U.S. Wheat Harvest Begins

(Farm Futures) – Feedlots in the western Plains will look to purchase a 90- to 120-day supply of wheat direct from the field at harvest if the price relationship to corn is still favorable as the crop is being harvested.

Soybeans Lose Acres in China

The world’s largest importer of soybeans looks to ramp up buying even more in the year ahead as acreage drops 10%, perhaps 20%, as farmers favor alternative crops offering greater returns.

Iran Keeps World on Edge

The potential for military escalation to stop Iran’s nuclear program remains a threat to fund investment in the broader commodity markets as we move through the spring.

Argentina Looks to Ethanol

Argentine farmers are preparing to build 15 new ethanol plants of 50 million gallons of capacity each to process corn at home to avoid paying export taxes on the feed grain.

Canadian Prairies Need Rain

The Canadian Prairies were dry this winter, with limited moisture relief so far this spring. Good moisture through the summer is essential to rebuild global quality milling wheat supplies.

Argentine Farmers Pin Hopes on Ethanol

Argentine farms are rich with potential, but government policies have punished farm success with high taxes to pay for that nation’s social programs. Its rich soils could make Argentina a dominant source of soybeans in the world, but a 35% export tax on soybeans limits returns to farmers. Argentina has a history of capping corn exports to maintain domestic supplies, on top of a 20% export tax, which limits the potential rewards of growing corn as well. Yet, that may be about to change.

Work is being done to build 15 ethanol plants in Argentina; each with a capacity of 50 million gallons. Frustration over Argentina’s high soybean export tax is driving farmers away from the oilseed, but they worry about government policies that would limit corn exports to rapidly growing markets like China. Yet, ethanol plants would open doors for adding value to increased corn production without facing export limitations or taxes. The ethanol could provide a cheaper fuel alternative, while dried distillers grains and solubles would support local beef production. The DDGS could also be exported if feasible. When operational, the plants would provide a market for more than 270 million bushels of corn, which would be equivalent to nearly a third of this year’s drought-shortened crop. Argentina is currently the largest export competitor for U.S. corn, with shipments averaging just over 600 million bushels over the past three years. However, corn exports from Ukraine may soon overtake Argentina as our largest export competitor, with this year’s shipments expected to reach 550 million bushels, up from 197 million the previous year.

Argentina just completed an export agreement with China, clearing the way for shipments to the newly emerging market, but drought cut short this year’s production. Focusing on China could leave other customers short, looking to U.S. supplies, once the ethanol plants are functional.