Fertilizer Markets and Finance

Astarta Holding cut hopes for grains harvest, and lopped 20% from its hopes for sugar beet output, as the Ukrainian farming giant revealed it had fallen foul of the “negative” weather which has dented national yields.

The dairy-to-soybean processing group, which this season sowed crops on 236,000 hectares, cut by 100,000 tonnes to 600,000 tonnes its forecast for it grain and oilseed harvests.

Wheat yields, at “approximately” 4 tonnes per hectare, had fallen by nearly 11% year on year, although they remain higher than the national average, pegged by Ukraine’s farm ministry two weeks ago at 2.90 tonnes per hectare, a decline of 15.7%.

For sugar beet, Astarta, Ukraine’s top sugar producer, cut its forecast for the crop by 500,000 tonnes to 2m tonnes.

‘Extremely dry and hot’

The downgrades reflected weather that was “negative” for the group’s farmers in eastern Ukraine, “as the summer months of June and July were extremely dry and hot.

“Drought in eastern and southern Ukraine affected the harvest in our fields in the Poltava and Kharkiv regions.”

The comments follow a second drought-hit season for Black Sea grain production in three years, with Ukraine’s wheat harvest estimated by the country’s farm ministry at falling 27% to 16.3m tonnes.

Read more at Agrimoney

Farm officials cut their forecasts for the US corn and soybean crops even further than investors had expected to account for damage from drought, lowering their estimates for the corn yield to a 17-year low.

Crop prices as of Friday’s close

Chicago soybeans, (November contract): $16.43 ¾ per bushel, +0.5%

London wheat, (November): £196.00 per tonne, -0.4%

Paris wheat, (November): E264.00 per tonne, -0.6%

Chicago corn (December): $8.09 ¼ per bushel, -1.4%

Kansas wheat (September): $8.93 per bushel, -2.4%

Chicago wheat, (September): $8.85 ¼ per bushel, -2.9%

Corn prices, as measured by Chicago’s September contract, soared to $8.43 ¾ a bushel immediately after the report, a record for a spot contract, before falling back to close in negative territory as investors took profits on a rally of 6% in three trading sessions.

The US Department of Agriculture cut its estimates for the domestic corn yield from 146.0 bushels per acre to 123.4 bushels per acre, which would be the worst result since 1995.

The estimate for acres abandoned because of the worst drought in more than 50 years, capped by the hottest July on record, was raised by 1.5m acres to 9.0m acres, to leave production at a little under 10.8bn bushels.

Read more at Agrimoney

Cocoa speculators are bracing for what many investors fear be the worst set of processing data since the world financial crisis to see if their brighter call on the bean is justified.

Speculators have covered a mass of short positions in cocoa futures and options, turning net long last week in New York-traded contracts, to their highest level since September, regulatory data this week showed.

In London, speculators’ net short position - meaning short bets, which benefit when prices fall, exceed long holdings which profit when values rise – fell below 7,000 lots to its lowest in a year.

The moves - which have helped cocoa futures stabilise in New York and maintain a slow recovery in London from a December low, helped also by a weaker pound – have been encouraged by growing concerns for West African crops.

‘Fears of fungal diseases’

“High humidity levels in key growing areas are fuelling fears of fungal diseases,” Commerzbank said, noting fears that Nigerian yields could fall 30%.

Read more at Agrimoney

Zimbabwe looks set to reverse a trend of falling corn exports after the troubled nation, once known as the bread-basket of southern Africa, revealed the loss of nearly half its crop to drought.

Zimbabwe’s agriculture minister, Joseph Made, warned that 45% of the 1.69m hectares of corn that growers planted this season “is a write-off” following a prolonged dry spell.

The loss meant Zimbabwe, which had been expected to see a rise in corn production, would harvest 1m tonnes this year, a drop of more than one-quarter on the 2011 result, the ministry said.

And even though the country has 400,000 tonnes of corn in store, following a 2011 harvest which, at 1.35m tonnes, was the best in a decade, Zimbabwe will need a further 400,000 tonnes in corn imports.

Read more at Agrimoney

Paris crop prices rose on Tuesday, as analysts warned that a spell of rain had yet to cancel out western Europe’s moisture deficit, and investors got their first chance to react to data showing sizeable French losses to winterkill.

Wheat for May edged 0.5% higher to E212.25 a tonne in lunchtime deals, while rapeseed for may gained 0.9% to E508.00 a tonne, the highest for a spot contract since January last year.

The increases came despite the Easter weekend bringing what weather service WxRisk.com termed “widespread shower activity” into parts of France, Germany and the UK, countries where a dearth of rainfall has put crops in many areas at risk.

Read more at Agrimoney

That divide in West Africa’s second-largest economy after Nigeria has deepened as cocoa and gold production rose in the south and oil output began off the Atlantic Ocean coast. It may erode support for President John Atta Mills and his ruling National Democratic Congress in a re-election bid this year after he won in 2008 by less than 1 percentage point.

n the drought- and flood-prone north, home to about 17 percent of Ghana’s 24.2 million people, little is produced other than locally consumed staple crops. Three-fifths of the population lives on less than $1.08 a day in 2009 prices, according to the bank.

Ghana’s first president, Kwame Nkrumah, included the north in his development plans and oversaw the construction of state- owned factories to process beef and tomatoes there during the 1960s. Decades of economic downturn following military coups, including the one that ousted Nkrumah in 1966, left northern development faltering, Graham said.

Mills is counting on a government effort to help bridge the divide. Ghana’s Savannah Accelerated Development Authority is meant to attract investment in infrastructure including roads, irrigation dams, health clinics and electricity and water production, said Alhaji Gilbert Iddi, chief executive officer of the authority, in an interview.

The authority “is a big project and adopts an integrated approach to try to bridge the developmental gap,” said Mark Woyongo, government minister in charge of the Upper East region, by phone. “We are hopeful it will stem the tide of migration to the south.”

Another sign of hope for the north is its reserves of gold, manganese, iron-ore and limestone, according to Ghana’s Geological Survey Department.

Read more at Bloomberg

Fears that rapeseed crops have been particularly vulnerable to the cold snap in Europe and the former Soviet Union held futures firm, even as wheat values eased on forecasts the freeze will loosen some of its grip.

New crop November rapeseed closed unchanged at E424.50 a tonne in Paris, with the August contract closing a fraction higher.

Paris wheat for November lost 0.5%, finishing at E197.25 a tonne, with other contracts also underperforming rapeseed equivalents.

The drop in wheat followed forecasts for an easing this weekend in Europe’s cold spell, while official forecasters in Russia forecast temperatures for western Russia recovering to within 2 degrees Celsius of normal over February as a whole, from current ranges of 10-14 degrees below average.

Cold may, however, return to Europe next week, with WxRisk.com warning “as you come out of the weekend, the models continue to develop a pretty strong ridge in the jet stream over the Azores which pushes into Spain, France and the UK” bringing low temperatures with it.

Read more at Agrimoney

In studies conducted at the Institute of Applied Plant Nutrition, which is part-funded by fertiliser business K+S Kali at Gottingen University, soil samples taken from long-term field trials showed potassium and magnesium fertilisation raised the water storage capacity of soils under field conditions.

Presenting the research results at a technical briefing in the UK, organised by K+S UK & Eire, Prof Andreas Gransee, head of applied research and agronomy at K+S Kali, said potassium protec-ted soil porosity, promoting the formation of optimal, medium sized soil pores which increased water storage and improved water use efficiency.

Diminished

In addition, where potassium and magnesium supplies were sub-optimal, diminished root growth reduced the ability of plants to efficiently use available water.

Read more at Farmers Guardian

Potash Corp. of Saskatchewan Inc. was among fertilizer producers that rallied in New York on speculation U.S. government forecasts understate the impact of dry weather on Argentina’s corn crop.

Potash Corp., the world’s largest crop-nutrient producer by market value, rose 3 percent to $44.74 at the close in New York. CF Industries Holdings Inc. (CF), the largest U.S. maker of nitrogen fertilizer, gained 3.8 percent to $172.55.

The U.S. Department of Agriculture yesterday cut its estimate for the Argentine corn crop to 26 million tons from a December forecast of 29 million tons, according to a government report.

“There is further cuts to come in the USDA estimate of the size of that crop, hence further export opportunities for U.S. corn producers,” Don Carson, a New York-based analyst at Susquehanna Financial Group, said today in a telephone interview. “People remain highly skeptical about the USDA grain forecast.”

Argentina, the world’s second-largest exporter of corn, will produce “significantly” less-than-expected supplies of the grain a lack of rain than has damaged the crop, Rosario Cereals Exchange said in a Spanish-language report on its website.

Yesterday, the USDA reduced its Argentine soybean production forecast to 50.5 million tons from 52 million tons, according to the report.

Potash Corp., based in Saskatoon, Saskatchewan, has risen 8.4 percent this year. Deerfield, Illinois-based CF has gained 19 percent.

To contact the reporters on this story: Ksenia Galouchko in New York at kgalouchko1@bloomberg.net; Christopher Donville in Vancouver at cjdonville@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

Wheat rose for a second day in Chicago on speculation that adverse weather in the U.S., the biggest exporter, may hurt yields for the grain as well as corn and soybeans.

Rain and cool conditions may be unfavorable for corn and soybean crops in parts of the U.S. Midwest, while planting of some wheat may be delayed due to dry soil in the southern Plains, Telvent DTN Inc. said yesterday. U.S. corn and soybean conditions deteriorated last week, the Department of Agriculture said in a report.

“There are some concerns about unfavorable weather in the main growing areas of the U.S.,” said Kieran Walsh, a broker at GFI Securities in London. “The fundamentals are still bullish.”

Wheat for December delivery rose 2.75 cents, or 0.4 percent, to $6.775 a bushel by 10:49 a.m. London time on the Chicago Board of Trade. Prices slid for a third week last week and have slumped 14 percent this month.

“Given the heavy selloff we’ve seen over the past week, you’ve got to start thinking that prices are looking a little oversold at the moment and could potentially be susceptible to a rebound,” Victor Thianpiriya, an agricultural commodity analyst at Australia & New Zealand Banking Group Ltd., said by phone from Melbourne today. “Crop conditions haven’t been good either, so that’s also price-supportive.”

Corn, Soybeans

Milling wheat for November delivery traded on NYSE Liffe in Paris climbed 25 cents, or 0.1 percent, to 196.25 euros (268.41) a metric ton.

Corn for December delivery rose 1.5 cents, or 0.2 percent, to $6.9175 a bushel in Chicago. The grain slid 6 percent last week, the biggest drop since June.

Soybeans for November delivery gained 1.5 cents, or 0.1 percent, to $13.395 a bushel. The oilseed declined 5 percent last week, the biggest retreat since March.

About 53 percent of the soybean crop was in good or excellent condition as of Sept. 18, down from 56 percent the previous week and 63 percent a year earlier, the USDA said. About 51 percent of corn was rated good or excellent, against 53 percent a week earlier and 68 percent a year earlier, it said.

Corn may advance to a record as “nervousness” about global supply returns to the market and harvest yields in the U.S. may be less than expected, Newedge USA LLC said today.

Futures may resume their rally after the U.S. harvest in October, jumping to $7.75 to $8 a bushel, as importers fight for supply and the market contends with a third year of global deficit, said Dan Cekander, director for grain research at Newedge, the world’s top futures broker by customer accounts. Prices reached this year’s high of $7.93 on June 9.

To contact the reporters on this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net; Tony C. Dreibus in London at tdreibus@bloomberg.net.

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

The corn crop in Argentina, the world’s second-largest exporter, is threatened by a lack of rain in the main growing regions that’s also affecting wheat, the Buenos Aires Cereals Exchange said.

Corn planting and the growth of the wheat crop, which is fully planted, may be hindered by dry conditions, the exchange said today in its weekly crop report. The country needs sufficient rain to restore soil moisture in the east of the main growing region to achieve a forecast to plant 3.5 million hectares (8.65 million acres) of corn, the exchange said.

Argentine corn farmers will harvest a record 28 million metric tons in the season that started last month and ends in August 2012, Agriculture Undersecretary Oscar Solis said in an Aug. 25 interview. Farmers have planted 4.6 million hectares of wheat in the 2011-2012 season, though dry conditions in the west of the growing region are affecting the output outlook, according to the report.

Corn futures for December delivery dropped 14 cents, or 1.9 percent, to settle at $7.34 a bushel on the Chicago Board of Trade amid speculation that this year’s price rally will prompt livestock producers to use other grains as feedstock. The grain has risen 17 percent this year. Wheat futures for December delivery fell 13.5 cents, or 1.8 percent, to $7.38 a bushel on the CBOT.

Makers of farm equipment and fertilizers posted some of the strongest moves in Monday’s rally as corn and soybean prices added to recent gains.

Corn is now up more than 30% from a July low, pegging new highs as markets brace for a weather-dented harvest.

A closely watched industry report, the Pro Farmer Midwest Crop Tour, released forecasts after Friday’s market close for corn crop yields to be sharply below levels previously forecast by the U.S. Department of Agriculture.

Pro Farmer calculated drought, hail and heat damage would pressure yields 6.3% below USDA forecasts in Illinois, down 14% in Indiana and off 6% in Ohio.

While the total crop is still likely to produce a record harvest of more than 12.4 billion bushels, rising demand means supplies could be stressfully tight.

This is bad news for corn buyers (including the general public, which will eventually pay higher food costs). And it has some livestock producers discussing the potential for feed rationing this fall.

A tight harvest would also suggest record corn prices until farmers plant more corn. That, in turn, leads to demand for tractors, as well as potassium and nitrogen fertilizers.

The news sent farm equipment makers AGCO (AGCO) and CNH Global (CNH) up more than 7%, although trade was light. The group heavyweight, Deere (DE), rose 4%, also in light trade.

In the fertilizer group, Intrepid Potash (IPI), Terra Nitrogen (TNH) and Mosaic (MOS) all posted 5% gains. CF (CF), CVR Partners (UAN) and Sociedad Quimica Y Minera (SQM) were among those to post 4% advances. All the moves also rode lighter trade.

The most significant agriculture sector move to occur in heavy trade was made by Monsanto (MON).

The seed strain developer recovered to a 2% loss after falling 5% in early trade. A news report said a “few Iowa fields” showed evidence that rootworm larvae had resisted crops genetically engineered by Monsanto to fight the pest.

The finding raised concerns that the widely used seed strain may be ineffective against subsequent generations of the bug.