Fertilizer Markets and Finance

The Keystone Agricultural Producers will announce today that they will be involved in plans to build a $1.5-billion fertilizer plant in North Dakota and will have a seat at its board of directors table.

That board seat will be filled by Brian Chorney of the Manitoba Canola Growers Association and allows Manitoba producers an opportunity to get involved in a project set up — in part — by former Brandon Simplot plant manager Don Pottinger. KAP president Doug Chorney said some of the details were hammered out in May.

Read more at Brandon Sun

The U.S. is in the grips of its worst drought in 25 years, farmers are considering pulling out their corn crop early to feed the stalks to cattle, and the World Bank is watching global food supplies.

And fertilizer companies are set to reap huge profits.

The pounding heat and dry conditions that are crippling corn crops are wreaking havoc with supplies. That’s driving prices for the commodity higher.

This growing season is already a write-off, but for the next one, farmers will plant more seed and use more fertilizer and insecticide as they chase those higher corn prices.

That means bigger profits – and soaring stock prices – for companies such as Agrium Inc., Potash Corp., and Mosaic Co.

“It was only six weeks ago that most observers were fearful of a blockbuster U.S. plan and record yield forecast that suggested domestic corn stocks (inventories) were poised the surge. Corn prices were in sharp retreat as a result – until Mother Nature turned up the head,” Steve Hansen, an analyst at Raymond James who covers Potash Corp, wrote in a research report issued last week.

Prices for corn have increased dramatically – 38 per cent since June 1. The price of a bushel now stands at $7.88 (U.S.)

“Sharply higher corn prices should incentivize farmers to maximize their fertilizer applications (this fall and next spring) in order to reap the highest possible return on their future crop.”

Read more at Thestar.com

Corn that has missed pollination due to high temperatures and little rain stands in Geff., Ill. The field is considered a total loss by the farmer. The nation’s widest drought in decades is spreading.                ROBERT RAY/AP

Chinese buyers, whose interest in foreign farmland has raised hackles from Argentina to Australia, have turned their attention to the UK –although for investment, rather than food security, reasons.

Knight Frank, the UK-based property consultancy, said it was, for the first time, “starting to see genuine bids” from Chinese investors wanting to buy UK farmland.

However, these were offers from private investors, rather than the funds whose appetite for large swathes foreign farmland has often met with controversy, largely for fear of growing food for shipping direct to China, and so denying the local market.

“These are personal Chinese buyers doing it for investment,” James Prewett, a regional head of farm sales for Knight Frank, said.

“It is different to a fund trying to buy 20,000 acres in East Anglia.”

‘Little piece of England’

Indeed, buyers are interested in smaller farmers, of £1m-2m, which “is not a big chunk of money” for a market in which the average value of agricultural land hit a record £6,295 an acre in the April-to-June, according to Knight Frank, with some lots going for £10,000 an acre.

Nonetheless, Chinese bidders had, even in losing out so far on auctions, including for a farm in Buuckinghamshire, helped lift the market by bidding up prices, and could become an increasing force, depending on whether more follow.

Read more at Agrimoney

The Buenos Aires grains exchange lowered the bar further on Argentina’s soybean and corn harvests, saying a crop tested by drought and frost was now suffering from floods.

The Bolsa de Cereales cut by 1.1m tonnes to 39.9m tonnes its forecast for the soybean harvest in the world’s third ranked exporter, the exchange’s second downgrade this month.

The cut, which put a year-on-year fall of 18.9% in Argentine soybean production on the cards, reflected both a continuing drop in yields and rains last weekend which brought flooding to much of the major producing province of Buenos Aires.

The rains brought “flooding over a wide area”, to a “significant” number of hectares of farmland, estimated at 30% of the 500,000 hectares or so still to be harvested in the centre and west of the province.

The inundation extend a cycle of weather threats which slashed hopes in Argentina, which had initially looked set for bumper crops.

Read more at Agrimoney

A new loan program will offer young farmers up to $500,000 to start or grow their farm business.

A $500 million loan program delivered by Farm Credit Canada will offer qualified producers who are under 40 years of age loans of up to $500,000 to purchase or improve farmland and buildings.

The FCC Young Farmer Loan includes features and options that address this demographic including variable rates at prime plus 0.5 per cent, special fixed rates and no loan processing fees.

Agriculture Minister Gerry Ritz said it gives young farmers a chance to achieve economies of scale and become more profitable.

“Agriculture is a very capital intensive business,” Agriculture Minister Gerry Ritz said. “It takes long, stable funding in order to make these systems work.

“Agriculture is a key driver of jobs and economic growth here in Canada, and young farmers are vital to the long-term prosperity of the agriculture industry,” said Ritz.

Mumbai: Leading farm-sector bodies in Maharashtra have expressed fear that fertiliser prices may go up if supply of domestic natural gas to the producers of phosphorous and potash (P&K) units is cut.

They have urged the government to maintain priority of gas allocation to P&K fertiliser sector.

Reduction in output from a major source in KG Basin makes the increase in the availability of natural gas highly unlikely,credit rating agency Fitch has said.

Natural gas output from Reliance Industries’ KG-D6 fields would sharply drop to 27.60 million cubic metres a day (mscmd) from April,squeezing the domestic gas supply.

Pune-based Krishi Vistar Pratishthan has written to Finance Minister Pranab Mukherjee and Jaipal Reddy,the Minister of Petroleum & Natural Gas,that any decline in the availability and affordability of phosphorus and potash-based fertilisers will affect crop productivity.

Read more at Zeebiz.com

Rains in Texas have failed to refill water reservoirs for the state’s main rice-growing areas, prompting the first-ever restrictions on irrigation that may lead to the smallest planted acreage since the 1920s.

The Lower Colorado River Authority, which manages lakes supplying water to 1.1 million people, including the city of Austin, Texas, plans to stop releasing water for irrigation on March 1, right before the start ofplanting for this year. The restriction would affect farmers in Colorado, Matagorda and Wharton counties, which produced 62 percent of the Texas rice crop and 3.7 percent of the U.S. harvest in 2009.

Read more at Bloomberg

In this May 19, 2011 photo, Tyler Gray stirs up a cloud of dust as pulls a tiller across a dry field near Lubbock, Texas, trying to break up hardened ground. A historic drought has already cost Texas farmers and ranchers an estimated $1.5 billion, and the cost is growing daily as parched conditions persist in much of the state. Photograph by Betsy Blaney/AP Photo

The record suicide rate among farmers in India continues to rise and is threatening the country’s stability and future development, according to campaigners.

They are blaming the government’s policies for the agrarian crisis and are demanding it takes urgent action.

More than a quarter of a million farmers have killed themselves in the last 16 years in what is the largest recorded wave of suicides in history.

Kishore Tiwari, a campaigner with the Vidharbha Jan Andolan Samiti in Maharashtra state in central India, says cotton farmers have been particularly badly affected.

Many of them have only just moved to growing cash crops - like cotton - in the last few years.

He says the farmers have taken on large debts to buy hybrid seeds, which are often unsuited to the harsh and temperamental Indian climate.

“They are sold these modern seeds and modern chemicals and have to take on large debts to buy them.

“The problem is they need a lot of water which is in short supply and then when the crop is poor and they have to repay the money lenders, they despair and commit suicide.”

Mr Tiwari says the suicides are a symptom of a wider crisis in the countryside.

India’s has one of the fastest growing economies in the world but its roots are in the countryside and much of it is being left behind.

Read more at Yahoo News

U.S. farmers will plant the most acres in a generation this year, led by the biggest corn crop since World War II, taking advantage of the highest agricultural prices in at least four decades.

They will sow corn, soybeans and wheat on 226.9 million acres, the most since 1984, a Bloomberg survey of 36 farmers, bankers and analysts showed. The 2.5 percent gain means an expansion the size of New Jersey, as growers target fields left fallow last year and land freed up from conservation programs.

Crop prices, some of which reached the highest averages ever in 2011, bolstered the economies of Midwest growing states, sent net farm income up 28 percent to $100.9 billion and pushed the value of farmland to a record $2,350 an acre, the U.S. Department of Agriculture estimates. Global food costs are down 11 percent from a peak a year ago as grain output rises from China to Canada, United Nations data show.

“There is unlikely to be any ground that won’t be planted this year,” said Todd Wachtel, a 40 year-old who farms about 5,700 acres in Altamont, Illinois, and plans to expand his corn fields by 21 percent when seeding begins in early April. “Farmers know that they have to plant more when prices are high because they may not last.”

Read more at Bloomberg

Sheep farmers could be forced out of business if they suffer heavy losses during the lambing season due to the Schmallenberg virus, scientists have warned.

Cases of the virus in Belgium have seen some farmers suffer losses of about 25% and a similar impact here could be detrimental to the fortunes of struggling sheep farmers, warned Peter Mertens of the Institute for Animal Health (IAH).

“Sheep farmers have had a tough time in recent years with bluetongue and foot-and-mouth and the Schmallenberg virus might push some farmers out of business,” said Prof Mertens, head of the Surrey institute’s vector-borne viral diseases programme.

“If losses are as bad as 25%, that will be the end of this year’s profits - and maybe more.”

Although the AHVLA had officially confirmed only 11 cases of the Schmallenberg virus in the UK by 31 January, the true extent of the disease is still unknown, he added.

“We’re still at the beginning of the lambing season and we have not really got an idea about what it (Schmallenberg virus) is going to do in cattle at the moment,” said Prof Mertens.

Read more at Farmers Weekly

Cotton growers in Australia are bracing for further rain, potentially extending the flooding which may damage up to 10% of the national crop of the fibre, besides sugar cane, soybeans and sorghum.

Eastern Australia which is in some areas suffering worse flooding than in the inundations which followed storms including Cyclone Yasi a year ago, is expected to receive another 25mm-50mm of rain later this week, Australia & New Zealand Bank said.

The rains threaten to extend the period of inundation which is a key factor in determining damage.

“The speed at which the water subsides and how quickly soils stay waterlogged will be key in determining any impact on yields,” ANZ analyst Paul Deane said.

Read more at Agrimoney

One farmer, whose sheep have been infected but who asked to remain anonymous, said the lack of hard facts available about the disease is driving the concern within the sheep community.

“The fact is that absolutely nobody knows anything about this. The advice we have received is very poor. It is not necessarily anybody’s fault. It’s just that nobody knows anything,” he said.

“They don’t know whether the virus stays within the ewe. They don’t know what do to reduce the impact for next season. We have no idea at all whether the lambs that have been born OK are going to show symptoms later on. There’s a whole range of things which nobody knows and we just don’t know where it will go from here.”

He said he did not necessarily blame Defra and AHVLA for the dearth of information, acknowledging that they ‘don’t have a lot of information to go on’.

Read more at Farmers Guardian