Wool prices to follow cotton values lower

images (6) Wool prices are "likely to fall", undermined by the weaker cotton market, but not by enough to threaten a revival in the sheep flock in Australia, the top producer and exporter of the fibre, where numbers have been in decline for 20 years.

Wool values, which remain within 12% of a record high set in June, according to the benchmark Australian eastern markets index, will feel a tug from cotton prices which have fallen well below half their all-time high, set in March.

Without wool price declines, "millers will increase the composition of cotton and polyester at wool’s expense", Luke Matthews, at Commonwealth Bank of Australia, said.

At National Australia Bank, Michael Creed said that the decline in wool values would "accelerate in spring as more production comes online".

‘Sizeable floor under prices’

However, it was "unlikely" that prices, which according to the eastern market indicator stand at a historically high Aus$13.15 a kilogramme, "will dip too far below Aus$11.00 a kilogramme", Mr Creed added.

"Supply will continue to remain critically tight, both in Australia and in key competitors abroad," he said.

"This places a sizeable floor under prices."

Besides a slump in Australia’s wool output from a high of more than 1m tonnes in 1989-90 to 382.3m tonnes in 2009-10, according to official data, production in New Zealand, the second-ranked exporter, has more than halved to 358,000 tonnes from its 1980s’ peak.

Furthermore, wool traders have sold down inventories heavily to take advantage of the rise in prices which, for the eastern market indicator, remain more than 50% higher than those a year ago.

Sales of stockpiled wool are expected to allow Australia to lift exports by 5% in 2010-11 despite of weak production, CBA’s Mr Mathews said.

‘Flock rebuild effort’

Stronger wool exports ahead would be enabled by higher Australian production, set to rise by 1.6% in 2011-12 – the first increase in seven years – amid a second year of expansion in the national sheep flock, Mr Mathews added.

"The recent high wool prices are likely to promote a flock rebuild effort," he said.

Historically high wool values, "and an assumed normalisation in seasonal conditions will facilitate continued flock expansion in the coming five years".

The rate of flock growth will depend on, besides the wool market, the price of lambs, which are also in demand by meat processors, and the increasing turn by farmers to lower-hassle markets, such as crops.

"Put simply, many farmers, irrespective of price, are not going to swing back into wool production," Mr Mathews said.


Worse crop conditions, better prices

images (4) Reports on crop conditions and private surveys of crop size have contributed to new contract highs on the Chicago Board of Trade as we inch closer to harvest.

Changes in corn supply has had a bullish reaction, with soybeans higher even with little change in the market perception of crop size. The wheat has gone along for the ride.

Talk Monday centered on the Pro Farmer crop tour, which threw some new fundamental numbers into the market mix. Pro Farmer says the corn is not as good as thought previously. Special notice was taken of declines in the northwest portion of the Corn Belt.

Their estimate was for 12.8 billion bushels, at 147.9 bushels per acre. This is significantly below the Aug. 1 USDA Crop Production Report. That report had us at 153 bpa and 12.91 billion bushels.

The corn difference is not huge, but it is in the right direction for a correction in the market.

Recently we have been making new contract highs, and one reason now given is that the Pro Farmer numbers were already leaking into the market.

Corn prices had broken a little lower in early August, leaving me to wonder if the top was in. After the high of 7.15 3/4 December futures Aug. 2, the market dropped to 6.81 on the 8th. We used to think that was a significant change. This time the market came back with one day unchanged and 11 of 15 days higher.

The result was Monday’s high at 7.75 1/4, nearly 60 cents above the early August high. This is a very high price, and is high going into harvest as if this is a short-crop year.

This week

The change this week is that, not only has the corn market continued to make new highs, the highs have been in bigger increments, and the soybeans have been dragged to new highs.

Previously, the beans had turned higher, but not made new highs. The soybean chart had been a beautiful example of a market that was trading in a large range and making successive cycles in the same range.

The old high was June 3 at 14.03. We dropped to 12.88 on the 30th, then bounced to 14.08 on July 19. By Aug. 10, we were back down to 12.94. Then the chart took a breakout to the upside.

On the 26th, Friday, we blew through the old high and wet as high as 14.25. Monday we posted a high of 14.54, up another big day, and making a high more than 50 cents above the old high.

Again, this is happening going into harvest.

At this point we may see a “Turnaround Tuesday” come into play. Prices are down sharply in the overnight trading. The December corn is down nearly a dime, the November beans are down eight and a half cents.

It remains to be seen if this trend continues or if we just saw the highs again. Supposedly the outside markets are hurting us today. The Dow was up yesterday, Asian equity markets are up overnight, and the dollar is down. I can argue, however, that all three of those factors lead to higher prices, not lower!


Soybeans are hot!

tải xuống (1) Soybean futures opened like a house afire this morning on the Chicago Board of Trade, up 20 cents per bushel to $14.43 with some traders predicting $15 beans soon.

Soybeans gained 30 cents per bushel Friday on the Chicago Board and kept up the momentum in overnight electronic trading.

Corn also opened strong, up 5 cents per bushel to a record $7.72 for the December contract.

Iowa is the nation’s leading producer of both corn and soybeans. The two crops are expected to generate more than $20 billion in cash receipts from the 2011 harvest.

Both corn and soybeans are seeing price increases after the latest private crop forecast, by Pro Farmer last Friday, predicted U.S. corn yields of 148 bushels per acre and soybeans at 41 bushels per acre. That is down from the last U.S. Department of Agriculture estimates of 153 bushels per acre for corn and 53 bushels per acre for soybeans.

Broker Tomm Pfitzenmaier of Summit Commodities in Urbandale said traders are worried about the U.S. soybean crop in light of below average rainfall in Iowa and Illinois. Parts of both states now are officially classified as being in drought conditions.

He also said traders, eying the high corn prices, are assuming even fewer acres will be planted for soybeans next year. Soybean acres in the U.S. have declined steadily in the last five years as more acres have shifted to corn for ethanol use.

“The weekly crop condition rating report due out this afternoon is expected to show another 1 to 2 percentage points of decline in the good/excellent category,” Pfitzenmaier said. “The beans are following the corn and wheat higher and bean traders are increasingly talking about the potential for decline in both South American and US acres next year, so that may be a part of the reason for the strong interest in being long beans.”


Warning on milk prices

tải xuống (8) MASSIVE rises in costs mean a long and unprofitable winter for Welsh dairy farmers unless milk purchasers pay their producers a sustainable price, NFU Cymru has warned.

Latest figures show intensive energy dairy rations up 28 per cent, low energy rations up 33 per cent and protein rations up nearly 20 per cent on last year.

Pembrokeshire NFU Cymru’s David James said: "Despite these huge increases in our costs over the past year, milk price on average has only moved by around 11 per cent in the same period, the gap continues to widen between what we receive for our milk and what it costs to produce."


Rice output likely to fall sharply in South Korea

tải xuống (7) SEOUL (Commodity Online): Fast growing industrialization in South Korea is likely to its agriculture as country’s Rice production is likely to hit to ten year low this season.

According to Korea Rural Economic Institute, South Korea’s rice production is forecast to hit a 10-year low this year due to shrinking farm land and lower yields caused by unfavorable weather conditions.

Rice production is expected to reach 4.12-4.24 million tons this year, down 1.2-4.0 percent from the previous year’s harvest of 4.29 million tons.

This year’s harvest could hit the lowest amount in 10 years. Rice production has been on a decline since 2001 when it came to 5.51 million tons.

Heavy rains and other extreme weather conditions led to the shrinkage, it added. Declining farm land was also cited as a reason for the lower output.

The institute said that the final figure will hinge heavily on weather conditions until next month as sunlight exposure during that period determines about 74 percent of annual output.

A smaller harvest could Lead to a hike in the price of rice, a major staple grain for Koreans. Rice prices are closely monitored by the government which has been striving to keep inflation in check.

The government helps stabilize the price of rice here by purchasing and unloading the grain in the market. The agriculture ministry said that it plans to buy about 340,000 tons of rice harvested this year from Oct. 25 to Dec. 31.

Meanwhile, South Koreans’ per-capita daily rice consumption is expected to contract up to 2.2 percent on-year to 195.3-196.4 grams this year, the institute said. This represents an annual per-capita rice consumption of 71.2-71.6 kilograms, the lowest amount in history, it added.


Soy prices jump on dry weather

images (1) U.S. soybean futures climbed Monday as it appeared the crop could miss out on badly needed rains.

Soybeans for November delivery jumped 23 1/2 cents, or 1.7%, to $14.47 a bushel at the Chicago Board of Trade. Corn for December delivery rose 3 cents, or 0.4%, to $7.70 a bushel. Soft red winter wheat for December delivery slipped 2 cents, or 0.3%, to $7.95 a bushel.

Driving soybean prices higher were forecasts for dry weather in key growing areas of the Midwest, including parts of Minnesota, Illinois, Indiana and Iowa. The crop is in its most important period of growth and needs rain to finish developing ahead of the upcoming harvest.

"The continued dryness, along with some increased heat later this week, should allow soybean yields to decline further," said Kyle Tapley, agricultural meteorologist for EarthSat Weather Services, a private weather firm.

Traders are on edge about the weather because soybean and corn inventories are projected to reach historically low levels in the coming year. Farmers were hoping favorable conditions would lead to large harvests to replenish supplies.

The corn crop has already suffered irreversible damage due to heat and dryness in July, its most important time for development. Crop losses have already been factored into the corn market, although a surprisingly small harvest could still push prices higher, traders said. Corn for December delivery set new contract highs during overnight trading and Friday due to supply concerns but failed to reach new heights during Monday’s day session.

The U.S. Department of Agriculture will issue an update on crop conditions in a weekly report due at 4 p.m. EDT. Ratings are expected to slip slightly for soybeans and stay steady to lower for corn.

Other Markets

December soymeal ended up 1.4% at $386.40 per short ton, while December soyoil finished up 2.2% to 58.58 cents per pound. December oats gained 1% to $3.84 a bushel, and December ethanol rose 0.07% to $2.796 per gallon. November rice jumped 1.3% to $17.54 per hundredweight.

At the Kansas City Board of Trade, hard red winter wheat for December delivery advanced 0.8% to $8.99 a bushel. Hard red spring wheat for December delivery edged up 0.2% to $9.39 a bushel at the MGEX in Minneapolis.


Crop supplies tight, record prices – FAPRI update

images Tight crop supplies and record farm prices dominate a midyear baseline update from the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri.

“Drought, floods and changing economics raise the outlook for many agricultural commodities,” said Pat Westhoff, director, MU FAPRI.

A new baseline update takes those changes into account, Westhoff said, but does not represent a full baseline report. The updated baseline will be used for independent economic analysis of farm, budget and biofuel policies.

Wet conditions and floods delayed and prevented plantings across the Corn Belt and Northern Plains. Droughts across the South and other areas added to the factors changing the outlook.

In the FAPRI baseline, corn prices increase on average from $5.25 per bushel to $6.46 for the 2011-12 crop to be harvested this fall. Likewise, soybeans rise from a projected $11.25 this year to $13.53 per bushel for 2011-12.

The baseline starts from the USDA August estimates of 2011 crop production. Those estimates showed below-trend yields for corn, soybeans and several other crops.

“Short crops contribute to higher feed costs, which pressure livestock and dairy producers and increase risks,” Westhoff said. “Higher feed prices contributed to slower growth in livestock production, higher meat prices and a decline in domestic per capita meat consumption since 2007.

“However, consumer demand improved for beef and pork, particularly in international markets. Poultry producers remain in a difficult situation,” he added.

“If consumer demand improves as expected during the next couple of years, beef and pork producers should endure higher input costs without further downsizing of herds.”

Consumers will see increasing meat prices into 2012, according to FAPRI.

In the beef herd, FAPRI projects another half-million-head decline in cows to 30.4 million by the start of 2012. By 2016, cow numbers should increase to 31.5 million head.

Beef supplies remain low as the cow herd rebuilds. Beef production declines by a billion pounds between 2011 and 2014. That leads to stronger prices the next four years. Fed cattle go from an average of $112 per hundredweight in 2011 to $120 in 2015. The baseline ends at 2016 with steers at $116 per hundred.

A similar trend occurs in feeder steers, Missouri’s major livestock product, from $134 per hundredweight to $147 in 2014, dropping back only to $138 in 2016. Prices are based on 600-650-pound steers at Oklahoma City.

Dairy numbers remain steady at 9.1 million cows until dropping to 9 million in 2014.

The average all-milk price, projected at $20.10 in 2011, eases to $19.47 by 2016.

“The update covers near-term outlook for a few commodities and goes out only five years instead of the 10-year annual baseline issued each winter. The update does not receive a full external review,” Westhoff said.

FAPRI assumes that provisions of the 2008 farm bill will continue, even though many are scheduled to expire. However, the ethanol tax credit and tariff are assumed to expire as scheduled at the end of 2011.

The next baseline will be prepared in early 2012, starting internally before Thanksgiving.

The update covers corn, soybean, ethanol, wheat, upland cotton, rice, beef, pork, poultry and dairy. The full update will be posted on the MU FAPRI

For 27 years, MU FAPRI has supplied economic analysis for proposed agricultural legislation by the U.S. Congress. That included multiple runs on every farm bill.

MU FAPRI is funded in part by the Agricultural Experiment Station of the College of Agriculture, Food and Natural Resources in Columbia, Mo.


Morning markets: crop prices build on US yield fears

tải xuống (8) And the verdict is… bullish. Corn is not expensive enough yet.

At least, investors took the first chance they have had to trade since the ProFarmer crop tour results late on Friday to send corn prices higher again.

The tour pegged the US corn yield at 147.9 bushels per acre.

And while it is not the lowest yield in town, with Lanworth for instance putting the figure at 147 bushels per acre, it was still far enough below the US Department of Agriculture estimate of 153.0 bushels per acre to support further price gains.

Chicago’s December corn lot set a fresh contract high of $7.77 a bushel before easing a touch as of 07:30 GMT (08:30 UK time) to $7.75 a bushel, up 1.0% on the day.


Not that the tour result was the only influence around. Otherwise, for instance, soybeans might be in a soft spot, after the tour pegged the US yield at 41.8 bushels per acre, 0.4 bushels per acre above the USDA forecast.

In fact, the November contract built on Friday’s above $14-a-bushel close, the lot’s highest since 2008, adding a further 0.7% to $14.33 ¾ a bushel.

But external markets were broadly helpful, as investors gave a positive response to the keynote speech by Ben Bernanke, chairman of the US Federal Reserve, which while failing to offer immediate economic support was viewed as having enough ammunition present in between the lines to support sentiment.

Tokyo’s Nikkei share index closed up 0.6%, and Seoul’s Kospi up 2.8%, while oil added 0.4% in New York.

The dollar lost 0.3% against a basket of currencies, another indicator of improved sentiment, luring investors from a favoured safe haven.

‘Rains are needed’

Furthermore, the US weather outlook (hurricanes aside) was still little bit worrying too.

The ProFarmer tour had some good words to say about the US soybean crop, terming it "the most disease-free we’ve ever seen".

However, to get to the 41.8 bushels per acre yield estimate will require further rains.

"Rains are needed to help maintain the soybean crop or it will slip further in the next two weeks," Mike Mawdsley at Market 1 said.

"After that rain won’t matter much as the crop matures."

However, the outlook remains dry, posing a threat to areas that DTN Meteorlogix said are "still in need of rain to prevent significant declines in yield potential".

‘Boost to winter crop production’

The same actually goes for Argentine wheat, which the government said late on Friday was in good shape, but would need more moisture.

Less equivocally bearish was rain in the other main southern hemisphere wheat exporter, Australia, where a lack of rain in some areas has been, until recently, raising eyebrows.

"Beneficial rain was recorded across portions of the northern New South Wales and Queensland grain belt over the weekend," Luke Mathews at Commonwealth Bank of Australia said.

"The rain provided a boost to winter crop production prospects", winter crops including wheat, besides giving "a much-needed improvement in soil moisture conditions for the upcoming summer crop planting season", a factor for cotton and the like.

Corn vs wheat

Furthermore, there is still chatter around about Russia’s apparent reluctance to introduce a wheat export tariff, as had been rumoured following a storming start to 2011-12 exports.

"An export tax could potentially be good news for US wheat after some countries had chosen to bypass US wheat for Russian wheat," Lynette Tan at Phillip Futures said.

However, on the bullish side, she highlighted that a "sustained increase in corn prices could provide more upside for wheat if end-users look for substitutes in wheat from the overbought corn market".

Furthermore, the US dryness looks set to continue in the US southern Plains, dimming prospects for the forthcoming hard red winter wheat sowing season.

Chicago wheat for September added 0.6% to $7.66 ½ a bushel.


Sale prices give timely lift to lamb sector


OPTIMISM in the lamb business was reflected at Skipton Auction Mart’s annual show and sale of gimmer shearlings – one of the largest fixtures of its kind in the North of England.

The sale of young ewes last Tuesday attracted 5,000 entries – over 1,700 up on the previous year – and achieved an overall average of £146.41 per head, a rise of £11.83 on 2010.

Mule shearlings were notably strong, with the 3,272 entry averaging £155.97 each, up £18.73 on 2010. NEMSA-tagged consignments sold to a high of £218 each – for the second-prize pen from the Littondale sheep farming family headed by James Hall of Darnbrook. They were bought by Craven Cattle Marts’ chairman Anthony Hewetson, Bank Newton.

The Halls, who run some 2,000 Mule, Swaledale and Blue Faced Leicester sheep on their 3,000-acre holding were also responsible for the champion pen of Mule shearlings, which won the Edgar Boothman Memorial Trophy. It is a familiar piece of silverware to the Halls, who also lifted the trophy in 2008 and 2009. Their 2011 victors sold for £212 per head to Angus Dean, Threshfield.

The gimmer shearlings fixture followed a sale of 4,628 prime sheep the previous day and 11,696 store lambs were catalogued for sale on Wednesday, in the busiest week of the year to date at Skipton.

East coast sheep farmer Mike Allen, of Borrowby Grange, Staithes, presented the first prize pen of Masham gimmer shearlings, sold at £155 per head to Michael and David Wilson, Beckwithshaw, who also bought the 2010 champions.

David is chairman of Masham Sheepbreeders’ Association. Masham shearlings averaged £133.59, up £10.77 on 2010.

First prize in the Continentals class fell to a pen of pure-bred Texels from Tim Jackson of Goosnargh, Preston. They headed the prices at £195 apiece when joining William Warren, Cleckheaton. Texel shearlings averaged £128.20.

* The August Craven Dairy Auction, on Monday, included the second annual show for dairy bulls.

Champion was a March 2009-born red and white Holstein bull shown by Alan Midgley of Dean House Farm, Luddenden, Halifax, which headed the prices when joining Chris Harrison at Elsack for 1,460gns (£1,533).

Reserve champion was a 15-month-old home-bred pedigree Brown Swiss bull from breed enthusiasts David and Pauline Brown of Longside Farm, Ramsgill. Mr Brown is chairman of Nidderdale Show and his runner-up sold for 600gns (£630) to David Pennock, Bolton Abbey.

* Kirkby Stephen saw 3,102 sheep through its weekly sale, on Tuesday night, consisting of 2092 Prime Lambs, 763 Cast Ewes/Rams and 247 Store Lambs.

Trade topped at 205.10p/kg for a pen of Beltex-X lambs. Overall average was 5p/kg up on the week and 22p/kg up on the corresponding week last year. Light lambs under 36kg were very dear with pens of Cont-X lambs often fetching 190-200p/kg and pens of horned lambs regularly achieving 175-180 p/kg.

Many more store lambs could have been sold.


BAKEWELL Market, serving South Yorkshire as well as Derbyshire, reported exceptional prices for store cattle. Auctioneers Bagshaws said: “We have seen the occasional animal making over £1,000 recently and last week there was a steer at £1,215. This week, steers sold to £1,200 and heifers £1,295 with no fewer than 26 store cattle topping the £1,000 mark.”

He added that prices for OTM (Over Thirty Months) cattle reflected demand for all grades of beef, at 125-145p a kilo.


Prices of livestock fixed for Eid

tải xuống (5) With just a few days to go for Eid al Fitr when the consumption of meat increases, the Public Authority for Consumer Protection (PACP) has fixed the price of Australian livestock at RO85 for the slaughter house in Muscat and at RO90 for other wilayats.

The Ministry of Agriculture will be responsible for ensuring that the livestock is disease-free. "Usually the ones imported from Australia are of high standard," a senior official at the slaughterhouse told Muscat Daily.

To check dumping of slaughter waste in roadside bins, people will not be allowed to take the carcasses home to cut.

Also, veterinarians at the slaughter house will monitor livestock before slaughter and also check the meat. Additional trash trucks will be deployed to ensure faster clean-up.

A team of veterinarians usually accompanies livestock in ships from the countries of import, carrying out regular check-ups.

Livestock from Somalia are kept at the Port of Salalah for 21 days after arrival and monitored continuously. They are sent to the slaughter house only if found to be free of diseases.