Need To Know News

Based on the National Agricultural Statistics Service’s first estimate of the 2008 crop, corn production is estimated at 12.287 billion bushels this year, down 6% from the 2007 crop but 17% above the 2006 crop year. This estimate is 5% above the July estimates USDA produced based only on early planted acreage numbers. Despite floods along the Mississippi River after planting was started, harvested corn acreage has been raised to 79.3 million acres, up 0.4% from the number of acres that was expected to be harvested on June 30th. Yield per acre has been raised to 155 bushels per acre, up almost 3% from last year and well above the July estimated yield of 148.4.

The 2008 soybean crop is estimated at 2.973 billion bushels, up 15% from last year’s production but still down 7% from 2006. The U.S. soybean supply is down about 1% from the early July estimates that were based solely on acreage estimates. Soybean harvested acreage is 1.6% above the estimates of June 30th, indicating less damage to the crops from the Midwest floods than estimated earlier. Soybean yeilds have been reduced to 40.5 bushels per acre from the previously estimated 41.2 bushels.

The 2008 cotton crop is estimated at 13.77 million bales, down 28% from the 2007 crop and down 36% from 2006. Today’s estimate of cotton production is down almost 2% from the July estimates that were based on acreage estimates. At 7.8 million acres, cotton acreage is down 25% from 2007. Cotton yields have been reduced to an estimated 842 pounds per acre from the 879 pounds per acre harvested in 2007.

Wheat production is estimated at 2.462 billion bushels, up 19% from the 2007 crop. That was equal to the estimated production released in July. Total winter wheat production is estimated at 1.875 billion bushels, up 24% from the 2007 crop. Hard red spring wheat production is estimated to have risen almost 4% from the 2007 crop year to 466.2 million bushels and durum wheat production is estimated to have increased 21% from year earlier levels to 86.6 million bushels.

USDA’s World Supply and Demand estimates raised U.S. corn production 5% from July estimates based on August survey results. Production is now estimated to be 6% below 2007 levels. While 2008 use has also been increased by 2% from July estimates, the estimate of stocks at the end of this crop year, has been raised by 300 million bushels, up 36%. While that stock estimate will still be below last year’s ending stock levels, the estimated average farm price for the year has been reduced 10% to an average $5.40 from $6 estimated in July, but that would still leave corn prices 27% above the 2007 average. That reflects the impacts not only of the increased estimate of U.S. production but also an increase in the estimate in foreign ending stocks.

U.S. Soybean production has been reduced 1% from the July estimates based on August survey results, that would be an increase of 15% from last year’s sharply reduced crop. Use of soybeans in the U.S. Has been reduced by about half a percent from the July estimates to 2.9 billion bushels, mostly from a reduction in soybean crushings. However, ending stocks are still estimated to be 135 million bushels, unchanged from the ending stock levels fro the 2007 crop year and below the July estimate for the 2008 crop year. Despite the lower stock numbers, the estimated average farm price for soybeans has been reduced from $12.75 to $12.25 per bushel but that is still well above last year’s $10.15 per bushel. While world oilseed production estimates have been reduced, the yield of meal and oil has been increased thus raising the world estimates for oil and meal production this year.

Global wheat production has been raised in today’s estimates to 670.8 million metric tons, up 6.5 million tons from last month and up 60.2 million metric tons from 2007. U.S. Wheat production was raised only slightly from last month’s estimates but increased production in Europe, India, Russia and the Ukraine raised world estimates overall. Estimated U.S. use of wheat has been reduced by 1.5% and ending stocks in the U.S. have been raised slightly to 574 million bushels, up 88% from the 2007 ending stocks.
Increased U.S. And world production has resulted in a reduction in the estimated average farm price for wheat to $7.25 per bushel from $7.50 per bushel estimated in July. However, that would still be up 12% from the average price in 2007.

Calgary-based Agrium, Canada’s 2nd largest crop nutrient producer and retailer, announced today that Egyptian state-owned MISR Oil Processing has agreed to acquire the 2 subsidiaries of the EAgrium project, giving shareholders equity interest in the combined entity. Agrium will continue to own 26% interest, which includes the recently completed 675K tonne MOPCO facility that will start production in Q4 2008. Agrium’s share of annual production will be 175K tonnes until planned expansions are completed sometime in 2011, at which point Agrium’s share will increase 525k tonnes annually.

Last week there were fears that Agrium might have to write off its US$280mln Egyptian investment when the nation’s ruling party withdrew approvals.

“As a foreign investor in Egypt it gives us comfort to see such commitment on the part of the government,” said Agrium head Mike Wilson.

As part of the agreement, MOPCO will acquire EAgrium through a share swap, after which EAgrium will become a wholly-owned subsidiary of MOPCO and the shareholders of EAgrium will become shareholders in MOPCO. The agreement is expected to be complete by Q3.

Potash Corp, the world’s largest producer of potash, fell 11% or C$22.19 on the TSX today on speculation that fertilizer prices have peaked. The decline is the steepest drop since Feb-00 for the company.

Speculation has been fueled by comments made by Russia OAO Uralkali that it would freeze the price of potash at $149/metric ton for the rest of this year.

The Canadian Wheat Board reported a record C$7bln in revenues for western farmers over the course of the last crop season — a 57% increase from the year before, and undoubtedly reflecting higher grain prices over the period.

Potash and the union representing 500 of its workers at 3 mines have agreed to seek a mediator and return to the table Thursday.

Talks between the two parties, which began Monday, continued y/day with the union saying it was cautiously optimistic over progress in negotiations. The union called off further job action after staging rotating strikes on Monday, saying it would hold off as long as talks were ongoing.

Potash workers have been without a contract since April and in light of the company’s Q2 report showing earnings had doubled from last year, the union said it doesn’t feel Potash is doing enough for its employees.

Workers at Potash Corp’s Cory Mine, 6km west of Saskatoon, have set up a picket line and begun a one-day rotating strike. Similar strikes may follow at 2 other Potash Corp. mines.

The workers at the world’s largest producer of potash are holding out for better pay. As the union calculates it the company made about $300k per worker in the first half of 2008.

Potash posted a net income of $1.47bln in the first half of the year, more than tripling Q2 profits.

Hundreds of workers at 3 of Potash Corp’s mines in Saskatchewan are poised to start a series of rotating strikes against the company, starting as early as today, according to a union spokesperson.

Negotiations have been ongoing for the better part of a week but have reached a deadlock.

The 500 unionized workers, without a contract since April, are trying to pressure Potash for a bigger slice of skyrocketing company profits.

The CFTC says it will hold a committee meeting Tuesday to discuss futures, price convergence, swaps, settlement prices, the role of margin, and credit issues.

The meeting will “obtain information on the views of agricultural futures market experts, national farm organizations, major commodity and agribusiness groups, and the farm banking community,” the CFTC said.

“Topics to be discussed include current conditions in the agricultural markets, including issues related to convergence in the futures and cash markets, agricultural swaps, settlement prices, the role of margin, and credit issues.”

The meeting will be held in Washington and webcast.