|
BRAZIL SANTISTA FAVORS ARGENTINA OVER U.S. WHEAT
Brazil's leading food supplier Santista canceled an order buy 25,000 tonnes of
U.S. hard red winter (HRW) wheat as it eyes more attractive prices from neighboring Argentina, company officials said Wednesday.
Santista, whose controlling shareholder is industry giant Bunge, opted to switch the origin of its buy order to Argentina and sell back the U.S. wheat according to a purchase contract agreed two weeks ago, a Bunge spokesman told Reuters.
"Santista sold the 25,000 tonnes (of September U.S. wheat) because it got a good price to sell and there are good prices in Argentina, especially when you
factor in transportation and taxes," said Bunge spokesman Mario Ernesto Humberg.
Brazil's 2000/01 wheat requirement is estimated at around eight million tonnes, the vast majority of which is likely to come from Argentina -- free of tariffs
as the two South American nations are partners in the Mercosur free-trade bloc. Humberg said Santista had resold its option for the U.S. wheat without making any profit or loss on the deal.
The company would probably proceed with an Argentine purchase as the grain would still be needed to make flour, although the buy option had not yet been
exercised, he said. "We need to buy. Santista is a big company that uses mostly wheat from Argentina but some from other countries too."
Last week. world markets were abuzz with talk that Brazil might buy between 250,000 and 400,000 tonnes of U.S. wheat this year, before new-crop production from
Argentina becomes available with the start of harvesting in a few months' time.
Although Brazil does occasionally buy wheat from the U.S. and Canada, it is not normally a regular buyer from North America and prefers to import from Argentina. This year, however, frost and drought sliced into the crop in the country's top growing state Parana -- making Brazil's import requirement even larger, and at a time when Argentina is still in between harvests.
Parana produced 1.51 million tonnes of wheat in 1998/99, the bulk of Brazil's overall crop of 2.43 million tonnes. But output in 1999/2000 is now pegged at
627,786 tonnes, a sharp fall on the initial pre-frost forecast of 1.66 million tonnes.
Industry sources said attractive prices coupled with guaranteed high quality had made the U.S. a competitive source for wheat for Brazilian buyers over the last
month, given the reduced national crop and interim supply lack from Argentina.
CBOT WHEAT MAKES NEW CONTRACT LOWS ON EXPORT NEWS
Soft red winter wheat futures at the Chicago Board of Trade ended lower
Wednesday, with several months making new contract lows after Brazil canceled an order for 25,000 tonnes of U.S. hard red winter wheat, traders said. Technical weakness also pressured futures. September hit a
new contract low of $2.32 per bushel in overnight trade, while December made a new low in the day session at $2.50-1/2 per bushel.
CBOT wheat closed down 3/4 to 3 cents, with September down 1 cent at $2.33-3/4 per bushel and December down 3/4 cent at $2.52-1/4 per bushel. Trade was
relatively light, and several floor sources noted a lack of follow through selling on the contract lows.
"But there wasn't much of a bounce off those lows either," one floor trader said. The Brazilian cancellation followed recent speculation that Brazil would buy up to 300,000 to 400,000 tonnes of U.S. wheat. Leading Brazilian food supplier Santista canceled its order to buy 25,000 tonnes of U.S. hard red winter wheat as it sees Argentine prices as more competitive, traders and analysts said Wednesday. No new purchase is believed to have been made yet.
However, CBOT traders noted other export news overnight included a U.S. attache report that Poland announced a tender on food wheat imports and minimum amounts
were set at 25,000 tonnes.
The government said in early August that tariff-free import quotas would allow Poland to import 1.1 million tonnes of grain by the middle of November, and most of that tally is expected to be wheat.
Egypt will tender soon for 50 wheat silos, on a build-operate-transfer basis, with a capacity of 30,000 tonnes each, at a total cost of about 1.5 billion pounds
($425 million), an official said on Wednesday. Mohamed Abdel-Razek, vice-chairman of the General Authority for Supply Commodities and Egypt's main official wheat buyer, said the Supply and Internal Trade
Ministry would issue the tender in the next few days. He said the silos would conserve Egypt's wheat stocks and reduce waste, but gave no other details.
Poland was scheduled to tender on Aug. 28 for 400,000 tonnes of optional-origin wheat with delivery by Oct. 31. Sri Lanka was to tender Aug. 31 for 50,000
tonnes of optional-origin wheat for Sept. 13-22 shipment. The Commodity Credit Corp will hold two tenders. The first will be on Wednesday seeking 15,000 tonnes of hard red winter wheat for donation to
Ethiopia. The second will be on Aug. 30 seeking 9,000 tonnes of hard red winter wheat and 12,000 tonnes of northern spring/dark northern spring wheat for donation to Guyana.
Wheat futures volume on Wednesday was estimated by the CBOT at 17,000 contracts, compared with 22,183 traded on Tuesday. Options volume was estimate at 3,500 contracts.
WEATHER REPORTS FROM WORLD WHEAT PRODUCTION REGIONS
US crop watchers indicate hot, dry weather in the southern Great Plains over
the past few weeks has depleted soil moisture and stressed unirrigated summer crops.
Some sources anticipate the situation has reduced yield potentials and stressed livestock. This kind of scenario near the end of August, now has some local producers concerned about the prospects of dryland wheat seeding which begins next month. Winter wheat seeding "normally" begins in the High Plains region during early to mid-September, but most planting occurs in late September and early October. Weather service sources suggest there is plenty of time available for improved rainfall to arrive before winter wheat prospects are dimmed. At this time, crop watchers suggest the first few weeks of winter wheat planting will be slower than usual in the drier areas, and seed germination may be slow and uneven at first because of continued dry and warm weather.
Weather service sources indicate Monday rains in Argentina, more specifically Buenos Aires and southern Entre Rios, were considered highly beneficial for the
winter wheat crop, although some of the heaviest amounts of rain fell in more minor growing areas.
Crop watchers suggest subsoil moisture remains largely adequate for winter wheat, but topsoil moisture was short in most of Buenos Aires and La Pampa and Cordoba. Moreover, additional rain is still needed in these areas as well in order to beneficially support spring growth. Generally speaking, sources indicate most winter crops in Argentina are in "good" condition for this time of the season.
For the third time, Russia's federal weather center has revised its grain production forecast for the 2000-01 marketing year downward to 63-67 MMT.
Its previous estimate was at 63.5-68.5 MMT. Sources report unfavorable harvesting conditions during the first half of August led to the lower revision. Despite the harvesting problems, the average yields will be higher this year, resulting in a harvest considerably higher than the 54.7 MMT output seen in 1999-00.
Local grain specialists in France indicate approximately 40% of the 2000-01 French wheat crop will be "export-quality" milling wheat, around 30% will
be "lower-quality" milling wheat and the remaining 30% will drop into the feed wheat category. Moreover, the crop specialists defined "exportable" milling wheat as having test weights of 76
kg/hl (59 lb/bu) or above and Hagberg falling numbers of 200 or above, "lower quality" milling wheat as having test weights of 74-75 kg/hl (57.50-58.28 lb/bu) and Hagberg falling number of around 170-200,
while "feed quality" wheat is defined as having test weights of around 70-72 kg/hl (54.40-55.94 lb/bu) and Hagberg falling number down to 100. Meanwhile, newswire sources suggest the French wheat
crop is virtually all harvested, but it will be at least another week or so before enough new-crop samples are tested to produce firm percentages.
NATIONAL AGRICULTURAL SUMMARY REPORTS ON CORN AND SOYBEAN DEVELOPMENT
Summary information from the National Agricultural Summary
released on August 22 reports that both corn and soybeans are further along in development this year than last and that recent, scattered showers will help in soybean filling.
Corn
Seventy-seven percent of the crop was at or beyond the dough stage and 40 percent was dented. Development remained slightly ahead of last year,
when 76 percent was at or beyond the dough stage and 36 percent was dented. Both stages were more than 1 week ahead of their 5-year averages of 60 and 22 percent, respectively. Above-normal temperatures stimulated
crop development in the central and southern Great Plains.
Eighteen percent entered the dough stage in Colorado, and 16 percent reached the dent stage in Kansas. In Texas, 59 percent was mature and 49 percent was
harvested. In the Corn Belt, fields rapidly developed, in spite of cooler-than-normal temperatures in many areas. In Iowa, 20 percent entered the dough stage and 22 percent reached the dent stage during the week.
Across the northern Corn Belt, from Wisconsin to South Dakota, more than 20 percent of the acreage entered the dough stage.
Corn dented progressed about 20 percentage points in Indiana, Nebraska, and Tennessee. Conditions rebounded in Minnesota and North Dakota, as rain relieved
moisture shortages and mild temperatures reduced moisture requirements. Rain maintained moisture supplies and boosted crop conditions in parts of the Corn Belt, but moisture supplies diminished and conditions
slightly deteriorated in most areas.
Soybeans
Ninety-one percent of the acreage was setting pods, slightly ahead of last year's 88-percent pace and more than 1 week ahead of the
80-percent normal for this date. Acreage dropping leaves, at 3 percent, was also ahead of last year and the average for this date. Below-normal temperatures limited development in the northern Great Plains, eastern
Corn Belt, and mid-Atlantic Coastal Plains. However, fields rapidly began setting pods in Michigan, Ohio, and North Carolina. Above-normal temperatures accelerated development in the lower Missouri and Mississippi
Valleys. In Arkansas and Missouri, pod setting advanced 18 and 12 percentage points, respectively. In Louisiana and Mississippi, 23 and 18 percent, respectively, was dropping leaves. In Kansas, 17 percent was
dropping leaves, more than 2 weeks ahead of normal. Conditions deteriorated in the central Great Plains and southern Corn Belt due to moisture shortages and excessive heat. Scattered rains and mild temperatures
limited deterioration in the northern and eastern Corn Belt and northern Great Plains. Timely rains boosted conditions in Minnesota and North Dakota."
CARLSON ANNOUNCES RECIPE FOR INCREASING GRAIN PRICES
Republican candidate for Agriculture Commissioner Clare Carlson today
announced a series of policies he called "a recipe for $5 wheat."Carlson also criticized current Agriculture Commissioner Roger Johnson for failing to push for the recipe's proactive measures, most of
which can be enacted administratively without legislation.
"Healthy agriculture is the basis for healthy communities and schools," Carlson said. "This recipe isn't just a catchy slogan. It is a series of
practical, realistic steps that can and should be taken to increase grain prices for our producers."
The recipe calls for:
1. Aggressive use of the Export Enhancement Program (EEP).
2. Full access to world markets and no embargoes.
3. Returning Canadian imports to 1995-96 levels.
4. Repurchasing 60 million bushels sold from the Food Security Reserve in 1996.
5. Donating 100 million bushels to needy countries.
6. Opening up lucrative Chinese markets by passing PNTR.
"If these policy changes were made, I believe we would see $5 wheat, $3 barley and $6 durum within two years," Carlson said. "Roger Johnson has
spent the last four years blaming Republicans for Freedom to Farm. All the while, he has failed to work with his Democratic colleagues who control the White House, the USDA and dozens of policies that have a
significant affect on commodity prices."
To a large degree, Carlson blames today's dismal prices on huge grain reserves that are dragging down the domestic market. He believes aggressive trade policies
that help producers seize new market opportunities are critical for improving prices. As Ag Commissioner, Carlson will call on Washington to use all the tools available to help farmers, in good times and bad.
The most important ingredient in Carlson's recipe is the strategic use of EEP. He said if the U.S. Department of Agriculture had used EEP in the 1990s to export
an additional 100 million bushels per year, the ending stocks for wheat would be 350 million bushels. The last time ending stocks were that low, the price of wheat was more than $5, he said.
"The Clinton Administration has had millions of dollars each year in spending authority for EEP since 1995," Carlson said. "It is hard for me to
understand why they have used only a tiny fraction of these funds to help U.S. farmers compete on the world market. And it's even harder for me to understand why Roger Johnson hasn't been screaming about it."
Carlson said the Clinton administration sold 60 million bushels of grain from the Food Security Reserve when prices were at their peak in 1996.
"They felt it was necessary to do that in 1996 when prices were high. In all fairness, they should buy it back now that prices are so low," he said.
He called on Congress to eliminate embargoes that block U.S. producers from 11 percent of the world's market, pass permanent normal trade relations with China,
and maintain a fair balance of trade with Canada. Specifically, he said Canadian shipments of grain to the U.S. should be reduced by 20 million bushels, from the 1999 level of 60 million to 40 million.
Carlson's plan also calls for the USDA to donate another 100 million bushels to needy countries. "This will further reduce price-depressing surpluses
and help feed starving people around the world," Carlson said. "The cost associated with this should be considered penalty points for the current administration that has bungled agriculture trade policy
for eight years."
He said leaders in Washington are not doing enough to use the tools they have available to improve market conditions. "Each of these ideas separately
might be minor, but collectively they can make a huge difference," Carlson said. "Roger Johnson has been silent on too many important immediate solutions -- silent on EEP, silent on PNTR. We need someone
who will go beyond political finger pointing to find workable solutions."
Carlson said increasing grain prices would have a dramatic affect on farmers and the entire North Dakota economy. Raising wheat prices from the current $2.50/
bushel price to $5 would mean $837 million to the state, based on an average sized wheat crop of 331 million bushels. For barley, raising the price from $1.15 to $3 on an average crop of 100 million bushels would
generate $185 million in the state's economy.
"This is $1 billion that could be circulating in North Dakota's $15 billion dollar economy," Carlson said. "I agree there are problems with the
current farm program. But our agriculture commissioner has been so focused on highlighting these problems that he has failed to lobby for some practical measures that could make a huge difference for farmers."
MANY FARM OPERATORS COULD REACH GOVERNMENT CROP PAYMENT LIMITS THIS FALL
Minnesota crop producers need to be aware of this year's
$75,000 government payment limit for corn, soybeans, and wheat. A large number of Minnesota farm operators could reach that limit this fall, says Kent Thiesse, Blue Earth County educator with the University of
Minnesota Extension Service.
The $75,000 limit is on the total amount of loan deficiency payments (LDP) and gain on Commodity Credit Corporation (CCC) marketing loans. The gain on the CCC
loans is the difference between the county loan rate and the posted county price(PCP) on the day the grain is released from under loan at the county Farm Service Agency (FSA) office.
"Current depressed prices are likely to result in very high LDPs and marketing loan gains on corn and soybeans after harvest this fall," says Thiesse.
Current PCPs in Minnesota have been running 45 to 50 cents per bushel below the county corn loan rates and 90 cents to a dollar per bushel below soybean loan
rates. That means a farm operator could potentially collect 50 cents per bushel for corn and a dollar per bushel for soybeans on the entire 2000 crop. The producer must choose between collecting the LDP or putting
the crop under a nine-month CCC loan, notes Thiesse. Both alternatives can't be used on the same bushels of grain.
The "threshold level" to reach the $75,000 payment limit depends on both the PCP and this year's crop yield, since every bushel produced is eligible
for either a LDP or to go under CCC loan. Thiesse cites an example of a farm operator with 1,035 acres in crops, half in corn that yields 180 bushels per acre and half in soybeans that yield 55 bushels per acre.
This operator would reach the $75,000 payment limit with LDPs of 50 cents per bushel for corn and a dollar per bushel for soybeans. It would take 1,250 acres for this operator to reach the $75,000 limit if yields
were 150 bushels per acre for corn and 45 bushels per acre for soybeans.
Farm operators exceeding the $75,000 payment limit still have an option to take advantage of the CCC loan program and low PCP prices at county FSA offices, says
Thiesse. A producer who reaches the $75,000 limit can no longer use the LDP and must put the grain under a nine-month CCC loan. If the grain is released at a PCP below the county loan rate, the producer can use
commodity certificates to release the grain under loan at the PCP. No paper certificates are actually issued. The process is electronic and allows producers who have reached the $75,000 limit to take advantage of
the marketing gain resulting from low PCPs. Farmers who use this option must use the daily PCP and not the 60-day PCP "lock-in" procedure available on mosT CCC grain loans.
"The commodity certificate procedures are quite detailed and complicated," says Thiesse. "Farm operators who expect to reach the $75,000 payment limit
this fall should contact their FSA office before harvest to learn the details of the commodity certificate program. It is extremely important to understand all aspects of the LDP and CCC loan programs to maximize
grain marketing income. Most county FSA officials are very willing to work with farm operators to design the best strategies for the 2000 crop."
MARKETING THE Y2K CROP FOCUS OF SEPTEMBER 13 SEMINAR
After producers are through checking out the metal at the big farm show in
West Fargo, N.D., they're encouraged to check the mettle of their grain selling plans, at the seminar "Marketing The Y2K Crop: Strategies For Pricing Your Grain," to be held Wednesday, September 13, at the Kelly
Inn, Main Avenue and I-29, in Fargo.
Seminar speakers are Ray Grabanski, president of Progressive Ag Marketing, Fargo; Mike Lockhart, a Ulen, Minn. farmer and marketing club facilitator; and George
Flaskerud, North Dakota State University extension crops economist.
Grabanski will focus on the market outlook for wheat, corn and soybeans, and outline strategies to get the most out of this year's markets. He'll also touch on
using the Internet to improve profits.
From an easy-to-follow producer's perspective, Lockhart will reveal strategies that many farmers are discussing and implementing in the marketing groups that he
leads.
Flaskerud will explain a handy tool that will enable growers to estimate expected net prices for wheat, corn, and soybeans for any given months in the future,
thus helping to plan grain sales.
Producers will be able to review post-harvest selling strategies for wheat and barley, and fine-tune pre-harvest selling plans for corn, soybeans, and other
late-season crops. They'll also be able to learn more about key factors affecting grain sell/store decisions, including loan deficiency payments (LDPs), the 60-day Posted County Price (PCP) lock, local basis, and
the limit for marketing loan gains.
Registration for the seminar is at 4:30 p.m. Supper will be at 7:30 p.m., with seminar wrap-up by 8 p.m. The seminar and supper are free. Sponsors of the event
are the Minnesota Association of Wheat Growers, North Dakota Grain Growers Association, and the Risk Management Education program of the U.S Department of Agriculture's Risk Management Agency. For more information,
contact the MAWG at 1-800-242-6118.
A GIVE AND TAKE MARKETING STRATEGY
Take what they'll give you." It's an old sports analogy, but it certainly could apply to
today's wheat market as well. Finish the article published in the Prairie Grains 2000-01 Marketing Guide: http://www.smallgrains.org/springwh/MGuide00/take/take.htm
USDA RELEASES U.S. EXPORT SALES REPORTS
http://www.fas.usda.gov/export-sales/esrd1.html
USDA RELEASES U.S. AGRICULTURAL TRADE UPDATE
http://usda.mannlib.cornell.edu/reports/erssor/trade/fau-bb/..
|
