April 18, 2011· Planting season sows seeds of anxiety · Ag industry outperforms S&P 500 · Syngenta sales soar amid food rally · Monsanto investing in life sciences · Produce industry’s latest pest – thieves Planting season sows seeds of anxiety(DesMoinesRegister.com)
– The world has more at stake than ever this spring as Those huge surpluses of corn that Americans have taken for
granted for generations are gone. The amount of A problem with this year's crop, like the record rains that cut Iowa's 2010 corn harvest yield by 9 percent from the previous year, could send corn prices to unprecedented double-digit levels. "This year there is no margin for error. We especially
can't have bad weather," said commodity trader Don Roose
of US Commodities in If the crop suffers, the consequences could ripple across
the globe, from the trading floors of Chicago and Wall Street to Grocery shoppers could see meat prices soar because livestock producers - faced with frighteningly high feed costs - would further reduce their herds, resulting in another round of price increases for beef and pork. The U.S. Department of Agriculture warns that retail meat prices could increase as much as 7 percent this year, on top of 9 percent last year. On the tense streets of developing nations, people
frustrated by rising food prices may boil over in revolt, just as they have
already this year in the "More poor people are suffering and more people could become poor because of high and volatile food prices," World Bank President Robert Zoellick said last week. Flooding or drought could visit hardship on segments of Prices much higher than the $7.50 per bushel that corn sold for last week could force Iowa's 41 ethanol plants to shut down to avoid excessive feedstock costs, threatening up to 5,000 jobs. Cattle and hog producers could start losing money again. Livestock producers enjoyed their first profitable year in three years in 2010 when prices for animals rose while the price of corn stayed below $4 per bushel, at least during the first half of the year. "It's fun to sell a cow for $1,500," said cattle producer Sid Wellman of Bonaparte. "But after that, what? Do you spend another $1,000 to buy a new calf knowing you'll pay $1.10 a pound to feed it and not knowing what cattle prices will be in a year or so?" The pressure will increase on leaders in Gov. Terry Branstad and other Are unprecedented pressures, weather on a collision course? The fate of the But this spring is different. "We've never had a situation this tight right at the
beginning of planting," said Why everyone is so nervous: The USDA predicts ending stocks, or a surplus, of 675 million bushels of corn by the end of summer before the new harvest. That is the smallest surplus in 15 years and the second-smallest in 74 years. The surplus would feed only about 10 percent of the nation's livestock. A year ago, Floods don't have to be fatal to a crop. The giant flood
that inundated Biotech seeds have proved they can provide partial resistance to high water. But drought-resistant seeds are just in their infancy. What worries farmers, traders and meteorologists would be a
drought during the early July corn pollination period, combined with
temperatures near 100 degrees that have been rare in Drought hasn't been a serious statewide problem in State climatologist Harry Hillaker notes the 100-degree summer day, which can fatally stunt corn growth during pollination in early July, has become rarer than historically normal in the last decade. Even with perfect weather, the comeback path for Monsanto Chief Executive Officer Hugh Grant said this month that "a heck of an increase" in yields will be needed from corn farmers this year to rebuild corn stocks. This year, Darin Newsome of DTN in "I can deliver 200 bushel-per-acre corn this summer, if Mother Nature cooperates," said veteran farmer Ron Gordon of Creston. "That's my job. What I can't control is the weather." How agriculture drives other sectors of For Farmers are coming off their best income year in history. In 2010, for the first time in three years, hog and cattle producers also made money. Grains and livestock will put up to $30 billion in cash into
the state's economy, triple what cash crops and livestock brought just a decade
ago. Add to those figures the $13 billion ethanol industry in But the signs indicate agriculture's economic profile has never been higher: - Farmland values, a significant portion of net worth for - - On Wall Street, shares of Deere & Co., - Pioneer Hi-Bred is preparing a new building in Johnston to house some of the 400 hires it will bring on this year to meet the growing demand for seeds. But farmers know that agriculture can turn quickly. Older
farmers, themselves children of the survivors of the Great Depression of the
1920s and '30s, recall the farm crisis that wiped out one-third of "If we don't see the 1980s again, I'll sure be surprised," observed Marshall Mussig of Gladbrook. Even a young farmer such as 25-year-old Chris Gaesser, who wasn't born when the farm crisis began in the early 1980s, knows the bill for any farm boom eventually comes due. "We can't sustain $7 corn," Gaesser said. The boom in commodities has generated memories of similar golden periods in the early 1920s and 1970s, both of which were followed by historic collapses in agriculture. Bill Webb, a Mitchellville-area farmer, put down a successful bid of $9,550 per acre for 132 acres of farmland near Bondurant at an auction in late March. "This is the best I've seen farming in 31 years," he said. But he added: "It never lasts. We'll pay for it in a couple of years." Ag industry outperforms S&P 500(University
of Illinois) – While the general economy has underperformed in the past
several years, the crop farming sector has been not just stable, but
profitable. A recent "We looked at 21 agriculture-related midwestern companies in five sectors: fertilizer, equipment, seed and genetic companies, crop production companies, and first processors," said U of I graduate student Clay Kramer who created the index with agricultural economist Gary Schnitkey. "The overall goal was to build an AgIndex that measured the change in market value of publicly traded agricultural companies and compare it to the S&P 500, looking at their market values and how they did over time from 2007 up to the first quarter of 2011." The S&P 500 is an index that tracks the market values of
500 large companies in the Kramer said that over the course of the study, the AgIndex performed much better than the S&P 500. "In the first year, we saw a 55 percent increase in ag companies compared with 2.2 percent from those in the S&P 500," Schnitkey said. "Year two was the year of the big stock price decline. The S&P 500 declined 35 percent from the beginning of 2008 to the end of 2008 and the ag market fell even further - 48 percent," Schnitkey said. The full report is available online at www.farmdoc.illinois.edu under the heading Farm Economics: Facts and Opinions. Kramer and Schnitkey evaluated the markets using a geometric mean, which is very similar to an average. "For example, if you invested funds in 2007, this would be your average yearly rate of return," explained Schnitkey. "So 8.6 percent for 2007 through 2010 means you would have had an increase of 8.6 percent in value each year up to 2010." Among the five agriculture sectors, the first processors didn't perform nearly as well when compared with fertilizer and equipment companies, Kramer said. "From the beginning of 2007 to the end of 2010, there was a 2 percent decrease in the crop protection sector and a 4 percent decrease in the first processor sector," Kramer said. "These sectors did relatively well in the first quarter of 2011, having increases that caused the second quarter 2011 value to exceed the first quarter 2007 value." According to the report, market values varied across sectors. Fertilizer, equipment, and seed and genetic sectors had large increases in market values. "These firms supply products to farmers, who have generally had above-average incomes," Schnitkey said. "Farms having above average incomes likely led to higher demand for fertilizer, equipment, and seed and genetic sectors. The sector that had the lowest market value increase from 2007 was the first processor sector. This sector purchases inputs from grain farms, and higher commodity prices may have played a role in lower market values." Syngenta sales soar amid food rallyThe Basel-based company, which said it was confident of reaching its full-year targets, said revenue for the first three months of 2011 rose 13% to $4.02 billion from $3.53 billion a year-earlier, sharply beating analysts views and boosting Syngenta's shares. "With commodity prices at elevated levels, farmers across the world feel encouraged to invest in crops and seed protection," said chief executive Mike Mack. Although many farmers were still weighing their planting intentions, the planting season in the Northern hemisphere had a good start, Mack said. Food prices have soared since late 2010, catapulting the United Nations' FAO Food Price Index to record highs in February. The price increases are hurting poorer economies. The sharply higher raw material costs for products such as rice, oils and sugar have also hurt food companies such as Nestle SA (NESN.VX) and Danone SA (BN.FR) Chief financial officer John Ramsay said this trend allowed Syngenta to raise prices selectively by 2% in the fist quarter. "And prices are holding," he said. Ramsay said that farmers' interest ran across the board, including seeds and crop protection products for crops such as cotton, coffee and sugar cane, whose prices on commodity exchanges have jumped over the past few months. Syngenta had been under pressure in 2009 and partly in 2010
as price cuts from increased competition and farmer reluctance to invest in new
crops dented business. This has been felt most heavily in the Syngenta, which competes with companies such as U.S.-based Monsanto (MON) and Dupont Co (DD), is one of the world's largest agrochemicals companies in terms of sales, wielding a market share of some 15%, which it wants to broaden by another 2% over the next five years. Most of the growth is expected to come from emerging
markets, which already contribute some 50% to overall sales. But business in
Europe is also regaining strength, especially in Analysts welcomed the strong set of figures and outlook and expect Syngenta to extend its market share in the years to come. The company's plan to bring its crop protection and seeds business closer together, which should help Syngenta to better cater to client needs and save costs. Monsanto investing in life sciencesSt. Louis-based Monsanto said it was collaborating with venture capital firm Atlas Venture, for a multiyear deal in which Atlas will identify strategic investments in "early-stage" life sciences companies whose technology could be applied to agriculture. Continued innovation for agriculture is "critical," said Steve Padgette, Monsanto's research and development investment strategy lead. "Our collaboration with Atlas will provide a great opportunity for us to get an early look at promising new technologies that could potentially be introduced into our biotechnology, breeding and agronomic practices work to drive yields even further," he said in a statement. Terms of the agreement were not disclosed. Produce industry’s latest pest – thieves(The New York Times) – The high price of produce, especially for tomatoes after the deep winter freezes, has attracted more than heightened attention from consumers. A ring of sophisticated vegetable bandits was watching, too. Late last month, a gang of thieves stole six tractor-trailer
loads of tomatoes and a truck full of cucumbers from The thieves disappeared with the shipments just after the
price of “I’ve never experienced people targeting produce loads
before,” said Shaun Leiker, an assistant manager at
Allen Lund, a trucking broker in Industry and insurance company officials said it appeared to add a new wrinkle to a nationwide surge in cargo theft. In the case of the stolen tomatoes, the thieves seemed deeply versed in the ways of trucking companies and the produce industry. Transportation company executives and a law enforcement official said the criminals appeared to have set up a bogus trucking company with the intention of stealing loads of produce and other goods. The company, based in “They were just sitting and waiting, watching the produce
because they knew it was climbing,” said Clifford Holland, the owner of the
transportation brokerage firm In the produce industry, buyers and sellers typically use freight brokers as middlemen to hire the trucking companies that carry goods from place to place. The thieves apparently began watching Web sites where brokers posted notices trying to connect trucking companies with loads they need carried. In late March, they contacted Allen Lund. The broker carried
out a standard series of checks, including verifying the company’s federal
registration and its insurance coverage. Then it assigned the company to pick
up a load of tomatoes from a shipper in Over the next four days, working through Lund and three other freight brokers, E&A Transport picked up four more loads of tomatoes, a load of cucumbers and a load of frozen meat from shippers across Florida, including in the Miami area, Palmetto and Punta Gorda. At each pick-up, a driver working for E&A showed up at the wheel of a tractor with a refrigerated trailer. The shippers loaded the pallets of tomatoes or the other goods into the trucks and the driver drove off. None of the loads got to their destinations. The load of frozen meat, worth about $48,000, was picked up
from a meatpacker north of “This was definitely a smart organization,” said Mr. Holland, who was the broker on the load of meat. “They were smooth as silk.” The thieves sought out loads headed for Tomato growers said that there had been occasional thefts in the past when prices were high, but the sophistication of this trucking ring was something new. “We’ve never seen anything like this,” said Bob Spencer, an
owner of West Coast Tomato in Palmetto, Interviews with several police departments in The thieves appear to have benefited by stealing loads in several jurisdictions, with the result that some police departments were slow to share information about the crimes. The Florida Highway Patrol said the cargo theft unit of the Miami Dade Police Department was leading the investigation. But Detective Roy Rutland, a spokesman for the Miami Dade police, initially denied that the department was aware of the thefts. He later said the department had been asked to assist in the investigation, but that it was not taking a lead role. “We’re trying to figure out who’s handling this,” Mr. Rutland said on Wednesday. “We just learned that most of this occurred outside of our jurisdiction.” End Transmission |
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