Reports have surfaced about the desertification and pollution of parts of China’s arable land, and now significant water stress is becoming a cause for concern. The graphic below from The Economist shows the amount of “High Water Stress” areas there are in China. Natural aquifers have been drained to irrigate crops, resulting in a depletion of the fresh water supply.
Credit: The Economist
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Corn exports increased this week for the fourth time in the past six weeks. Analysts expect U.S. corn sales and exports to increase with news of Ukraine failing to meet contract deadlines for delivery to China this year. The Chinese are having domestic corn problems of their own as reports have surfaced of corn left in the elements due to lack of storage infrastructure, which has caused millions of tons to mold. Wheat exports increased from last week, but soybeans exports fell to below 2 million metric tons (MT) for the first time in eight weeks. Corn and soybeans sales decreased, while wheat sales increased.
Chinese officials announced an agreement has been made to begin accepting the MIR-162 corn trait, commonly known as Syngenta’s Viptera corn. The MIR-162 trait has been the cause of much dispute; China canceled several barge loads of U.S. corn last year due to detection of the previously unapproved MIR-162 trait in the shipments. The cancelations prompted companies like Archers Daniel Midland, Bunge, and Cargill as well as a significant number of farmers to file suit against Syngenta, claiming negligence and false claims of the traits imminent approval. ...continue reading →
(AgWeb) Last night, after days of waiting, the U.S. Senate voted 76 to 16 to approve H.R. 5771, a $42 billion package of tax breaks, including the popular Section 179 deduction on business equipment and farm machinery. The bill now goes to the White House, where President Obama is expected to sign it within days.
“Today's passage of the tax extenders bill is a welcome relief to farmers as we close our books on 2014," said Wade Cowan, a farmer from Brownfield, Texas, and the new president of the American Soybean Association. "While it's not the long-term fix we need, the legislation does include the dollar-per-gallon biodiesel tax credit, expensing for farm equipment and infrastructure under Section 179, and bonus depreciation on farm assets, all of which provide greater certainty and a more stable climate for the farmers and producers who make use of these programs. ...continue reading →
(GallatinRiverCapital) The price of oil is falling like a rock. Since June, oil prices have fallen more than 40% and last week the price of West Texas Intermediate (WTI) (the most popular benchmark for American oil) closed below $60 a barrel(1). After Saudi Arabia declined to lower their oil supply at the November Organization of Petroleum Exporting Countries (OPEC) meeting speculation surrounding the reasoning behind their move began to take hold. One theory was that the Saudi’s are attempting to flush out high cost U.S. oil producers. More extreme theories are that the Saudi’s are colluding with the western world to further the economic pain for Russia as a result of its actions in Ukraine. The one conclusion that can be made is that simple economics of supply and demand are taking place within the market for oil. As a result, there is a market share war among large oil producing countries and price is at the root of the battle.
The U.S. energy boom has caused major disruptions within the global energy market composition. As a result of what has been deemed the U.S. energy renaissance, imports of foreign oil have declined 40% from 2006 highs(1). From the chart below, you can see that imports of OPEC oil (left axis), which is the largest supplier of foreign oil to the U.S. has significantly declined during this period. This development has left a large void in demand for OPEC crude oil supply. Other major oil export countries have also had to seek out replacements for their product and a lack of U.S. demand is not the only reason. ...continue reading →
Syngenta AG expects to win Chinese government approval soon for imports of a type of genetically modified corn at the center of lawsuits over U.S. grain shipments rejected by Beijing, a company spokesman said on Friday.
Syngenta, one of the world's largest seed companies, will make an announcement when it receives official documentation from China that Agrisure Viptera corn, known as MIR 162, has been cleared for import, spokesman Paul Minehart said. He declined further comment.
Approval would be significant because U.S. corn trading with China has essentially shut down since Beijing began turning away cargoes containing MIR 162 corn in November 2013. However, it was unclear whether Syngenta's comment represented a breakthrough in the company's four-year wait for approval or wishful thinking. ...continue reading →
(Reuters) Ukraine is struggling to honor corn contracts signed with China in October and may default on about 20 percent of the volumes because of a shortage caused in part by the political turmoil engulfing the country, industry sources said.
Private feed mills in China, the world's second-largest consumer, signed contracts in October to buy 19 cargoes, the equivalent of about 1.1 million tonnes, as they rushed to use up their import quotas, which enable them to access cheap supplies. ...continue reading →
Farmers have depended on the railways to reliably transport their crops across the country to processing plants and ports, but recently the railways have been anything but reliable. Poor weather last winter combined with increased demand began to backlog the rails. The main cause of the delays is the amount of oil being shipped out of the Bakken shale in North Dakota. Despite reassurance from the owner of BNSF Railway, Warren Buffet, that the railways would be running smoothly this fall, grain elevators have had to wait weeks to receive railcars.
Below the picture shows the weekly average number of oil shipments that were moved across the U.S.
Soybean exports over the past six weeks have totaled almost 15.5 million metric tons (MT), a feat that required 10 weeks to accomplish a year ago. China continues to be the main destination receiving over 60% of the soybeans. Corn and wheat exports decreased. Wheat sales increased, but both corn and soybean sales decreased.
The USDA Word Agriculture Supply and Demand Estimates (WASDE) released yesterday expressed the torrent pace of U.S. soybean exports by lowering the expected carry out for the current marketing year. ...continue reading →
(Reuters) Wheat has been the star performer in Chicago lately, rising more than 27 percent since Oct. 1, compared with a 17 percent rise in the price of corn and a 14 percent rise in soybeans.
However, traders seem convinced that wheat’s recent run-up is nearly out of steam and should reverse heading into the end of the year after prices over-stretched to the upside.
In contrast, traders are bracing for more strength in the soybean market over the near to medium term thanks to strong importer demand and lingering questions about the extent and potential of the newly planted South American crop. ...continue reading →
Soybean ending stocks for the 2014/15 marketing year were trimmed in the December USDA WASDE Report; a reflection of the blistering pace of exports over the last month. The pace of exports is unprecedented for the Chinese who have already purchased 25 million metric tons (MT) of soybeans from the U.S. in the 2014/15 marketing year. That is over 90% of what China purchased in 2013/14 and it is only three months into the current marketing year. ...continue reading →