 39,167 higher than the week ending April 11, 2013. For the 2013/14 marketing year to date, wheat inspections are 27,238,463 tons, compared to 23,000,928 in 2012/13.

Corn was reported at 1,448,812 tons, 138,248 above the previous week and 1,075,367 larger than this time last year. So far this marketing year, corn inspections are 25,170,478 tons, compared to 11,625,249 a year ago.

Soybeans were pegged at 267,939 tons, 241,388 less than the prior week, but 87,068 more than last year. At this point in the marketing year, soybean inspections are 40,944,918 tons, compared to 33,536,713 a year ago.

Sorghum inspections totaled 206,470 tons. That’s an increase of 172,611 tons on the week and 183,873 on the year. 2013/14 sorghum inspections are 2,543,570 tons, compared to 1,340,779 in 2012/13.

Agricultural tariffs still the issue for TPP

Top U.S. and Japanese negotiators wrapped-up two intensive days of talks on Thursday in an effort to work out some deals before President Obama meets Prime Minister Shinzo Abe in Tokyo on April 24th. Hopes are the two leaders would set the stage for completion of the Trans Pacific Partnership (TPP) that is being negotiated.

But agricultural issues and auto parts remain some major stumbling blocks. The U.S. wants Japan to eventually eliminate all tariffs on U.S. agricultural products including beef, pork and rice. Earlier this week Japan signed a trade deal with Australia under which they will reduce tariffs on beef imports from the current 38.5 percent to 23.5 percent on chilled beef and 19.5 percent on Australian frozen beef. The Japan News says Tokyo would like to reach a similar deal with the U.S.

 

 

Chinese rejections cost $$$$

The National Grain and Feed Association says China’s rejection of U.S. corn because of an unapproved genetically-modified variety has cost grain companies $427 million in lost sales and re-routed shipments. China has rejected nearly 1.45 million metric tonnes of U.S. corn since last November for traces of Syngenta’s MIR 162 variety. Syngenta has been awaiting approval from China for more than four years.

NGFA says U.S. corn sales to China are down 85 percent from a year ago and the rejections have affected the global prices of corn and soybeans in a negative way.

 

Cattle leader says deal undermines U.S. beef

A member of the National Cattlemen’s Beef Association board of directors from Missouri says the Japan/Australia trade deal seeks to undermine U.S. trade in the Trans Pacific Partnership which is under negotiation.

Chuck Massengill of Missouri says the U.S. is looking for ZERO tariffs for beef trade with Japan, “We’re looking for zero. We’re not looking for kind of close to zero or something less painful than we have now.”

The deal with Japan will reduce the current 38-and-a-half percent tariff on Australian beef to 19-and-a-half percent in 18 years.  Chilled beef from Australia going into Japan will be levied at 23.5 percent.

The agreement with Australia set a precedent for Japan to negotiate with the U.S. on sensitive items like beef, according to Kent Bacus, with the National Cattlemen’s Beef Association.

“I hope that our negotiators are a little more successful, because deal that was struck with Australia is not even close to anything that would be acceptable to us,” said Bacus on Friday, during an interview with Brownfield Ag News.

But, Massengill tells Brownfield, Australian beef does not come close to what U.S. beef offers to consumers, “Australian grass-fed, or short fed beef, does not anywhere compare to the U.S. grain fed beef (which is) just a standard of quality all over the world. So, we certainly we don’t want to be brought in and held to the same standards as what the Australians trade for.”

Massengill and his wife raise cattle in central Missouri’s Moniteau County. He is the immediate past president of the Missouri Cattlemen’s Association.

Interview with Chuck Massengill (6:00 mp3)