Need To Know News

Potash One announced today that it’s still committed to completing its Legacy project in Saskatchewan in spite of the challenging financial conditions.

The planned mine will use the solution technique of circulating salt water through the workings to dissolve potash and pump it to the surface. Solution mining has lower capital costs, a shorter time to production and lower risk, however the company said it is developing a scaleable model so that it “can avail itself of lower capital expenditure requirements in this credit-challenged environment.”

The 97.4k acre Legacy project’s estimated Indicated resources are 36.8mln tonnes of potash and estimated inferred resources are 360.4mln tonnes of potash.

The project is located 80 km northwest of Regina, near the largest potash solution mine in the world owned by Mosaic Potash.

In early trading this morning shares in 2 major Canadian potash producers tumbled as Merrill Lynch cut ratings on earnings pessimism due to falling prices. POT is down nearly 23% thus far and Agrium is down over 24%.

As of September 30, the USDA estimates that the 2008 crop of oats is 88.6 mln bushels, down 3.2% from the 2007 production levels. Total oat production fell despite an increase in the two largest producing states, Minnesota and Wisconsin. North Dakota’s oat crop fell dramatically from 15.3 mln bu last year to only 6.6 mln bu in 2008.

Total wheat production is estimated at 2.50 bln, up 21% from last year’s production and 2% above USDA’s estimate of the wheat crop in August. Winter wheat production rose to 1.867 bln from 1.516 bln. Durum wheat production rose 18.4% to 84.877 bln bu.

Barley production for 2008 is estimated at 239.5 mln bushels, up 13% from last year. North Dakota’s barley crop rose 86.2 mln bushels, up 11% from last year’s estimtes.

The union representing 500 striking workers at Potash Corp 3 mines has sent representatives to New York and London to alert investors of the effects of a prolonged labour dispute.
The union is hoping investors will pressure Potash Corp into returning to the bargaining table according to a Regina Leader newspaper report. The workers have been on strike since Aug 8 following failed negotiations.
Roger Falconer, of the United Steel Workers union said he would welcome a return to bargaining tomorrow if Potash Corp showed any inclination to discuss the outstanding issues including wages, pensions, bonuses and benefits.
In the meantime the union has provided striking members at the affected Potash Corp mines with winterized trailers signaling a protracted battle with the company. However even if an agreement were reached within the next few weeks the company may not see a full work force immediately according to the union, as many members have already found other employment and some have signaled they would not return to Potash.
Meanwhile Potash says it’s not concerned over the union’s actions as its shareholders are aware of the long-term need for striking a balanced deal with workers on these issues.
The company had offered a 35% wage increase over 3 years which was turned down and no further meetings are currently scheduled between the union and the company.

World wheat production is expected to reach record levels this year, 676.3 million metric tons. Increased production in the European Union and Russia more than offset the reductions in Argentina and Australia as hot, dry weather cut production in those areas. However, there is still a shortage of milling grade wheat which is expected to support U.S. farm prices later in the year. Global ending stocks are expected to increase to 139.9 million metric tons.

Global coarse grain production was reduced by 2.4 million tons in September as lower estimates of U.S. and Argentinian corn production and lower Australian barley production more than offset the increases in grains in China, Canada and FSU-12. Ending stocks are estimated to increase 116.85 million metric tons, up 5% from last month’s estimate and up almost 9% from last year.

Global production of oilseeds was raised to 417.77 million metric tons in September which helped to raise the ending stock levels to 60.4 million metric tons from the August estimate of 57.42 million metric tons. Soybean production in Argentina was raised a record 50.5 million tons as area planted increased.

FROM THE CFTC
“The proposed amendments add new delivery territories, including shuttle train loading facilities in a 12-county area of Northwest Ohio at a 20 cent per bushel discount, barge loading facilities on the Ohio River from Cincinnati to the Mississippi River at par, and barge loading facilities on the Mississippi River below St. Louis to Memphis at a 20 cent per bushel premium. The proposed amendments establish a seasonal storage premium charge of eight cents per bushel per month from July through November (the storage premium charge will remain five cents per bushel per month at all other times). Finally, the amendments reduce the vomitoxin level for par delivery from three parts per million (ppm) to two ppm. The amendments adding delivery territories and introducing a higher seasonal premium rate will become effective for the July 2009 contract, and the new vomitoxin specification will become effective for the September 2011 contract.”
The proposed changes, according to the CBT, are intended to address concerns raised over the past two years by market participants about the wheat futures contract, especially the lack of cash/futures convergence at contract expiration.

• Potential ‘structural problems’ in some futures markets, especially ag
• Lack of convergence, weak basis and high margin requirements all threaten market effectiveness
• The CFTC is examining the impact of index trading, though definitive conclusions will be difficult even with more transparent markets such as AG
• The CFTC’s intervention proposals include: higher margin requirements for speculators, stricter position limits, outlining acceptable hedging practices and improving OTC market reporting
• The CFTC is attempting to strike a balance between the value of a commodity as a spec investment and its fundamental value.

After almost 100 years of manufacturing farm equipment in Ontario, Deere & Co is shutting down its Canadian operations and heading south.

Citing the high CAD the company announced y/day it will close its Ontario utility-vehicle plant in Welland, Ontario, cutting 800 jobs by the end of 2009.

In a statement the Illinois based company said production will be moved to existing facilities in Wisconsin and Mexico.