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Sorry kidl. Only following the pure phosphate plays. Potash had its prematurely early run. Even the analysts fail to understand phosphate prices always lead potash. That's quite simply because phosphate is applied at planting whereas potash is applied as crop yield and price potential develop.
Rock phosphate is now US$190-200/t.
Main stock I am watching is MAK.AX (also has a Toronto listing). In 2008, this stock popped from 19c up to $2.90 as rock phosphate rocketted to US$400/t. Management has been the issue since and obviously the spectacular collapse in rock prices following the GFC. However a deal with the Indian State owned bohemeth NMDC is likely to be inked in October. A MOU was recently signed. What very few know is that NMDC pulled out of a similar project in Tunisia following the political unrest.
The supply security of phosphate has changed permanently and non Middle East supply bases are being re-rated as a result.
Good luck.
How's The Crops Fairing in Alberta John?
Long time no speak. Hope all is well. Australian crop is mixed atm. Grain markets have tanked of late. There's nothing to suggest that sort of confidence in global production prospects is justified. Markets effectiveely tank when disaster is avoided, whereas the grain coffers need above average crops just to keep up with rising demand.
We have yet to see 'the' big spike in grains IMO. But it will likely culminate in a very spectacular broader market meltdown of some sort.
Keeping an eye on nitrogen and phosphate. They've left their runs late and are on the move ... not too concerned about potash prices. It's always the last fertiliser to be purchased. Investors don't understand this it seems. Phosphate is always applied at planting with nitrogen. Potash always comes last.
Good luck.
Subprime Down at the Farm?
Can't be long before we start to see some foreclosures out of this year? We are below the cost of production for wheat here in Australia for a significant percentage of farmers. Only those that managed fertilizer prices effectively prior to the spike or those well hedged are looking at a good year.
Our currency is killing returns and I would imagine that would likely be the case around the world (outside the US). A lot of fear in the market.
Whilst I don't buy the sentiment in these markets I won't be standing in their way. We are putting in firm groundwork for an even stronger bull market in prices but that doesn't necessarily mean a boom in farm profits. Farmers will be more cautious the next time around.
Significant areas of grain production will move to legume fallow and/or pasture which in itself reduces peak debt loadings because you don't need all the inputs with these options.
Interesting times. How are things fairing in Canada John?
Now starting to see a kind of subprime unfolding in agriculture. Low prices for a high cost year. Land prices beginning to fall. Fixed interest rates spiking (9% for 5 year here in Oz). Nowhere is it written you can't have a food crisis running concurrently with a debt crisis down at the farm ... especially while the USDA keeps talking up the size of this credit and drought crunched world crop. Mob of information manipulators. Fertilizer will find it hard to rally like it did in boom part 1 until shortages begin to emerge ... hope all are well. Been a bit slack lately ...
Rock phosphate prices back in the doldrums ... now trading around US$125/t for 32%
No doubt Potash Corp is a potential achilles heel for any major food producer and import dependent ... hasn't been a cent of correction in price here in Australia through all this mess. Still A$1200/t ...
Hey guys still alive. Getting married in October ... explains my slackness. Still very much a food bull. Now more than ever actually but this time round I think the best way to play will be direct ownership of the food commodities ... if you're in a developing nation credit is hard to find for fertilizer and if you are in the developed world you are going mining of stored phosphate reserves. Lots of deficient crops worldover this year and significant increase in legumes over cereals.
What a world we have unfolding! Hope you have all traversed the last year with your wealth relatively intact. Try and touch base here more ...
Key for ag output in 2009 is going to be access to finance ... marginal producers could easily find it impossible to secure credit. The sums at present wouldn't compell many lending institutions to be chasing agricultural clients. 50% of the world's DAP/MAP production capacity is currently sitting idle. Given we never really did solve that global food crisis and everyone is likely still eating three square meals a day, you'd have to be fairly confident speculating 2009 will be yet another year where consumption (even credit crunched) will exceed production. Bullish long term agricultural commodities ... part 2 of this story WILL undoubtably involve REAL, physical shortages IMO.
I know as a farmer myself I will not be cropping my marginal acres and fertilizing for an average crop (even with cheap 2007 inventory on hand still). When the world is this scary it doesn't pay to aim for anything higher than average.
Feed barley prices here today capitulated to A$185/t ...
The threat of a credit freeze before they get to production. MAK are ticking all the boxes so far but the outside world is changing beneath their feet. Out of their control unfortunately. If the central banks get on top of this problem of indebtedness and asset deflation then MAK should be fine.
Actually am still bullish on the ag (grains, fertilizer) commodity prices in the medium to long term but not so bullish on the associated equities. I'm bearish short term especially the phosphatic fertilizers. Moved to cash.
I think the prognosis for the unfolding global economy is ultimately very dark. Deflation leading to the effective permanent removal of the marginal production base for all commodities. In the wake of this very painful phase for commodity producers will be the likely emergence of shortages in key commodity groups - the needs like energy, fertilizer and grains. Sure demand is being rationed but supply output is going to drop sharply from this point on. Very hard to get finance if you are indebted (read almost everyone) and impossible if you are too heavily geared or have a high cost base. Forget about raising capital on equity markets. China won't emerge until shareholders are in full blown fear mode for good quality assets
So I see deflation for a little while yet and the shortages emerging leading to a rush on whatever supplies exist out there. Put simply hoarding. I notice there are already gasoline shortages in the US. Beyond that I don't like to think too far other than to suggest an unfamiliar future.
You can't stop consuming food and you can't stop consuming energy ... producers losing money producing stop producing.
Terry I've found the best analyst to follow on the meats is Dennis Smith at the following web address - www.insidefutures.com. Its free too ... Gives a daily pre-market wrap.
AG BOOM: The Agriculture Bomb
10 September 2008
by Sean Brodrick
Commodity prices have pulled back sharply, enough for some market watchers to pronounce the commodity bull "dead." I'll take that bet, because I think we're just seeing a correction in a long-term bull market. What's more, when the next commodity price squeeze comes, it might not be from a sector you'd expect, like energy or metals. It might be food.
I probably don't have to tell you about rising food prices. In the U.S., the cost of groceries rose at an annualized 8.4% rate in July (the latest data available). If you think falling commodity prices means that your grocery bill will be going down soon, think again. Rising food prices tend to be "sticky" — and now we have the added factor that, thanks to globalization, a family in Shanghai is willing to buy your Sunday dinner before you have a chance to cook it.
Food has something in common with energy — they're both commodities that you use up. And they're both worth fighting over.
F-O-O-D is a Fighting Word
Australian researchers say that 60% of all conflicts in the past 18 years have been driven, at their core, by disputes stemming from a scarcity of food, land or water. And by the 2020s, regional food shortages could trigger hundreds of millions of new refugees and leave no country on Earth unaffected.
You think America would be safe from that? After all, we are the world's breadbasket, producing over 400 million metric tonnes of grain in the last harvest year. Our biggest competitor, China, produces only two-thirds as much as we do.
And in America, food is so plentiful it's dirt-cheap, even with recent inflation. U.S. consumers spend roughly 15% of every dollar on food. In China, 30% of consumer income is spent on food. In India, it's closer to 35% or even 40%. And these are relatively "rich" countries.
In poorer nations, 80% of consumer income goes to food. According to the World Bank, just over 1 billion people live on one dollar or less per day. And there are millions upon millions of people who are literally being priced out of the food market right now.
If you think that doesn't affect you, consider this: When those folks run out of food, where do you think they're going to emigrate to?
Importantly, cheap food isn't guaranteed in the U.S. Thanks to our huge trade deficits, our wealth is pouring across the seas to other nations ... and they are using it to buy more and more American grain. China has 1.3 billion people with rising incomes and expanding waistlines ... and a billion people in India are also improving their diets.
Result: The fiscal 2008 forecast for U.S. grain and feed exports has been raised to a record $37 billion — up $1.7 billion from an estimate made as recently as May — according to Foreign Agricultural Service (FAS) of the United States Department of Agriculture. So not only are U.S. grain sales to foreign customers rising year over year, they're accelerating.
50 Million More Hungry Mouths
Surging demand is already sending shockwaves around the world. The United Nations World Food Program says the number of hungry mouths increased by 50 million in 2007 because of higher food prices.
And it's a problem that's going to get worse.
Approximately 50 million acres of arable land disappear every year thanks to the growth in cities, urban sprawl and economic development. In Iraq, where the Tigris and Euphrates rivers have nourished riverbanks since the start of civilization, farmland is expected to shrink 30 percent because of upriver damming in Turkey. Vietnam lost 1.2 million acres of farmland from 2001 to 2007; 123 golf courses, among other developments, have gone up since.
In China, encroaching deserts are such a problem that the country has banned new golf courses and other developments that would worsen the problem. And they're dead serious about this. Just last week, a Chinese businessman, Luo Zhongfu, was sentenced to jail for more than 10 years. Zhongfu was once listed as the richest man in China. What crime got him 10 years in the slammer? Clearing a forest to make way for a new resort. Ouch! Can you imagine Donald Trump getting 10 years behind bars for an environmental violation?
If you want to get an idea of how fast population is going up and arable land is going down, there is an Internet clock that keeps track of this at: http://www.tranquileye.com/clock/. Looking at that clock, you can't help but get the sense that the world's food supply/demand picture is a ticking time bomb.
Naturally, if food is a problem that could blow up in our faces, the smart thing to do would be to think strategically. And some countries are doing just that.
Strategic Food
• Russia is one of the countries looking at food strategically. In Russia, the government is debating the creation of a new state agency that would own Russia's 28 biggest grain elevators and shipping terminals.
• Pakistan — which is teetering on the edge of collapse, a political crisis worsened by a severe shortage of fertilizer — recently sought $6 billion in aid from Saudi Arabia in return for the use of hundreds of thousands of acres of agriculture land. That's a deal worth making for the Saudis, who can farm only 1% of their mostly desert country.
• The Saudis are also looking at a proposal by the Indonesian government to develop a Connecticut-sized farming tract on the remote province of Papua to grow rice, sugar cane and soybeans.
When you look for countries that are thinking strategically in terms of food, Saudi Arabia comes up a lot. And with good reason. Saudi Arabia's food import bill has grown by an average 19% annually over the past four years to $12 billion in 2007, making it the Middle East's largest food importer, according to a recent study by Saudi bank SABB.
It's not the only oil-rich country feeling the pinch in the pantry. Most of the Persian Gulf countries heavily rely on food imports at a time when global food prices surged 57% between Aprils 2007 to 2008, according to the United Nations.
And their problem is only going to get worse. When you add in the other members of the Gulf Cooperation Council — the UAE, Kuwait, Bahrain, Oman and Qatar — the total population has risen from around 30 million in 2000 to more than 35 million recently. The population of these mostly desert nations is expected to hit nearly 39 million by 2010 and 58 million by 2030.
Saudi Arabia used to grow a lot of its own food using irrigation from prehistoric water deposits, but with those wells running dry, it's phasing that out. So it's natural that the Saudis and other desert nations look to other, wetter countries to grow food.
In recent weeks, the Saudis have met with representatives of Thailand and South Africa to discuss buying farmland ... Abu Dhabi has signed a deal with Sudan to develop 70,000 acres as farmland ... and the United Arab Emirates is eyeing land in Sudan Egypt, and Yemen is pursuing a $3 billion deal in Pakistan with several private companies to build large corporate farms for growing rice, wheat, sugar cane, and fruits.
Challenges Facing America
The U.S. is the world's breadbasket, but we better not get too comfortable. For one thing, we have our weaknesses. Farming is highly specialized in the U.S. Only about 2% of the U.S. population is part of a farm family, and the average age of principal owners of farms is about 60 years.
Also, our farm harvest is highly energy dependent. Food in the U.S. travels an average 1,500 miles to end up on your dinner plate. Nitrogen fertilizers are made from natural gas, insecticides are oil-based, tractors run on diesel, and plastic packaging comes from oil. Add in refrigeration and it may take as much as 1,000 calories of oil-energy to produce a calorie of food today, according to some estimates. In 1944, it took just one calorie of oil-fuel to make 2,300 calories of food (horses were still used on many farm fields back then, and they provided fertilizer, too).
So why not go back to horses? Because today's farmer riding a combine can do in hours what it would take days to do with a horse. Before the mechanical revolution in farming, about one-third of the U.S. population worked on farms, and it wasn't because they liked the fresh air. It was the only way to get things done and get enough food to feed everybody. If the energy crisis worsens — and I think it will — we'll face some hard choices.
Another reason that the U.S. shouldn't rest on its laurels as an agricultural superpower is that we have competition.
The Emerging Food Superpower
If food is the scarce resource of the future, Brazil could emerge as a new superpower. It has plenty of sun, fresh water, and more available arable land than any other country on Earth. Brazil is already the top world exporter of beef, poultry, soybeans, sugar, coffee, and orange juice. John Deere already has 114 showrooms in Brazil and plans to expand to 200 stores by 2010.
Brazil could triple its area under cultivation without cutting one more acre of rain forest. Its secret is taking marginal land and making it productive farmland. But to do that, it needs heavy applications of lime and phosphate-rich fertilizer.
The looming fertilizer crisis is a subject for another whole column. There are fertilizer stocks out there that are woefully undervalued and will probably go much higher from here. Suffice it to say for now that there isn't enough fertilizer to keep up with a growing global population that also wants to eat better.
If current trends hold, we could see 9.1 billion on this planet by 2050 — but demand for protein food, especially in China and India, is growing much faster. According to Australian researchers, total world food demand is forecast to rise 110% by 2050.
I don't think that those current trends will hold ... not unless we can make a major leap forward in crop yields.
So what will bridge the gap between surging demand for food and a limited supply of fertilizer, not to mention energy costs that are trending much higher over time? Probably genetically modified (GM) food. It's called "Franken-food" by its critics, but it's about the only way, using current technology, to continually squeeze higher and higher yields out of the same field. Soybeans and corn are just two of the U.S. crops that are getting bigger and bigger yields thanks to GM seeds.
GREAT SITE: World Population and Arable Hectare Clock
You'd be forgiven for thinking we have seen the ag boom come and go. When you check the following website out it puts it all into perspective.
http://www.tranquileye.com/clock/
Doyle has said that POT would buy its stock back whenever weakness presented value. Long term they'll be fine. I think this correction is largely to do with the general correction across commodities and particularly in the grains. If it wasn't for the latest weakness in currencies outside of the US there would be some screaming farmers out there. And I must say it is hard to be optimistic about the future with the weather risks and the ease with which returns have diminished with rising costs and declining crop values. And you know I am an eternal optimist John.
MEAT: Less Meat in 2009
09/02/2008
Normally livestock producers increase production of meat each year, at least enough to keep up with the increase in population. According to World Agricultural Outlook Board Chairman Gerry Bange that will not be the case next year.
"Production will be down some if you look at meat in total," Bange says. "We are looking at about a 1.2% reduction in U.S. meat production for the 2009 year."
Bange says beef production will drop .5% next year, pork 2.3% and broilers just under 1%, but that is less of a cutback than had been expected earlier this year.
"One of the reasons of course is that the producers are looking at somewhat lower feed costs," Bange says.
Still livestock producers will be paying record high prices for corn and soybean products, meaning a cut in the number of animals being fed, which will send livestock prices as well as meat prices up.
http://www.hoosieragtoday.com/wire/news/01396_lessmeat_163521.php
MEAT: Consumption of meat up 40 per cent
Thursday, 4th September 2008
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Demand destruction in the developed world being more than accounted for by growth in demand in emerging economies? EF
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Local consumption of beef and lamb has soared more than 40 per cent, compared with per capita consumption last year due to increasing demand.
"Bahrain Livestock Company has reached maximum production levels to ensure sufficient supplies," chairman Ibrahim Zainal said yesterday.
He was speaking as he briefed Industry and Commerce Minister Dr Hassan Fakhro on consumption trends.
Manama Central Market butchers, BLC board members and Delmon Poultry company board members attended.
"There is a vital need for concerned parties to join hands and ensure price stability and sufficient food supplies, particularly of meat and poultry," Dr Fakhro said.
He called on the BLC to co-operate with butchers and ensure fair meat distribution among their shops.
BLC's chairman said his company was striving to supply 443 butchers.
Delmon Poultry Company was urged to boost production to meet soaring demand among consumers.
Food traders and investors were also urged to set up meat and poultry-importing companies.
http://www.gulf-daily-news.com/Story.asp?Article=228029&Sn=BNEW&IssueID=31168
John I reckon you're the smartest farmer I know! Lease it out ... Who in their right mind would farm with the current weather risk and high input costs paradigm? There are not many low risk options to pilfering profits from land these days ... unfortunately I have the bug! :) Hope the lads get it stripped before the snow comes in ...
Got agricultural exposure?
John I wonder whether Pot Corp really minds if its workers are striking or not? Can only put upward pressure on prices in a market where deficits can only really be met by Pot Corp anyway. What a position to be in?
Hi John. How's that finishing weather treating the Canucks? Hopefully they have navigated through the frost window safely. Its turned dry here in the West. Not a drop for August, lots of sunny days (~24 degrees C) and frosty nights (12 so far for August). Forecast doesn't look very encouraging unfortunately. Arrrgh! :)
I think we will be right here but I know anything more marginal is looking down the barrel of another horrible year. 3 weeks ago we were on track for a record harvest everywhere virtually. The scary thing now is it may well trigger a very significant exodus of people from the industry and it won't be voluntarily. That cost base is scary and leaves very little room for failure. Anyone who has expanded will be finding out the hard way that bigger may well increase your earnings potential but it also increases your loss potential. IMO the days of buying out the neighbour are long GONE.
COTTON: The end of cheap clothes is near
24th April 2008, 02:22 PM
By Jorn Madslien
Business reporter, BBC News
http://news.bbc.co.uk/go/pr/fr/-/1/h...ss/7362343.stm
Food prices have shot up in response to a surge in crop prices. Now consumers should get ready for clothes prices to follow suit.
Garment makers are seeing demand shrink as consumers in the US and Europe are cutting back on spending.
US cotton consumption is set to fall 6.5% from last year to less than a million tonnes whilst EU consumption is expected to fall 11% to about 460,000 tonnes, the Economist Intelligence Unit (EIU) predicts.
At the same time, they are hit by more expensive raw materials and by soaring oil prices, which make their factories more expensive to operate and which pushes up the cost of shipping to foreign markets.
In India, the weaving industry is in crisis. In China, the textile sector is squeezed.
And, yet again, the root cause of their problems can be found in America.
US markets
Cotton prices
2008/09 - 80 cents per pound (projected)
2007/08 - 74 cents per pound
Source: ICAC
In the US, ever more cotton farmers are switching to more lucrative crops - soybeans, corn, and wheat - whose market prices are rising even faster.
The prices of these crops have been pushed higher by a mixture of subsidies, growing demand from biofuel producers and market speculation.
"Cotton is taking its cue from whatever the other [commodity] markets are doing," according to a US commodities broker.
"They set the tone for a lot of the things taking place in this market."
Costly cotton
As a result of the shift by farmers, "the cotton harvested area in the USA is projected to decline by a further 15%" in the year ahead, predicts the International Cotton Advisory Committee (ICAC).
That would bring the cotton acreage in the US to 9.5 million acres, down from 10.8 million in 2007 and from whopping 15 million acres in 2006.
"It is obvious that [cotton] prices will be higher," ICAC says.
This year, global cotton prices are set to rise more than 8% to 80 cents per pound, ICAC predicts.
Financial market professionals think the rise could be even steeper.
May cotton futures currently trades at about 71 cents per pound on the Intercontinental Exchange, or ICE. The December futures trade at about 83 cents per pound.
"I don't think we've had markets this wild since 1995, and we're in an environment where it could be with us for several years," says Mike Stevens from finance house Swiss Financial Services in an interview with Penton Insight.
Demand outstrips supply
Cotton shortages first emerged last year, when global demand for cotton exceeded global supply by about a million tonnes.
In spite of the US shift towards competing crops, this year, the global cotton harvest is set to grow 3%, as major producer regions such as China, India, Australia, Brazil and West Africa are raising production.
Globally, supply growth is thus outstripping demand growth; cotton mill use is set to grow by just 1% this year.
But even so, supply is not growing fast enough.
This year's production level is expected to peak at 26.9 million tonnes of cotton, compared with demand for 27.5 million tonnes, the ICAC predicts.
Expensive clothes
But costly cotton is only one factor hitting clothing manufacturers.
"It all comes down to energy," explains Bradley George, head of commodities and resources at Investec Asset Management. "We are basically short of power in the world right now."
Hence, it is not only a question of whether land should be used to grow crops for food or cotton. It is also a question of how much energy should be used to produce clothes in factories.
Fertiliser costs are also soaring, adding to raw material costs, and the credit crunch is adding to the squeeze as low-margin clothes manufacturers are finding it harder to raise finance.
The wages paid to factory workers have risen too, especially in China.
Manufacturers in India and China, as well as in many other parts of South East Asia and Central Asia are already feeling the pain.
In the end, they will either have to raise prices for the clothes they make, or go under - which in turn will reduce supply. For consumers in Europe and the US the outcome is certain: prepare to pay more for clothes in the years to come.
http://www.politicsandcurrentaffairs.co.uk/Forum/peak-oil-economics-environment/48107-end-cheap-clothes-near.html
FERTILIZER: Soaring fertiliser prices threaten world's poorest farmers
India and China hoard fertilisers to guarantee food stocks, while riots break out in Vietnam, Africa and Pakistan
* John Vidal
* guardian.co.uk,
* Tuesday August 12 2008 15:56 BST
Fertiliser costs and the rush to biofuel have made it difficult for small farmers to grow their crops. Photograph: Charlie Neibergall/AP
A global fertiliser crisis caused by high oil prices and the US rush to biofuel crops is reducing the harvests of the world's poorest farmers and could lead to millions more people going hungry, according to the UN and global food analysts.
Optimism that soaring food commodity prices could lift millions of developing country farmers out of poverty and lead to more food being grown have been dashed, says the UN. This is because small farmers either consume their own crop or have no access to global markets to take advantage of the higher food prices.
There is little prospect of relief. A world fertiliser forecast report, due to be published by the UN this week but seen by the Guardian, states that prices will remain high for at least three years and possibly longer.
Fertiliser prices have mostly doubled and in some cases risen by 500% in 15 months as US farmers have rushed to plant more biofuel crops and countries such as India and China have bought fertiliser stocks in large quantities to guarantee their food stocks.
But while the unprecedented price explosion has barely affected large commercial farmers, it is leading directly to civil unrest among small farmers in developing countries. There have been fertiliser riots or demonstrations in Vietnam, India, Kenya, Nepal, Nigeria, Egypt, Pakistan and Taiwan in the last few months. Last week one man was killed in a stampede at a government handout of fertiliser in Hyderabad, India.
Senior UN Food and Agriculture organisation analyst Dr Jan Poulisse warned the poor were being hurt the most by the crisis. "High commodity prices allow commercial farmers in developed countries to cope with high fertiliser prices. But rising food prices hurt subsistence farmers, particularly in Africa," Poulisse told the Guardian. "People just cannot afford [fertiliser]. They were in dire straits before, but now the situation is worse."
Farmers in sub-Saharan Africa have been hardest hit because they have the least chance to benefit from soaring food prices on the world market, but desperately need fertilisers to replenish nutrient-depleted soils.
World fertiliser prices have risen more than oil or any other commodities in the last 18 months. Of the three main types, diammonium phosphate (Dap) sold for US $250 per tonne in January 2007 but has risen to $1,230 per tonne. Potash-based fertilisers have risen from $172 to over $500 a tonne, and nitrogen based fertilisers have risen from $277 to over $450 per tonne.
Much of the price rise is attributed to first world farmers who have applied high levels of fertilisers to maximise harvests of grain to take advantage of record grain prices, said Dr Balu Bumb, policy leader at the International centre for Soil Fertility and Agricultural Development (IFDC) in the US.
The UN fertiliser forecast blames capacity constraints for the price rises. "Strong global demand for fertilisers is stretching current production capacity to its technical limits. This situation will persist until new capacity comes on line", it states.
"It can take 5-7 years to open a phosphate mine, 10 years for a potash mine and three years for a major nitrogen plant", said Dr Poulisse, one of the report's authors. At least 50 new plants to make nitrogen fertiliser are believed to be under construction, and phosphorous and potassium mines are being expanded.
Fertiliser prices have in the past been largely controlled by governments because they are so politically sensitive. But keeping prices down in the current crisis is now impacting heavily on other areas, such as education and health.
India is expecting to have to spend $24bn supporting fertiliser prices this year compared to only $4bn three years ago and countries such as Malawi have had to borrow millions to introduce a fertiliser subsidy programme. However, the president of Malawi admitted last week that the subsidy programme was failing the poor. "Sadly, it is the rich who are benefiting a great deal. They are selling maize to the poor at exorbitant prices," he said.
Agriculture and development experts say the world has few alternatives to its growing dependence on fertiliser. As population increases and a rising global middle class demands more food, fertiliser has become the preferred route to higher yields.
"Rises in basic commodity prices should be good for small growers but we are seeing that agri-business is reaping all the benefits. It needs a fundamental reform of the way agriculture is managed as well as more sustainable farming", said Amy Barry, an Oxfam spokeswoman.
http://www.guardian.co.uk/environment/2008/aug/12/biofuels.food
COTTON: Expert forecasts dramatic revival of cotton market
Thursday, 14/08/2008
A leading international cotton consultant says the market for the embattled industry will vastly improve in the future.
FC Stone Asia's managing director, Ed Jernigan, says industry has been kept to a limited price range because of the world wide over-supply of cotton.
Mr Jernigan says in the future the market could be demand-driven, with less cotton produced in the coming years because of the global food crisis and the emerging ethanol market.
"I see the cotton market being shaken to its core and being a dramatically different market," he says.
"The first thing is the end of the US cotton surplus. Cotton acreage in the US is declining.
"Cotton is battling for its acreage all around the world, it's cotton versus food and in every country, whether it's India, China or the US, cotton has to compete for acres against food crops."
Yeah fodder crops for hay or silage have made a lot of sense where frost risks are high. That has been the driver of that industry here in WA, plus a generous subsidy in Japan by its govt to its dairy farmers. But I fear fodder (for export purposes) is a sunset industry because of spiralling freight rates.
COTTON: World cotton prices seen rising
By our correspondent
8/3/2008
LAHORE: The International Cotton Advisory Committee has forecast an increase of 12 per cent in global prices of raw cotton in 2008-09 as it expects world cotton production to drop by 5 per cent.
The ICAC secretariat has forecast an increase in season-average Cotlook A Index from 73 cents per pound in 2007-08 to 83 cents in 2008-09. It expects cotton production in 2008-09 to be at 24.9 million tons, which amounts to a 5 per cent decline over last year due to decrease in both area and yield. This projected decrease is driven by a fall of more than one million tons in US production to 3.1 million tons. The ICAC says world cotton use by mills is also expected to decline by one per cent in 2008-09 to 26.4 million tons due to slower global economic growth and higher prices of cotton relative to polyester.
World imports are expected to increase by 6 per cent to 8.8 million tons, driven by larger imports by China (mainland). Exports from the US, India and Brazil are also expected to rise.
World cotton stocks are forecast to fall by 12 per cent to 10.7 million tons. The largest decline in stocks is expected to occur in the US, where considerable supplies that accumulated during the previous two seasons will fuel exports.
http://www.thenews.com.pk/print1.asp?id=127821
CANADA CROPS: Weather a big threat to western crops
Growth is uneven. But farmers still have a lot to be excited about
KEVIN HURSH, Canwest News Service; Saskatoon StarPheonix
The dollar signs are big on grain farms these days.
With the potential for an above average crop in Saskatchewan and with a strong price outlook on most commodities, this could be a record revenue year for a lot of operations.
Let's get all the provisos out of the way off the top.
Even though the overall provincial yield outlook is above average, that's not the case for everyone. In many regions, there are canola fields that are ugly. While some of the field is flowering, the rest is still far behind. Uneven emergence this spring was the culprit and the yield result will not be good.
There are also areas where cereal crops are stunted due to a lack of moisture. The yield will be far below average.
And then there's the hail damage.
Big storms over the past month have wiped out large regions. Sometimes, producers have adequate hail insurance. In many cases, producers will be out a lot of money.
And even for those looking at an above-average crop, it isn't in the bin yet. An early frost would be devastating. They will need to be frost free well into September to avoid significant damage.
Wet harvest weather is another risk. That could cause grade losses and a corresponding loss in value.
It's also important to note that along with the potential for record revenues, there are record high costs, particularly for fertilizer and diesel fuel.
Fertilizer prices continue to escalate and some producers are actually buying fertilizer for the 2009 crop already.
All the provisos aside, for a majority of grain producers, there's a lot to be excited about as harvest approaches.
To give an idea of the revenue potential, here are some numbers based on a 2,500-acre (1,000-hectare) grain farm.
These days, 2,500 acres is only a moderate-size operation. For easy figuring, let's assume the farm has equal acreages of spring wheat, durum, canola, field peas and lentils.
Based on Canadian Wheat Board estimates, the projected Saskatchewan price for spring wheat (No. 1 CWRS with 12.5-per-cent protein) is $7.43 a bushel. Saskatchewan Agriculture is estimating the provincial average spring wheat yield at 32.1 bushels per acre (0.4 hectares).
On our hypothetical farm, the 500 acres (202 hectares) of spring wheat would generate revenue of $119,000.
The durum price projection is $9.55 a bushel, while the average yield is pegged at 30.5 bushels per acre. Based on these assumptions, the revenue for 500 acres would be $145,500.
It should be noted that the expected prices for both wheat and durum are significantly below the prices expected for the current crop year.
However, producers should realize prices are higher than last year for many other commodities.
Canola yields are expected to average 26.8 bushels per acre. Prices have been dropping in recent weeks, but let's assume a value of $12.50 a bushel. That would be a gross return of $335 an acre. On 500 acres, that would be $167,500.
Field peas are expected to average 32 bushels per acre provincially. A price of $9 a bushel seems plausible. That's a gross return of $288 an acre or $144,000 on 500 acres.
Lentils will be the big money crop for a lot of producers. Saskatchewan Agriculture is predicting an average yield of 1,256 pounds per acre. There are many different classes of lentils with a wide variation in prices.
Let's use a conservative price estimate of 35 cents per pound. That's a gross of $440 per acre or $220,000 on 500 acres.
Adding up the five crops in our 2,500 acre example farm, the gross revenue comes to $796,000. Many operations are 5,000 or 10,000 acres and will grow above average yields.
http://www.canada.com/montrealgazette/news/business/story.html?id=213eeb2a-e538-4d81-b6d6-0ec820aa5f0b
Thanks for the links JW. Listened to your sis as well. Seems the rural roots run deep in your family. Great to see! :) Hope the hail holds off for your lads. The world can take as much canola as Canada and Australia can throw at it ... silver lining in the oil price.
POTASH: Potash strike could stoke hot fertilizer prices
Reuters
Thursday July 31 2008 (In U.S. dollars unless noted)
By Roberta Rampton
WINNIPEG, Manitoba, July 31 (Reuters) - Prices for potash fertilizer, which have surged with record grain markets, could climb higher still if a simmering labor dispute boils over into a full-blown strike at the world's largest producer of the nutrient.
Workers are in a legal strike position at three mines that last year produced about 30 percent of potash mined by Potash Corp of Saskatchewan . Their union has said they want a bigger share of the company's record profits.
The two sides are still negotiating, and there has been little discernible impact on the company's output to date. But a serious disruption would be felt around the world.
"If there was an extended strike which had a significant impact on production, this would probably result in a sharp jump in spot prices," said Barrie Bain, director of respected industry consultancy Fertecon Ltd, in an e-mail interview.
Potash miners have not been able to keep up with demand this year, selling out their supplies as the world struggles to produce enough grain for food, livestock feed, and biofuels.
The food shortage has sent grain prices to record highs, and fertilizer prices have followed suit.
Potash Corp reaped an average price close to $500 per tonne this year, according to estimates by J.P. Morgan analyst David Silver, almost triple the company's 2007 average price. Silver has projected next year's average price at $900 per tonne.
Potash Corp and others are expanding mines, and the rush is on to build new ones. But high costs and long lead times mean supplies will be tight for years.
"It won't be until 2012 or 2013 before potash prices peak," Bain said.
The boom has made Potash Corp the largest company on the Toronto Stock Exchange as measured by market capitalization, ahead of Canada's oil and gas producers, banks, and Research in Motion , the maker of the BlackBerry.
Potash shares were down about 1.6 percent at C$214.71 on Thursday. They have climbed more than 500 percent in two years, and most analysts believe they have more room to grow.
"The company's future earnings outlook has never looked better," wrote RBC Capital Markets analyst Fai Lee in a research report.
Those profits have emboldened its workers to ask for more. "Our job is to extract as much as we can from the employer when times are really, really good," said Stephen Hunt, a director of the United Steelworkers union, which represents the miners.
Analysts say the union thus far seems more keen on talking its way to a deal than forcing results by stopping output.
"They haven't been really boisterous about threatening" to cut production, said David Asbridge, economist with Doane Advisory Services in St. Louis.
That has minimized the effect of the labor uncertainty on the market. So has the timing. North American crops are still in the field and shipments are seasonally slow, Asbridge said.
"If (the dispute) drags on another month, six weeks, then we're going to get into a period where it could have more of an impact on prices," he said, noting U.S. farmers will apply potash to fields in fall to prepare for spring corn planting.
Farmers have no choice but to absorb any extra costs, said analyst David Riedel of Riedel Research Group.
"There's a lot of wringing of hands and gnashing of teeth at how high these prices are, but if you want to get more crops out of the ground, you have to pay the price," Riedel said.
If Potash Corp sees a short-lived work stoppage, higher prices will more than make up for the loss, analysts said. But they said the company will want to quickly get a deal to avoid missing out on too many sales at current lofty prices.
Its compromise may have an impact on costs across the sector, since labor contracts at its other mines and those owned by Canadian competitors begin to expire next year.
The company has said it does not want its labor costs to become a drag on its results, particularly when cyclical commodity markets may one day turn lower.
"Once you give, it's very hard to take it back," said an analyst who declined to be named, noting investors will closely watch the company's costs.
http://www.guardian.co.uk/business/feedarticle/7692112
Important trade today for feeder cattle. Currently edging up to its record highs. Should it break out and lets face it, it simply has too, stock up the freezer and kiss goodbye cheap meat.
FERTILISER: Fertiliser firms to invest $5 bn in JVs abroad
Joe C Mathew / New Delhi July 31, 2008, 5:46 IST
Indian fertiliser companies are planning to invest around $5 billion (Rs 21,000 crore) in overseas joint ventures over the next three years. These companies are in negotiations for 19 such ventures, said government officials. These joint ventures are aimed at sourcing nitrogenous, phosphatic fertilisers and other raw materials.
The companies involved in the talks include domestic fertiliser majors such as Indian Farmers Fertiliser Cooperative (Iffco), Rashtriya Chemicals & Fertilisers (RCF), Nagarjuna Fertilisers & Chemcials, Coromandel Fertilisers & Mangalore Chemicals & Fertilisers among others. The talks are being spearheaded by the department of fertilisers, the nodal agency responsible for adequate availability and timely supply of fertilisers across the country.
While the proposed ventures in Argentina, Canada, Jordan, Morocco and Ukraine are primarily aimed at potash production, the government is looking at countries such as Algeria, Australia, Azerbaijan, Egypt, Iran, Kuwait, Mozambique, Nigeria, Ukraine and Saudi Arabia for ammonia and urea fertilisers.
The department of fertlisers has already announced plans of Coromandel Fertilisers and Gujarat State Fertiliser Co to set up a JV with Tunisian firm Group Chimique Tunisia for setting up a phosphoric acid production facility.
G(R)OING GLOBAL
Company Fertiliser Country
IFFCO Ammonia, Urea, Phosphate Australia
RCF Potash Canada
Nagarjuna Ammonia, Urea Iran
IFFCO Mangalore Phosphate, Potash Jordan
Chemicals Phosphate Morocco
RCF Ammonic, Urea Mozambique
IFFCO Phosphate Senegal
Similarly, RCF is joining hands with South African firms for setting up integrated fertiliser plant in Mozambique, based on rock phosphate from Foskar mines in South Africa and gas from Mozambique.
Officials added that the attempt is to encourage joint venture ammonia and urea projects in countries where adequate gas is available at reasonable prices. These JVs will also insulate fertiliser companies from the vagaries of sudden increase in imported input prices. Since fertiliser is sold at subsidised rates in India, efforts to cut production cost will have a direct impact on the government’s subsidy burden.
http://www.business-standard.com/india/storypage.php?autono=330051
MEAT: If your Portfolio is a Dog Diversify into Cows & Pigs
By: Matthew Bradbard
Thursday, July 31, 2008 3:03 PM
As we have repeatedly voiced, commodities are in a bull market, but prices will not go straight up. Furthermore, the smart money moves from sector to sector; rotating from one sector to another when the fundamentals change, technicals swing, weather shifts, or even in some instances seasonally. We feel that in addition to the agriculture and softs markets, the livestock markets i.e. live cattle, feeder cattle, and lean hogs could be at the beginning of a historic run to much higher prices. Amen amen. EF
Cattle
A cheap dollar, expensive grain and the growth in demand of world protein should continue to promote a strong environment for exporting cattle. The surge in grain and fuel prices for cattle operators has pushed producers out of the business as well as helped temporarily cause more short-term production. While this has kept short-term supply relatively high, future production could be more limited due to fewer players within the marketplace.
Low placements in the spring, gradually improving exports, a sharp drop in imports and the outlook for declining supply ahead, are all key bullish fundamental forces for the market looking forward. Elevated corn prices in June motivated cattle feedlot managers to reduce placements, which were down 9.0%. Small placements in the months of March to June should cause beef supplies to drop sharply in the September to December period. The low value of the dollar has discouraged imports and encouraged US beef exports. The fact that the first shipments of US beef in 4 years arrive in Korea this week should also support. During the January to May period, beef imports dropped by 22% and beef exports surged by 34%. We hate to be so elementary, but it really boils down to supply and demand.
Generally cattle prices make their summer lows in late summer and begin to move higher by late August or September. The traditional end to outdoor grilling season (Labor Day) can temporarily deplete grocer stocks just as the return to school and the approach of cooler weather can increase retail beef consumption. Past performance is not indicative of future results. For the last 4 years feeder cattle have attempted a run to and through the $120 level and failed sometime between August and October. We believe that 2008 is the year where we get through that level and reach record highs. For October feeder cattle the 100 day moving average comes in at 112.50 and we will be adding length for clients as long as that level holds on the board. October live cattle have been consolidating around the 50% Fibonacci retracement level for the last week or so in what we expect to be a pause before the next leg lifts prices back to $110-112. The current market is oversold, stochastic and MACD support a move higher and as long as last week’s low of 103.80 holds, we like being long.
Lean hogs
Pork has remained cheap in the US for quite some time but we feel that’s about to change. The cheap US dollar relative to currencies in countries in which we trade pork has started to stimulate exports and reduce pork imports. For the first 4 months of 08’, pork exports have expanded by 52% and imports have dropped by 12%. It is our opinion that foreign pork end users will continue to buy US hogs until prices move higher. Just like the cure for high prices is higher prices, if prices go to low enough levels they entice increased demand.
Given the increase in grain prices over the past several months coupled with record high shipping rates, many grain importing countries have started to see a shift to more pork imports and less pork production. Additionally, the steady slide lower in the US dollar, a short term shortage of pork in China (due to blue ear disease 07’ and earthquakes in 08’) , and mounting world protein demand, the USDA may in fact be underestimating the potential of US exports, which of late have really started to surge. Another currency impact could be the fact that the Canadian dollar’s strength has begun to diminish the incentive for Canadian producers to export pigs to the US. Given the declines in pork supply and the more vigorous export growth we anticipate to see higher hog prices.
October lean hogs futures have rallied 16 of the last 25 years in September, making this the second strongest month for pork. The best Septembers follow August weakness so if we pullback from overbought levels, which looks likely in the short term, we would suggest buying the dip. In the last 25 years there have been 12 occasions in which October hogs have declined into August. Following these down Augusts, October hogs have gained 10 times in September or 83% of the time. The average September rally under such circumstances has been stronger (+6.048 cents), while the average September breaks have been modest (-1.485 cents/lb.). Past performance is not of indicative results. Summarizing, we view any potential August weakness as a great buying opportunity. October lean hogs have traded between 71.50 and 74.50 now for the better part of 2 weeks, not wandering far from the 100 day moving average as we have been accumulating longs for customers via options and futures.
The real issue for cattle and pork producers is whether they can hang on long enough for prices to catch up with costs where money can be made instead of lost. We recognize that producers can only shed so much blood before they have had enough. MB Wealth expects that the excessive losses of 08’ to be offset by profits into 09’ for producers and speculators alike that can navigate these trades successfully.
The above commentary is posted on a delayed basis. For real time access sent to your inbox, sign up for 4 free weeks with no obligations! http://www.mbwealth.com/contact.html
http://www.istockanalyst.com/article/viewarticle+articleid_2459703~title_If-your-Portfolio-is-a.html
PORK: Boars Charge Along The Mountain
There's more in common between conquering nature and the markets than you think
By Euan Wilson
Thu, 31 Jul 2008 11:30:00 ET
Sometimes there's nowhere to go but down. When you reach the summit of Mt. Everest, for example, you'll want to take a few moments to enjoy the view. But soon enough, the oxygen-poor atmosphere and air temperature remind you that it's time to head back down. You can't climb any higher anyway.
But why didn't that same reminder come 100 feet before you got to the mountaintop? Well, it probably did. You knew the peak was coming but were determined to finish the climb anyway.
Markets work the same way. Mountaineering and trading each require risk management: the climb can be risky, and you won't know exactly what the peak looks like until you get there. When it comes to trading, technical analysis can help you assess the risk at a given juncture, just like the thinning of air tells you you're near the top of Mt. Everest.
Experienced mountaineers use grappling hooks, skis, harnesses, ice picks, hammers and belay lines – together these tools serve a common purpose but are far less effective if used alone. The technical analyst's tools include methods and techniques that identify the size and duration of market trends. And just like the mountain climber, tools used in tandem are that much more effective.
A case in point is unfolding right now in lean hogs, according to Futures Junctures editor Jeffrey Kennedy. By using technical analysis tools that include Fibonacci ratios, Base Price Channeling, Corrective Price Channeling, market low memory and corresponding length of the previous climb, Jeffrey's analysis looked at lean hogs from five different angles. Each tool argues that the lean hog market is ready to begin its next leg in the price trend.
Near the end of yesterday's session, prices reached a crucial juncture. How will Jeffrey know that the next leg really is underway? Well, Jeffrey's tools also identified a level of resistance that will confirm the trend – once prices go through that level, the lean hog trend should continue.
http://www.elliottwave.com/freeupdates/archives/2008/07/31/Boars-Charge-Along-The-Mountain.aspx
BEEF: Beef exports highest since mad cow shook U.S.Reuters, Thursday July 31 2008 (Recasts, adds U.S. 2008 sales may reach $3.5 billion; new throughout)
By Charles Abbott
WASHINGTON, July 31 (Reuters) - U.S beef exports are running at the highest level since just before mad cow disease shattered the market for American beef five years ago, the Agriculture Department said on Thursday.
Besides the resumption of sales to South Korea, shipments are up sharply to Canada, Mexico and Russia. Beef officials said that exports are aided by the weaker U.S. dollar, which makes beef an attractive item for foreign purchasers.
"It's looking pretty positive around the globe," said Philip Seng, head of the U.S. Meat Export Federation, based in Denver. "We're seeing growth in a lot of markets."
Exporters shipped 13,937 tonnes of U.S. beef last week, said the Agriculture Department. According to USDA records, that is the largest one-week total since 14,773 tonnes in the week ending Nov. 20, 2003, a month before the first U.S. case of mad cow disease was reported.
Most countries immediately closed their borders to U.S. beef. USDA officials have worked for years to show the meat is safe and to reopen markets.
South Korea, traditionally the No. 3 market for U.S. beef, opened its borders a month ago. On Tuesday, importer Nerp said it had received a shipment of U.S. bone-in beef, the first such import by Korea in nearly five years.
Some 800 tonnes of beef left U.S. ports for Korea last week and exporters reported sales of 8,100 tonnes in the week.
"It does look promising," said Chuck Lambert, deputy U.S. agriculture undersecretary.
According to the Meat Export Federation, which encourages sales of red meats, $951 million of U.S. beef was exported during the first five months of the year, up 39 percent from 2007. Sales for 2008 could hit $3.5 billion, assuming no major disruptions, estimated an MEF economist.
Exports were worth $3.8 billion in 2003, when 10 percent of U.S. beef was sold abroad. The latest USDA forecast is that 6 percent of U.S. beef will be exported this year.
Officials say beef exports are more diversified nowadays with rapidly growing markets such as Mexico, Canada, Russia and Europe. In 2003, Japan and South Korea accounted for 61 percent of shipments.
Japan, the long-time No. 1 customer, held 12 percent of the market through May. Seng said U.S. meatpackers offer 17 new cuts of U.S. beef to Japanese companies to maximize potential sales. Japan does not accept beef from U.S. cattle more than 20 months of age.
The new cuts include brisket, top blade muscle for steak and grilled meat, and rib cap plate for the popular beef bowl. (Reporting by Charles Abbott; Editing by Marguerita Choy)
http://www.guardian.co.uk/business/feedarticle/7693292
PORK: How We'll Make a Fortune Exporting Pork to China
By Tom Dyson
July 30, 2008
"I eat sausage in the morning, a meat dish and a vegetable dish for lunch and the same for dinner. If there's no meat, I won't feel full."
That's from the mouth of 20-year-old college sophomore Guo Meng as she chows down at a local McDonald's.
"It was impossible for my parents' generation to have meat all the time," adds Xue Wei, a 42-year-old teacher. "Now we can eat meat every day."
Since 1980, per-capita meat consumption in China has nearly tripled. The price of pork has jumped more than 50% in one year, yet the butcher shops remain packed.
In fact, there's so much money to be made in the Chinese meat trade that 26-year-old Zhou Jian recently switched from selling car parts to pork – and is now making three times more money.
The Chinese eat more pork than the rest of the world combined. The country consumes seven times as much as the No. 2 consumer, the United States. And consumption is increasing. According to the USDA, Chinese pork consumption rose 22% between 2002 and 2006.
In 2007, a shortage of pork hit China. The earthquake, huge snowfalls, and an outbreak of swine disease have resulted in a 9% decline in Chinese pork production. Chinese pork prices rose 68% between April 2007 and April 2008.
The disease problem in China is going to get worse. Peasant farmers account for 70% of hog production in China. As peasant farmers move to the cities for manufacturing jobs, it's putting pressure on supplies. So the government is setting up factory farms like they use in the United States. But with China's polluted water and overcrowding in the hog sheds, disease will spread even more readily than it already does...
"I am very skeptical of these modern facilities that are being built today [in China]," says Nick Rosa, a Chinese hog-industry expert speaking at JPMorgan. "What typically happens in a hog farm, when they have a brand new facility, with the first cycle, the mortality rate is 5%. But then each progressive cycle as disease starts building up, it goes from 5%, 10%, 15%, 20%, and before you know it, you have a big problem, and that is what I am predicting is going to happen in China."
Meanwhile, there's a glut of pork in North America. The situation is so bad in Canada, the Canadian government is giving Canadian hog farmers money to kill their pigs.
The Canadian Pork Council is giving hog farmers C$225 for every breeding pig they "cull." The funds help farmers cover the costs of transport, euthanasia, and disposal. To qualify for the money, hog farmers must agree to "depopulate" an entire breeding barn and promise not to house more hogs in the same barn for three years.
As of two weeks ago, the Canadian Pork Council had received 500 applications.
In the U.S., hog prices are so low, farmers are killing their piglets and using them as compost.
I think there's a big opportunity for America and Canada to export pork to China. As one hog-industry observer put it, "The potential for further Chinese importation of pork is almost incomprehensible." Chinese pork imports are already up 311% from last year.
My favorite way of playing this is to buy American and Canadian meatpacking companies that do business with China... As China's shortage grows more severe and hog prices recover in the U.S., these firms will make fortunes.
http://www.dailywealth.com/archive/2008/jul/2008_jul_30.asp
Crescent Resources Signs Letter Agreement to Acquire Major Potash Exploration Project in Western Australia
Last update: 8:03 a.m. EDT July 30, 2008
VANCOUVER, BRITISH COLUMBIA, Jul 30, 2008 (MARKET WIRE via COMTEX) -- Crescent Resources Corp. (CA:CRC: news, chart, profile) ("Crescent") has signed a letter agreement with Australian Potash Company Pty Ltd. ("APC") and its shareholders to acquire up to a 100% direct and indirect interest in 12 licenses known as the Carnarvon Basin Project, an exploration property covering approximately 4,280 square kilometres of prospective potash horizons in an extensive evaporite basin known as the Southern Carnarvon Basin in Western Australia. Previous drilling, consisting of three widely spaced oil and gas wells over a distance of 25 kilometres, has indicated the potential for significant potash and other sodium and magnesium salts.
CARNARVON BASIN POTASH PROJECT HIGHLIGHTS:
- Three widely spaced drill wells drilled in the late 1960's intercepted significant intervals of salt layers some of which hosted potash beds:
-- Yaringa No. 1 - combined 38 metres thick from 1,198 m. to 1,268 m.
-- Hamelin Pool No. 1 - combined 17.7 metres thick from 1,234 m. to 1,295 m.
-- Hamelin Pool No. 2 - combined 5.2 metres thick from 1,140 m to 1,177 m.
- The three wells span a distance of 25 kilometres. Due to the indicated lateral continuity and the enclosing beds intercepted within these wells, the potential for a significant potash deposit exists. Regional gravity data indicates that the evaporitic horizons may have developed in a sub-basin exceeding fifty kilometres in length and suggest that the sub-basin is nested within the much larger, but locally complex Southern Carnarvon Basin.
- In 1968, based on the results from the first of these wells, Yaringa No. 1, Continental Oil commissioned Hazen Research to undertake a series of potash recovery feasibility tests using solar evaporation of a brine estimated to contain 5.3% potassium chloride (KCL), which is a substantially higher grade than that at some profitable mines operating in other parts of the world.
- The project is ideally situated on the coast of Western Australia, adjacent to the major North West Coastal Highway which can be used to access several port facilities in the region.
- Australia currently imports 100% of their potash requirements resulting in a strong demand and need for a domestic potash supply. In addition, the project's location on the west coast is ideal for export to the Asian markets.
Michael Hopley, President and CEO of Crescent states, "This is a very significant project for Crescent with many positive features including historical work verifying the presence of potash and an excellent environment for potash exploration as well as world-class location and infrastructure. In addition, the potash market remains extremely strong."
Terms of the Agreement
Under the terms of the letter agreement, and an underlying option agreement which APC has with property owner West Coast Potash ("WCP") and its shareholder, Crescent has the right to acquire a 100% direct and indirect interest in the Carnarvon Basin Project, subject to a 2% gross overriding royalty. Subject to regulatory approval, Crescent must make the following payments and issue an aggregate of 30,000,000 common shares to APC (collectively, the "Option Payments") to maintain its rights, provided Crescent is satisfied with its 45 day due diligence review:
(a) issue to APC 7,500,000 common shares of Crescent within five business days of the date of approval (the "Approval Date") by the TSXV of the transaction
(b) issue to APC an additional 7,500,000 common shares of Crescent on or before the first anniversary of the Approval Date
(c) issue to APC an additional 15,000,000 common shares of Crescent on or before the date which is two and one-half years after the Approval Date
(d) reimburse $275,000 of payments made by APC prior to the Approval Date pursuant to the underlying option agreement between APC and WCP within 30 days of the Approval Date and make all further payments, carry out all further work expenditures and fulfill all further obligations of APC under the agreement between APC and WCP. These underlying payments in Canadian dollars are summarized as follows:
- APC can earn an 80% interest in the WCP licenses by spending a cumulative $7,000,000 on exploration and development over a three year period commencing July 15, 2008;
- APC can acquire an additional 20% interest (total of 100%) by completing a bankable feasibility study and paying WPC's shareholder the fair value of the additional 20% as determined by an independent engineering evaluation;
- Additional option payments by APC to WCP are as follows:
-- $500,000 by August 31, 2008
-- Six semi-annual payments of $400,000 beginning on January 15, 2009 until a total of $2,400,000 has been paid by July 15, 2011
(e) At the election of Crescent 50% of the $2,400,000 payments may be made in common shares of Crescent
(f) Nominees of APC will have the right but not the obligation to purchase up to 40% of any equity financings by Crescent
(g) On closing, APC may appoint up to two board members to Crescent's board of directors
About Crescent
Crescent is a mineral exploration and development company with a defined growth strategy of adding value through discovery and rapid project advancement through exploration. The Company has 30.7 million common shares outstanding.
CRESCENT RESOURCES CORP.
Michael Hopley, President and Chief Executive Officer
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this News Release.
Contacts:
Crescent Resources Corp.
Don Halliday
Executive Vice President
Direct: (604) 899-1505
Email: info@crescentresourcescorp.com
Crescent Resources Corp.
Greg Davis
VP Business Development
Direct: (604) 688-1263
Email: greg@crescentresourcescorp.com
Website: www.crescentresourcescorp.com
Gday John. Thanks for the updates. Australia has just turned BIG. My home State here in Western Australia, the largest producing State in Australia, has seen widespread falls totalling anywhere from 75mm to 160mm (3-6") for the month of July. Our marginal areas are now back in production prospects and that means a lot of wheat.
Quite a bit of canola in around these parts and I imagine that is repeated throughout the high production areas. Our crops have a lot of potential and am quietly excited but you know the drill ... long time til harvest. But we have good subsoil, had good establishment through a very dry period (god bless minimum tillage) with very few weeds and good nutrient use efficiencies.
The rain continued across to the East Coast as well. There is now potential for a bin buster out of Australia now. And I can see lots of stopped harvesters waiting for carriers to get rid of the grain. Most trucks have left the industry after two drught years and with a booming mining sector running flat decks (mucheasier on your gear than bulk haulage).
Australia's fertilizer demand for 2009 is going to be rather large. Makes investing in the producers here kind of easy since earnings are effectively predictable before the next season arrives based on what the previous season removes. And people continue to waste time investing in the broader market? I don't know ... the ag theme is so simple to get your head around.
Oh and Australia is sold out of the most commonly used triazole fungicide for cereals, propiconazole. There has been a major run on all the substitutes the last couple of days and anticipate more shortages. Luckily I predicted that one and have all of this year and next years in the shed at 2007 prices. Unfortunately a lot of farmers learnt nothing from the run up in fertilizer prices. Capacity constraints are going to continue to emerge in this sector.
There is no livestock here. The odd mob of sheep ...
Hope all is well and you're navigating these treacherous waters safely :)
MEAT: Beef / Pork Price Spread Narrowing
7/25/2008 5:42:00 PM
KANSAS CITY (Dow Jones)--The spread between U.S. wholesale beef and pork prices continued to narrow this week, closing to $74.91 as of the close of business Thursday. U.S. Department of Agriculture reported the choice-beef cutout value at $160.38 per hundredweight and the pork cutout at $85.47.
Pork cutout values have risen for 2 1/2 weeks, going up 7.9% from $79.21 on July 8, the last time the value was quoted lower, according to the USDA.
Conversely, choice-beef cutout values fell $13.42, or 7.72%, from the recent high of $173.80. Market analysts said export markets for both were keeping values supported, and calculations by Glenn Grimes, agricultural economist at the University of Missouri, backs them up.
Grimes said beef demand was down 4.7% at the consumer level for the first six months of this year. Yet cattle demand at the live level is up 0.5% over the same period. Pork demand at the consumer level was down 2.3% in the first half, while hog demand at the live level was up 7.9%, Grimes said.
Clearly, something besides domestic demand is pushing the demand for hogs and cattle, Grimes said. And that demand is exports. "Exports are more than carrying their load," as far as hog and cattle prices are concerned, Grimes said.
CATTLE/HOG SLAUGHTERS
This week's cattle slaughter was estimated at 668,000 head, compared with 686,000 a week ago and 669,000 a year ago. Year-to-date cattle slaughter is up 1.1% from a year ago. The week's hog slaughter was estimated at 2.126 million head, compared with 2.140 million last week and 1.975 million a year ago. Year-to-date hog slaughter is up 9.3%.
TOTAL MEAT PRODUCTION
The USDA estimated total beef, pork and lamb production for the week at 942.0 million pounds. Last week's output was 957.9 million pounds, and the year-ago figure was 917.7 million pounds. Year-to-date combined meat output is up 5.1%. Broiler/fryer slaughter this week was estimated at 167.803 million head, compared with 171.673 million a week ago and 165.807 million a year ago.
-By Lester Aldrich, Dow Jones Newswires; 913-322-5179; lester.aldrich@dowjones.com
(END) Dow Jones Newswires
http://www.cattlenetwork.com/Content.asp?ContentID=240005
PORK: Fertile ground: The price of pork
Marian Scott, Montreal Gazette
Published: Friday, July 25
The 11 one-day-old piglets suck hungrily, their pink skin almost transparent, as the sow grunts rhythmically.
The porkers will be weaned at three weeks and grow to 125 kilos, heftier than a heavyweight boxer, by the time their short lives end at five months.
"It's very fast," producer Jean-Paul Roulin says of the journey from birth to butcher block.
He raises 2,500 pigs and 250 breeding sows on his 80-hectare farm in St. Urbain-Premier, 40 kilometres southwest of Montreal.
Three times a day, premixed feed falls from a chute. Pigs promptly convert it to meat.
"It takes 2.5 kilos of food to produce one kilo of pork," explains Roulin, 50. "Chicken takes even less. Beef takes much more."
In the controlled environment of Roulin's hog barn, every detail is precisely worked out, from the minimum number of teats on a sow (16) to the size of the sows' 24-inch by 90-inch pens.
But despite his meticulous calculations, Roulin's numbers are not adding up to a profit.
This year, Quebec's 1,800 pig producers expect to lose $47 for each of the 7.5 million hogs they sell.
Criticized for polluting waterways, spewing odours and raising animals in factory-like conditions, beleaguered hog farms are also hemorrhaging money.
Last year, farm-income insurance doled out $361 million to hog producers and payments are expected to top $500 million this year.
A global pork glut has depressed prices, while the cost of feed and fuel has soared.
"If you're the nervous type," notes Roulin, "it's keeping you up at night."
Jean-Guy Vincent, president of the federation of Quebec pork producers, likens the problems facing his members to a perfect storm.
In the past two years, swine viruses decimated herds. The strong Canadian dollar made exports less competitive. And cheap U.S. pork has undercut Quebec producers.
But critics say the crisis is a symptom of a deeper malaise, one that spotlights the failings of industrial-style agriculture.
"Hog farms are symbolic in many ways," says Guy Debailleul, a professor of agricultural economy at Université Laval.
Inspired by assembly-line industries, modern hog operations are producing meat faster and more efficiently than ever before. But some say the cost to the environment, rural communities and animal welfare is too high.
Once barnyard animals that rolled in the muck and feasted on leftovers, pigs have become indoor creatures, raised in antiseptic barns where they never see direct sunlight.
Visitors to Roulin's hog barn must shower and don fresh clothes before entering.
Pigs are intelligent creatures that like to rootle - dig up earth and roots with their snouts, says Susan Heller, an artist who lives on a farm in St. Bernard de Lacolle, where she raises five pigs.
"I think it's cruel for an animal that's so bright never to go outside," adds Heller, who sells the pigs for slaughter even though she's a vegetarian.
"You can't organize agriculture like an assembly line in the automobile industry," says Debailleul.
For example, raising animals in close proximity increases the risk of illnesses like porcine circovirus, which ravaged Quebec herds in 2006-07.
This week, a Montreal supermarket displayed a package of four pork chops for $3.85 - a bargain by any measure.
But the price at the checkout only tells part of the story, says Debailleul.
"You're benefiting from a cheap price at the grocery store, but as a taxpayer, you're compensating the pork producer," he says.
"More and more, it's up to the state to subsidize the industry."
In the U.S., concentration in the pork industry has led to hog operations with as many as 2,000 sows and 15,000 pigs - almost 10 times the size of the average Quebec hog farm.
"Pig farms are a caricature of everything that's wrong with agriculture," says Denise Proulx, co-author of a book on pig farms, Porcheries! La porciculture intempestive au Québec (Pig Farms! The Untimely Pig Industry in Quebec, published in French by Écosociété, 2007).
"We've made the error of looking at agriculture only from an economic angle," she says.
"We've forgotten that agriculture is also about our relationship with nature. There is a direct connection with public health and with protecting ecosystems," says Proulx.
In the 1960s and '70s, Proulx and co-author Lucie Sauvé recount in the book, agricultural experts preached the benefits of specialization.
Federal and provincial incentives encouraged farmers to modernize. Cattle disappeared from pastures to be fattened in feedlots. Specialized hog operations replaced subsistence farms.
In the 1980s and '90s, as free trade agreements opened the door to farm exports, Quebec pork producers set out to conquer foreign markets.
Pig production grew from 2 million to 4 million from 1974 to 1981, and stabilized at 7.5 million in 2003.
Quebec producers will raise 7.5 million pigs in 2008 - matching the human population. Quebec exports about 45 per cent of its pork; the U.S. and Japan lead the list of 70 countries that buy it.
Quebec's pigs generate $840 million in farm income and $2.4 billion in sales of meat, cold cuts and other products.
The producers pay $8.74 per hog for farm-income insurance and the provincial and federal governments contribute the same amount. However, in bad years, like 2006, 2007 and 2008, the government share is greater.
This year, the federal government announced a buyout program to reduce herds across Canada by 10 per cent. Some of the pork slaughtered under the program will supply Quebec food banks.
While the outlook for this year is grim, pork producers are banking on a growing appetite for meat in newly industrialized countries. "International demand is growing," Roulin says hopefully.
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Johanne Dion has been lobbying for protection of the Richelieu River since 1985.
"It was the main treasure of my childhood," said the retired receptionist in Richelieu, a village of 5,500, 35 kilometres south of Montreal.
"I swam in that river when I was little and I was hoping to do it again before I died."
In the 1980s, towns and industries along the Richelieu were dumping untreated industrial and human waste.
By 2000, Dion's campaign to clean up the waterway had largely succeeded.
Then, pig farms started moving in.
In 2005, Quebec lifted a three-year moratorium on new hog operations.
"We found out in the fall of 2005 that a pig farm was planned," recalls Dion.
"The whole population was in a hullabaloo."
Stormy public consultations made national newscasts and local voters elected a new mayor who vowed to fight the hog barn. But the farm opened anyway last year.
"The people of Richelieu are very bitter because democracy did not work," says Dion.
"Everything is stacked up against us."
Despite a provincial law calling for public consultation on new pig farms, opponents say local residents have little power to prevent them.
For farmer Roulin, much of the opposition to hog barns is irrational.
"A lot of outsiders came in to stir up fear. It's always the fear of destroying the environment."
On Roulin's farm, pig stalls have a slatted metal floor where excrement falls through the gaps.
Waste is flushed out and piped outside to a huge cement lagoon, like an above-ground pool the size of two Olympic-size basins. A brown crust floats on the surface.
Twice a year, the liquid is sprayed on nearby fields.
Roulin, who has planted fruit trees around his lagoon, points out the cement enclosure ensures liquid manure does not leak into groundwater.
Under provincial law, farmers must monitor soil content before spreading manure, which is high in phosphorus and nitrogen. But Debailleul notes that runoff from farmers' fields can leach into waterways, especially when it rains or if the ground is frozen.
"The issue of pollution of waterways by hog production is far from solved in Quebec," says Debailleul. "In some areas, waterways are continuing to become degraded."
Liquid manure is also a significant source of methane emissions.
Pig farms contribute to blue-green algae, says Daniel Green, a scientific advisor to the Sierra Club of Canada.
Microscopic organisms created a green bloom on many of Quebec's lakes and rivers last summer. The problem is caused by high levels of phosphorus in the water. Quebec has launched a 10-year, $200-million action plan to combat the plague.
Researchers at the University of Guelph have come up with a novel solution for phosphorus pollution from pigs. They created a genetically engineered a pig, the Enviropig, whose manure contains 50- to 75-per-cent less phosphorus than a regular pig.
But Ann Clark, an associate professor of agriculture also at the University of Guelph, charged the Enviropig focuses attention on the symptom rather than the real problem.
"The problem is not the animals," says Clark. "It is the concentration of animals which transforms manure from a valued resource to a major waste problem."
North Carolina, which has the largest hog farms in the U.S., recently passed a law banning new hog lagoons, although existing ones are grandfathered. New and expanded farms will be required to install equipment to treat manure and recycle it as compost.
"We have developed innovative technologies that eliminate ammonia, odour, pathogens, discharge to streams and heavy metal soil contamination," says Joe Rudek, a senior scientist with the North Carolina office of Environmental Defence, a non-profit organization that worked with producers and legislators on the reform.
Not unlike the process at a municipal water treatment plant, the technology separates liquid from solid waste and composts solids.
Environmentalists have raised concerns about contamination of soil and water by antibiotics and heavy metals from hog waste.
Livestock accounts for half of antibiotic use in the U.S., according to a 2006 report by the United Nations Food and Agriculture Organization.
Low doses of antibiotics have been found to promote growth in livestock.
However, Quebec producers say non-therapeutic use of antibiotics and growth hormones is banned here.
The FAO report, Livestock's Long Shadow, said farm animals are the world's leading source of water pollutants. Animal wastes, antibiotics, hormones, chemicals from tanneries, fertilizers and pesticides used for feed crops lead the list of contaminants.
The report said farm animals are also responsible for 18 per cent of the world's greenhouse gas emissions and almost two-thirds of ammonia - a cause of acid rain - from human activity.
Feed crops use one-third of the world's arable land. Livestock also accounts for more than eight per cent of the world's water use - mainly to irrigate feed crops.
When you drive along Highway 20 east of Montreal, you might not connect the vast fields of corn and soybeans with pigs.
But those crops are grown to feed livestock, points out Clark.
"The livestock industry is the tail that wags the dog of agriculture."
Overproduction of industrial corn has driven up meat production and consumption, Clark notes.
"It was a direct result of the great excess of grain that we have."
Spiraling energy and grain prices are eroding the assumptions on which intensive meat production is based, says Clark.
"It worked fine as long as energy was cheap, but the energy is not cheap any more," she says.
"When grain costs $7 a bushel instead of $2.50, your cost as a pig producer goes through the roof."
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On the Rheintal farm in Ste. Monique de Nicolet, 150 kilometres northeast of Montreal, a big sow lowers herself up to her ears in a mud bath. Grunting with pleasure, she luxuriates, then emerges covered in black muck except for two pink circles around the eyes.
"Here, they do what comes naturally," says farmer Guylaine Buecheli as the sow saunters off to snack on alfalfa growing under the wide blue sky.
Buecheli and husband Sebastien Angers recently took over the 84-hectare organic farm started in 1984 by Buecheli's father, Hans, a pioneer in Quebec's organic-farming movement. They raise beef cattle and pigs.
"People acted like he was from outer space," says Buecheli, 29, said of her father, who immigrated to Quebec from Switzerland, where he also practised organic farming. But interest in organic meat and produce is growing, she adds.
The couple raise 40 sows and 300 pigs and plan to increase production. They also have 60 head of beef cattle. They sell the meat to individuals and health-food stores.
Angers, 28, whose father runs a maple sugar bush, studied organic farming at Laval University.
"It just clicked with me," he says. "It reflects my values: health, the animals' welfare, the environment - just common sense, really."
The pigs on the Rheintal farm (the name means valley of the Rhine) nest in straw. Their manure is composted and used on fields where the couple cultivate organic corn, oats, wheat and flax to feed their livestock.
Angers views manure as a valuable resource.
"You're nourishing the soil. If we got rid of the manure, it would be like exporting the farm's organic matter."
Free-range pigs grow more slowly than penned pigs and reach slaughter weight between six and eight months.
"We don't cut the piglets' tails. We don't cut their teeth," says Angers, as sows flake out in the straw on a hot summer day. Some conventional hog producers do so to prevent crowded animals from hurting each other.
As Angers chats, veterinarian François Cardinal drops by to check up on the herd.
The farm is unlike any other in his practice, says Cardinal, whose client list includes 150 hog operations across Quebec.
"There is less density. The fact that the animals are loose, for sure, it improves their well-being," he says.
Many hog farmers would switch to more humane methods if they could afford it, Cardinal adds.
"Most of them are barely managing to meet their costs. It's really a question of economics."
Those economics could change if the government revised farm-support programs, argues Denis Boutin, an agricultural economist with the province's Department of Sustainable Development, the Environment and Parks.
Farm-income insurance, which ties payments to production, encourages higher output and even overproduction, Boutin wrote in a 2004 report.
"Support that varies directly with production volumes is considered amongst the most environmentally harmful, since it couples maximum support to maximum output," he noted. This means large, industrial farms benefit most.
In 2003, a committee that held public hearings on Quebec's pig farms reached a similar conclusion. It proposed that farm-income insurance be phased out and replaced by a new scheme not tied to output or to a specific agricultural product. Instead, all farmers would be guaranteed a certain level of revenue, regardless of volume, type or cost of production.
Laval's Debailleul envisions a future where pork producers could develop niches like organic meat and gourmet products.
He draws inspiration from Wisconsin, a dairy state where small producers have developed hundreds of specialty cheeses and ice cream.
In recent years, the state offered incentives to farmers to transfer cattle from feedlots to pastures. "It's a tourist state, so it's important to see cows in the fields."
Pork producers, take note.
"I think in the future we should envisage producing less (pork), and not only for environmental reasons," adds Debailleul. "We should bank on quality, not quantity."
http://www.canada.com/montrealgazette/story.html?id=bf31723d-77d6-42b1-9eb2-8aec82c6f7c2
FERTILIZER: Boom Not Over For Fertilizer Sector
Melinda Peer, 07.24.08, 11:50 PM
Profits more than doubled for a crop of agribusiness companies that reported Thursday, but investors seemed unsure whether hefty guidance hikes were too good to be true.
The bullish outlooks seem to belie the idea that the world is headed for a sharp slowdown. While conditions in the United States and Europe seem weak, a lot of farmer are making bad bets if they are ordering fertilizers for crops that won't be wanted.
During Thursday’s conference call, Potash Chief Executive Bill Doyle said he didn’t see dwindling demand for potash, despite a fall in corn prices on the belief that Midwestern floods didn’t destroy as many crops as initially feared (see " Corn's Comeback, Thanks To Mother Nature").
“We have the opposite problem, which is we have so much demand it is exceeding current supply,” he said, adding that the trend is expected to continue through 2009. The company aims to boost capacity to 18.0 million metric tons, up from the 10.2 metric tons expected this year.
Commodity prices have soared in the past year as the world's population grows and becomes wealthier, enabling emerging middle-class consumers in developing markets to spend more on food. These consumers aren't only buying more food but also spending on higher quality nutrition like meat, which drives up grain demand by way of animal feed. According to Potash Corp. of Saskatchewan (nyse: POT - news - people ), corn prices surged more than 60.0% and soybean prices nearly doubled during the second quarter.
As a result, farmers are scrambling to boost crop yields and piling on the fertilizer, which restores nutrients that sapped out of the soil during the previous planting season. But Potash said global crop yields will need to reach record highs not only to meet growing demand but also to replace depleted grain stockpiles, which are down to less than two months of supply.
"That presents farmers with a significant challenge--one that becomes greater as population covers a larger portion of the world's agricultural spaces, leaving less land for food production," the company said.
Bunge (nyse: BG - news - people ), which manufactures oilseed products in addition to animal feed and fertilizer, boosted year-end earnings guidance by more than 60.0% on Thursday.
"While growth in demand for some agricultural products may soften slightly due to the sustained period of high prices, agribusiness margins should be solid. Edible oils should improve from its performance in this quarter," said Chief Financial Officer Jacqualyn Fouse, adding fundamentals in the company's fertilizer business are projected to remain strong. Bunge boosted full-year earnings guidance to between $11.60 and $11.90 from $7.10 to $7.40. Analysts had been expecting earnings of $9.16 a share.
Bunge said earnings more than quadrupled in the second quarter, soaring to $751.0 million, or $5.45 a share, from $168.0 million, or $1.30 a share, a year ago. The second quarter included $128.0 million in tax credits from a favorable tax ruling in Brazil. Earnings, adjusted to exclude non-recurring items, came in at $4.73 a share.
The results beat analysts' expectations for $2.27 a share; second-quarter sales of $14.4 billion, up 73.1% from last year, also surpassed the $13.3 billion in sales projected by analysts. Its shares closed Thursday down $2.25, or 2.3%, at $97.07.
Potash Corp. of Saskatchewan said higher prices for potash, nitrogen and phosphate helped profits more than triple, to $905.1 million, or $2.82 a share, from $285.7 million, or 88 cents a share, a year ago. Sales jumped 93.7%, to $2.6 billion, from $1.4 billion, in 2007's second quarter.
Analysts had predicted earnings of $2.61 a share and sales of $2.6 billion. The fertilizer-and-animal-feed company boosted year-end earnings guidance to between $12 and $13 a share, from $9.50 to $10.50, and it said third-quarter earnings will be between $3.25 and $3.75 a share. Its stock closed down 3.1%, or $6.26, at $194.43.
Terra Nitrogen (nyse: TNH - news - people ), a major U.S. producer of nitrogen fertilizer products, said second-quarter net income more than doubled, to $130.2 million, or $4.01 a share, from $57.1 million, or $3.02 a share, in the prior year. Sales surged 44.7%, to $256.7 million, from $177.4 million.
The company attributed the strong earnings to higher selling prices for nitrogen and soaring ammonia sales volumes, despite lower sales for some products as a result of flooding in the Midwest, which reduced U.S. corn planting by 6.0%. Its stock added 1.9%, or $ 2.10, to close at $ 110.14.
Anglo-Swiss agribusiness leader Syngenta (nyse: SYT - news - people ) also beat expectations with its half-year results on Thursday, and raised its earnings outlook right into 2009. Analysts said the company had until then been conservative with its forecasts. (See "Syngenta: A Place To Plant Investment")
http://www.forbes.com/markets/2008/07/24/bunge-potash-closer-markets-equity-cx_mp_0724markets47.html
FERTILIZER: Fertiliser subsidy to treble this FY - minister
Fri Jul 25, 2008 7:00pm IST
By Himangshu Watts and Mayank Bhardwaj
NEW DELHI (Reuters) - India's fertiliser subsidy is likely to treble to 1.19 trillion rupees ($28 billion) this financial year from a year ago as the country tries to protect farmers from rising global prices, the fertiliser minister said.
In the year to March 2008, the subsidy was 403.4 billion rupees which the government thought would rise to 950 billion rupees this year as international fertiliser and input prices flare.
Indian fertiliser companies have to sell their products at below market rates to poor farmers and the government gives the firms subsidies and also issues bonds in return.
The subsidy bill had risen due to surging prices of imported ingredients used to manufacture fertilisers, and higher rates for certain grades of fertiliser, which are also imported, Steel, Chemicals and Fertiliser Minister Ram Vilas Paswan told Reuters in an interview on Friday.
"There has been huge rise in global fertiliser prices and our subsidy bill is going to rise as we try to sell at cheaper rates," Paswan said. "There has been no increase in (local) fertiliser prices for five years."
He said the government was considering a demand from the firms that the subsidy the state provides to cushion the impact should be given solely in cash.
The government late last year said it would issue bonds worth 75 billion rupees to fertiliser firms to compensate them for selling at discounted prices.
Prime Minister Manmohan Singh has expressed concern at rising food, fuel and fertiliser subsidies and has asked officials to rein in increasing subsidy bills.
Demand for fertiliser peaks in the monsoon months of June and July when farmers begin planting rice, cotton and oilseed crops. The government steps up imports in the summer to ensure steady supplies.
"We have ensured availability of fertiliser and have insulated farmers from high costs," the minister said.
Paswan said his ministry has recommended a ban on exports of sulphuric and phosphoric acids to help reduce firms' input costs.
http://in.reuters.com/article/businessNews/idINIndia-34679220080725?sp=true
SUGAR: Government bans sugar exports
By Sajid Chaudhry
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Don't get too carried away with linking sugar to oil at this particular juncture. Oil may well have yet to complete its downtrend but sugar has some potentially explosive fundamentals coming through in the next year or so. Number one of which will be loss of acres to grain crops. EF
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ISLAMABAD: The Economic Monitoring Committee on Saturday decided to impose a ban on sugar exports to stabilise the commodity’s prices in the country.
The daily meeting of the committee, chaired by Finance Minister Syed Naveed Qamar, announced this initiative to avoid a possible sugar shortage crisis. It also decided to exempt 25 percent customs duty on sugar imports by the private sector. The committee has advised the Commerce Ministry to immediately notify a ban on sugar exports and directed tax authorities to notify the reduction in import duty.
The participants of the committee meeting also noted that the sugar supply to the Utility Stores Corporation would be increased and 6,000 tonnes of pulses would also be provided to it. They said that 20,000 tonnes of pulses would be offloaded in the open market. The committee also requested the Trading Corporation of Pakistan (TCP) to procure sugar from mills to guarantee a smooth supply in the market.
According to sources privy to the information, the sugar industry expects a 10 percent reduction in the sugarcane crop this year and is anticipating a subsequent decrease in sugar production. They said that the industry was seeking to charge higher prices of its sugar stock by creating sugar shortages through reduced releases to the market.
Similarly, the committee meeting directed the Petroleum and Natural Resources Ministry to convene a meeting of the CNG Prices Committee, which has been formed to devise a benchmark that will facilitate the Oil and Gas Regulatory Authority’s oversight of CNG consumer prices.
The committee also reviewed the existing wheat stock situation and directed the Ministry of Food and Agriculture (MINFAL) to import more wheat to meet the increased domestic requirements.
It was also informed that 50,000 tonnes of urea would be imported from Saudi Arabia to meet local demand and the neighbouring country has already committed 200,000 tonnes of the fertiliser to Pakistan.
The committee expressed satisfaction that DAP fertilisers for the Rabi season were of sufficient quantity. It also noted that DAP prices would be decided by the Fertiliser Prices Committee, saying it had already been notified of this by the federal government.
http://www.dailytimes.com.pk/default.asp?page=2008%5C07%5C27%5Cstory_27-7-2008_pg1_7