Issue #9 September 30, 2011 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Message from Ray Washmera, President:

Hello NSIMA Members:

Can you believe Halloween, Thanksgiving and the Holiday season are just around the corner? Where has the year 2011 gone? Unbelievable!

FYI! This month, the NSIMA held its first all members welcome commodity market conference call. It was on Monday, September 26, and many attended. The response was positive too. I quote one of the responses, “I believe that the teleconference was very helpful… these types of exchanges, I find very beneficial. I hope that the NSIMA continues them.” And that was only one of the responses. Not too shabby! YOU should plan to attend the next on. Check it out.

Attached, we have culled out some very topical and informative articles. Take a look, enjoy, and learn.

Oh, and by the way, did I mention football season has begun? Fall is such a beautiful time.

Have a wonderful Halloween. Talk with you next month.

Raymond A. Washmera, President

Also in this issue: (Scroll down to the document)

00/00 - September Sugar Price Announcements 09/01 - Stevia market share to explode in 2011, says report 09/01 - US grain cos tighten GMO policy, eye Syngenta corn 09/06 - New fructose enhancers promise 'significant amplification' of sweet taste in HFCS 09/06 - Farm Income Increases, while Debt Decreases 09/06 - Mexico Leads World in Consumption of Sugary Drinks, Study Says 09/07 - (RRV) Sugar beet harvest begins with replacement workers 09/07 - US ethanol exports increased by 300% last year 09/08 - Brussels looks set to end sugar quotas by 2016 09/11 - Seeds are sown for rally in agricultural stocks 09/12 - Kerry acquires SuCrest, gains sweet expertise 09/12 - USDA Cuts Corn Production Forecast Again 09/13 - Surging supply projections do little to suppress cocoa prices 09/13 - Heat to cut south-central Kansas corn yield by 40% 09/14 - Pioneer plans to raise corn, soy seed prices 09/15 - The September issue of the SUGAR AND SWEETENERS OUTLOOK 09/15 - At the heart of (California) agriculture is the struggle for water 09/16 - As of September 1, Russia increased grain production by 44% compared to last year - Rosstat 09/19 - A prediction on American Crystal's lockout situation 09/20 - (Jenkins) September WASDE Update 09/21 - (Michigan) Sugar beet crop not expected to meet last year's, but still ahead of the curve 09/29 - Fed. Agency (NRLB) Sides With American Crystal in Labor Dispute

http://www.foodnavigator-usa.com/content/view/print/557239

Sep 01, 2011; By Elaine Watson, FoodNavigator-USA

Stevia market share to explode in 2011, says report

Use of stevia is predicted to rise at an astonishing rate this year, taking the natural sweetener's share of the total US sugars and sweeteners market from 1.8% in 2010 to 9.1% in 2011, according to Packaged Facts. In a new report on sugar and sweetener trends in the US, the market researcher estimates that sales of stevia will rocket from $210.6m in 2010 (1.8% of an $11.736bn retail and wholesale sugars and sweeteners market) to $1.192bn in 2011 (9.1% of an estimated $13.036bn market). Meanwhile, sugar's share of the total market is expected to drop from 63.8% in 2010 to 58.9% in 2011, while corn sweeteners and molasses are also expected to see a dip in share from 16.8% to 15.3%. Looking ahead, stevia will be “the runaway leader” in the retail sector and the key driver of growth in the manufacturing sector, predicts Packaged Facts. “Much of the growth in this market is attributed to the increasing use of stevia by manufacturers to replace artificial sweeteners, high-fructose corn syrup and sugar.” Stevia-sweetened product launches surge The number of stevia-sweetened products has risen steadily following GRAS (generally recognized as safe) approval in December 2008, it adds, with 46 food and beverage products introduced to the market in 2009 and 76 in 2010. “That rollout continues unabated, with stevia-based product launches increasing 918% in the 52 weeks ending April 16, 2011 according to SPINS scan data.” Most of the new products combine stevia with one or more other sweeteners. With regulatory approval expected in the European Union in November, stevia use is also expected to explode on the other side of the Atlantic next year, adds the report. Other high intensity sweeteners While Splenda sucralose remains the leading player in the US retail/tabletop sugar substitute market, its sales nevertheless dipped 5.6% from 2009 to 2010, while other high intensity sweeteners also struggled to make headway in the tabletop market following the arrival of new stevia-based products such as Cargill’s Truvia, notes the report. “Sweet ‘N Low (saccharin), Equal and Nutrasweet (aspartame) all saw sales drop in 2010, while natural sugar substitutes saw sales increase. Truvia’s sales jumped 73.7% between 2009 and 2010. “Splenda fell from a 61% share of the retail sugar substitute market in 2007 to 45.5% in 2010, while Truvia and Stevia in the Raw accounted for 13.8% of the market in 2010. Equal went from 12.4% of the market in 2007 to 6.5% in 2010, and Sweet N’ Low fell from 13.2% in 2007 to 11% in 2010.”

Agave-sweetened product introductions up 116% in two years Agave nectar - a sweetener from the agave plant – featured in 110 new products in 2010 compared with 88 in 2009 and 51 in 2008, added the report. High Fructose Corn Syrup While the number of new product launches containing the much-maligned sweetener high-fructose corn syrup (HFCS) nearly doubled between 2009 and 2010, there was also a corresponding rise in the number of new products making marketing capital out of not containing it, noted the report. “In 2009, there were 138 products introduced in 60 categories that had a ‘no high-fructose corn syrup’ claim, with breads and rolls, cookies and functional drinks being the leading three categories. “In 2010, there were 150 products introduced in 55 categories that had this claim, with breads and rolls, functional drinks and other savory snacks as the three leading categories.” Sugar consumption As for sugar, annual per capita consumption has remained fairly steady since 1985, ranging from about 42 to 46 pounds per year, says Packaged Facts. Per capita sugar consumption increased 5.6% from 2006 to 2010, while HFCS per capita consumption declined by 18.2% over the same period, claims the report.

http://www.reuters.com/article/2011/09/02/cargill-corn-idUSN1E78017Q20110902

Sep 1, 2011; By Christine Stebbins and Karl Plume, REUTERS

US grain cos tighten GMO policy, eye Syngenta corn * Cargill not taking Syngenta's GMO corn at wet mills

* Cargill awaiting regulatory approval from EU

* ADM not taking unapproved GMOs without written notice

* Bunge North America said earlier not taking the corn (Recasts, changes headline, adds ADM comments, adds byline)

By Christine Stebbins and Karl Plume

CHICAGO, Sept 1 (Reuters) - Major U.S. grain companies have tightened curbs on genetically modified grains not yet approved by foreign markets, with some singling out one popular corn variety made by Syngenta (SYNN.VX), fearing any trace of the biotech grain in shipments could shut off export markets.

The action was taken just weeks before the U.S. corn harvest, when this variety of corn could enter market channels.

U.S. agribusiness giant Cargill [CARG.UL] said on Thursday it will not accept Syngenta's genetically modified Agrisure Viptera corn at its North American wet milling plants until the corn variety receives regulatory approval from the European Union.

Agricultural processor Archer Daniels Midland (ADM.N) did not single out any specific corn varieties, but said it would only accept grain approved for commercial use in the European Union, which would exclude Viptera, unless given prior written notice to ensure its supply chain integrity.

Another major grain handler, Bunge North America (BG.N), has also barred Agrisure Viptera from its facilities, awaiting additional export market approval, particularly from China -- a top U.S. grains and oilseed customer.

"Cargill strongly values its right to accept or restrict products of agricultural biotechnology, dependent on the approval status in export markets and needs of our customers," Cargill spokeswoman Nicole Reichert said.

"Consistent with our long-standing wet milling position, Cargill cannot accept Viptera at these facilities until it has received regulatory approvals in the EU," she said.

Cargill and ADM said their grain elevators will accept Viptera but only with written notification ahead of delivery.

"We need the advance written notice so that we can make merchandising decisions regarding the grain and so that we can ensure the integrity of our supply chain and our exports," ADM spokesman Roman Blahoski said.

U.S. processors and exporters became hypersensitive to issues related to GMO corn after a variety unapproved for food use known as Starlink was discovered in a U.S. shipment to Japan in 2000. Sales to the biggest U.S. customers at the time -- Japan and South Korea -- dried up overnight. The subsequent tracing, sorting, testing, separating and certifying of GMO cost the industry millions of dollars.

Cargill operates eight wet-corn milling plants in North America, all in the United States, with the largest located in Blair, Nebraska. The Blair plant accepts some 100 million bushels of corn annually to produce ethanol, food products and livestock feed.

The genetically modified Viptera corn variety, designed to protect the crop against insect damage, represents less than 2 percent of the U.S. corn crop, Syngenta said.

The variety has been approved for shipment to several major corn export destinations, including Australia, Brazil, Canada, Japan, Mexico, New Zealand, the Philippines and Taiwan.

"China has not yet approved it, but we expect approval by China by the end of the first quarter next year," Syngenta spokesman Paul Minehart said.

Syngenta Seeds, a unit of the world's largest agrochemicals company, Syngenta AG, filed suit against Bunge on Aug. 22 for refusing to accept Agrisure Viptera corn.

Syngenta said it had been in contact with U.S. ethanol plants to identify "suitable outlets" for the Viptera corn.

"With tight corn supply this fall, we expect ethanol plants will have strong interest in taking corn with the Agrisure Viptera trait but we ask that growers notify destinations that their grain contains the Agrisure Viptera trait before delivery," Minehart said.

http://www.foodnavigator-usa.com/Business/New-fructose-enhancers-promise-significant-amplification-of-sweet-taste-in-HFCS/?c=nr4GVAI4KC0Xkhj4yZl2Qi7MN%252BK8X2fj&utm_source=Newsletter_Subject&utm_medium=email&utm_campaign=Newsletter%252BSubject

Sep 06, 2011; By Elaine Watson, FOODnavigator-usa.com

New fructose enhancers promise 'significant amplification' of sweet taste in HFCS San-Diego-based flavor Innovator Senomyx has started taste tests on novel fructose enhancers that could help amplify the sweet taste of fructose, a key component In high fructose corn syrup (HFCS).

Senomyx uses high-throughput screening techniques to evaluate thousands of potential flavor ingredients to identify which substances bind to specific taste receptors that tell our brains that something is sweet, savory, salty or bitter. Speaking at the Midwest IDEAS investor conference in Chicago last week, vice president, investor relations Gwen Rosenberg said Senomyx had made great strides in the development of flavor ingredients that enhanced the sweetness of sucrose (56973 and 59632) and sucralose (52383). "Nobody else we know of has a sucrose enhancer [56973] that does not have any taste on its own, it just boosts the taste of the sugar that is there. But we are also very excited about [more recent discovery] 59632, which appears to be very effective for a broad range of beverages -whereas 56973 is primarily used for foods.” However, Senomyx had also identified ingredients demonstrating a statistically significant amplification of the sweet taste of fructose, and was now talking to partners Firmenich and PepsiCo about their potential application in foods and beverages, she said. "We have found some that are effective in assays and we are now evaluating them in taste tests [exploring their ability to enhance the sweetness of products containing HFCS].” A case of when, not If, we find a salt enhancer

While Senomyx was still loss-making, royalty payments from high-profile customers and partners from PepsiCo, Nestle and Kraft to Firmenich and Ajinomoto, were now starting to pour in as products containing its ingredients hit the market, said Rosenberg.

And firms that had seen what was possible on the sweet front were now looking to Senomyx to make a breakthrough in salt reduction, she said.

"The major companies know about us now, they are aware of what we are doing. For example with the salt program, I'd like to say [it's a case of] when, rather than if, we find a salt enhancer. We have companies that are lined up that would be interested in that. Nobody else has that.

"This is a very high priority for us but the most challenging from a scientific aspect. We have a very strong effort on finding salt taste receptors. We're looking to find salt enhancers that would work in the same manner as our sucrose enhancers.

PepsiCo collaboration

The fact PepsiCo had been prepared to pay Senomyx $30m upfront and a further $32m for R&D work on top of any future royalty payments in order to gain exclusive access to the sweet enhancers and novel natural sweeteners covered in their collaboration demonstrated how seriously the Californian firm was now being taken by industry, said Rosenberg.

"We are the only company that has this type of agreement with them. I don't know of any other company that they have given $30m upfront and another $32m for R&D. We are also in line to get milestone payments and royalties on Pepsi non-alcoholic beverages containing our ingredients.

"We believe we have some unique technology, and they wanted exclusivity so that they could have a competitive advantage.

Senomyx, which posted a $3.2m net loss on sales up 22.8% to $7m in the three months to June 30, has a library of more than 800,000 potential ingredients that it can screen in order to determine whether they activate, block or enhance taste receptors.

http://www.agweb.com/article/farm_income_increases_while_debt_decreases/

September 6, 2011; By: Ed Clark, Top Producer Business and Issues Editor

Farm Income Increases, while Debt Decreases The numbers show what everyone knows. In just one year, the bottom line has improved substantially for U.S. farmers, particularly those in the Heartland.

USDA’s farm sector balance sheet estimates for 2011 show that cash receipts for crops will increase 19.4% over 2010, with livestock up 15.8%, both eclipsing rising expenses, which will also be up double-digits at 11.4%. Returns to farm operators will rise 33.4%, a new report released Aug. 30 by USDA’s Economic Research Service (ERS) says.

The three most important factors driving high asset values (including farm real estate) are:

1. Higher expected income from production assets

2. Favorable borrowing costs

3. Expected growth of future returns on these investments.

Farm real estate and non-real estate asset values are expected to rise from $2.18 trillion in 2010 to $2.32 trillion in 2011 (up 6.6%).

Farm business debt is expected to fall from $246.9 billion in 2010 to $242.1 billion in 2011. As a result, farm equity is expected to increase from $1.93 trillion in 2010 to $2.08 trillion in 2011. Debt-to-asset ratios and debt-to-equity ratios are expected to decline, indicating that the farm sector overall is more solvent than it was in 2010. In 2011, the value per acre of farmland and farm buildings in the U.S. is forecast by USDA to rise by 7.1%. The value of land varies widely by state, however. USDA/NASS reported in its “Land Values: 2011 Summary,” a report issued earlier this year, that in 2010, land values increased by greater than 15% in by these states: 24.4% in Iowa; 17.1% in Nebraska; 16.3% in Illinois; and 15.3% in North Dakota. But land values didn’t rise everywhere, and farmland values are highly localized, ERS says. Values declined by 4.4% in Rhode Island; 3.1% in New Jersey; Massachusetts, 2.7%; and fell by 1.5% in California, the latter the nation’s No. 1 agricultural state when it comes to value of its crops and livestock. The new ERS report is called, “Farm Income and Costs: Assets, Debt, and Wealth."

http://latino.foxnews.com/latino/health/2011/09/06/mexico-leads-world-in-consumption-sugary-drinks-study-says/

September 06, 2011; FOX NEWS

Mexico Leads World in Consumption of Sugary Drinks, Study Says Mexico is the biggest consumer of soft drinks in the world, with a per capita consumption 40 percent greater than in the United States.

The average per capita consumption is 163 liters (43 gallons) per year, while the neighboring country reaches only 118 liters (31 gallons), according to the results of a study that the director of Yale University's Rudd Center for Food Policy and Obesity, Kelly Brownell, released at a press conference in Mexico City.

For that reason, health and consumer groups demand that the government put a 20 percent tax on soft drinks.

The proposal to impose such a tax, according to Alejandro Calvillo, director of Consumer Power, stems from the recommendations of international organizations on comprehensive policies for combating obesity, since "these drinks are the chief source of calories" in Mexico.

He recalled that the World Health Organization, the Organization for Economic Cooperation and Development and the United Nations have called on the government to take measures against this epidemic, but "they have been ignored."

Calvillo also cited the statement by Health Secretary Angel Cordova, who said that the obesity problem has gone beyond the capability of the public health system to deal with it, and predicted that in six years the cost of addressing obesity-related health problems will equal the system's current annual budget of $14 billion.

A tax on soda pop "would bring about a 16-24 percent drop in consumption," which would in turn lead to fewer calories being ingested and would be a boon to household budgets, from which "more is currently spent on soft drinks than on eggs, beans and tortillas," Calvillo said.

He also said that with the funds from taxes, the health conditions of the general population can be improved and there would be more money available to treat health problems resulting from the high intake of these products.

As an example he mentioned the introduction of free drinking-water fountains in schools and public spaces, which would reduce even more the indiscriminate drinking of carbonated beverages.

"Our country has become a factory for producing anemia and obesity, because people with such habits go from malnutrition to obesity by substituting nutritious drinks with soda pop," Dolores Rojas, coordinator of Oxfam Mexico, said.

On the eve of the Mexican Congress' debate on the 2012 budget, Rojas said that the proposal is "precise and specific" because it would bring drinking water to those who don't have it.

According to a report from the U.N. special rapporteur on the right to nutrition, Olivier De Schutter, seven out of every 10 Mexicans are overweight.

http://www.wday.com/event/article/id/51612/

September 07, 2011; By: Bill Schammert, WDAY

Sugar beet harvest begins with replacement workers American Crystal Sugar is now bringing in roughly 10% of its sugar beet crop, but this year's pre-pile harvest is different. Hundreds of Union Workers are picketing outside factories as hundreds of temporary and replacement employees get to work. Tonight, we talk to two of American Crystal's newest hires who are crossing the picket lines.

The national unemployment rate is above 9%. So for Jessica Knight any job is worth taking.

Jessica Knight – New American Crystal Worker: “I heard that they needed helpers, and I didn't really have much else going on so I wouldn't to come out and take a chance I guess.”

She and her friend will be among the hundreds of temporary workers who will work for American Crystal this sugar beet season. The two said they were hired, watched a safety video and signed a waiver promising to cross the picket line no matter what. Something they will have no problem with.

Elizabeth Ostea – New American Crystal Worker: “Not too worried about it.”

Jessica Knight: “Just deal with it as it comes, I guess.”

American Crystal Sugar Company continues to say that safety is its number one priority, but it’s something that picketing union workers believe will be hard to come by with newly trained employees.

Branden Wahl – Picketing Union Worker: “I'm just fearful somebody is going to get seriously injured or hurt doing this. It's liable to cost somebody there life, that's the sad part.”

As this year's ambush of trucks enters the facility, American Crystal has issued a safety letter to picketers, asking them to be cautious and not distract drivers. This year, they'll be on the outside, looking in.

Branden Wahl: “Everybody is trying to make a living, but you can't make a living by taking jobs from other people.”

http://www.biofuels-news.com/industry_news.php?item_id=4004

September 07, 2011; BioFuels-News.com

US ethanol exports increased by 300% last year Both the ethanol and biodiesel global markets continued to grow in 2010 with biofuels production up 17%, compared to a 10% rise in 2009. This is according to a report on 2010 biofuel production by US research company Worldwatch Institute.

Ethanol remains the most widely produced biofuel; of the 105 billion litres produced in 2010, 86 billion litres was made up of ethanol.

In recent years a number of oil companies including Sunoco, Valero, Flint Hills and Murphy Oil have entered the ethanol market as a result of high oil prices, and authors of the report say the biofuel increase can, in part, be attributed to this.

Biofuels growth in 2010 was particularly prominent in the US, and ethanol output here reached 49 billion litres, a 20% increase on 2009 production levels.

Brazil remained the world's second largest ethanol supplier in 2010 and the country's ethanol output from sugarcane increased by 2 billion litres to 28 billion litres. This is a 7% rise on the previous year.

Despite this, demand outweighed supply and as a result the US ended up exporting 1.3 billion litres of its corn-based ethanol to Brazil, in addition to other markets, in 2010. This is a 300% increase compared to US ethanol exports reported in 2009. And this trend is expected to continue, according to the US Department of Energy (DoE).

But Worldwatch highlights that it may not last long as ethanol production in Europe may be on the rise.

http://www.foodnavigator.com/Legislation/Brussels-looks-set-to-end-sugar-quotas-by-2016

Sep 08, 2011; By Jane Byrne, FoodNavigator.com

Brussels looks set to end sugar quotas by 2016 The EU is set to abolish the system of sugar production quotas for the bloc as well as guaranteed minimum prices from 2016, according to a Brussels source. Sharp rises in sugar prices have led to calls from food and drink manufacturers for the European Commission to increase sugar quotas or abandon them. Indeed, a spokesperson for the world’s biggest food producer, Nestle told the Financial Times last month: “Significant changes are required to bring sufficient transparency and fair conditions to the market. As such, the EU reform should phase out sugar production quota as of 2015.” The existing sugar quota regime runs until the end of September 2015. Proposals from the Commission are expected before then – sometime next month. The EU source, who wished to remain anonymous, said that the proposals are designed to boost EU sugar beet output and cut prices for the key food and beverage manufacturing ingredient within Europe, as well as making the sector more “market driven and competitive”. He notes that the situation in the marketing year 2010/2011 was particularly challenging in terms of supply in the bloc, with world market prices above EU levels for the first time, and sugar exports from emerging nations, normally imported into the EU duty-free, diverted to the world market to benefit from those more attractive prices. “This has shown up one or two failings in the system as it currently stands,” the Brussels contact told FoodNavigator.com. Cane sugar But UK based refiner, Tate & Lyle Sugars, in a position statement on the CAP post 2013 and sugar reform, said that, in the event that quotas are removed, then any increase in the ability of the sugar beet sector to produce more should, for reasons of equity and fair terms of competition, be accompanied by equal measures to ensure the cane refining sector can compete fairly. “In particular, this has to relate to raw material supply. Any policy change that allows for unrestricted production of beets should also allow for cane refiners to compete through increased access to raw material at competitive prices," it added. CXL duty And, the European Sugar Refiners’ Association (ESRA) is urging the Commission to permanently abolish the CXL sugar import duty of €98 per tonne. The CXL duty was established at a time when EU institutional prices were set much higher and world prices were generally lower. “Given today’s lower EU institutional prices and higher world prices, only the removal of the duty will ensure predictable and economically viable access to raw cane sugar,” argues João Pereira, chairman of ESRA.

http://ca.reuters.com/article/businessNews/idCATRE78A2ND20110911

Sep 11, 2011; By Euan Rocha, REUTERS - CANADA

Seeds are sown for rally in agricultural stocks TORONTO (Reuters) - Agricultural stocks could outperform the broad Canadian market in coming weeks as bearish crop forecasts and low grain inventories keep prices at record highs and spur increased fertilizer demand.

Even with strong grain prices and a surge in crop nutrient prices, shares of Potash Corp (POT.TO: Quote), Agrium Inc (AGU.TO: Quote) and Viterra have had a dismal run over the last six months, largely due to an uncertain global economic outlook. On average, the shares have fallen about 8 percent in the period.

But the trio may soon enjoy a nice pop. Forecasts point to further reductions in corn yields across the United States. That suggests corn prices will rise, encouraging farmers to plant more acreage and use more fertilizer this fall. This trend is sure to benefit companies that either produce crop nutrients or sell them at a retail level.

"Farm economies are still in an optimal position," said Morningstar analyst Min Tang-Varner. "At the end of the day, the fertilizer stocks have their own inherent cyclicalities that are not fully co-related to the North American economy, so they should still have space to run."

WASDE NUMBERS

The U.S. Department of Agriculture will issue its closely watched World Agricultural Supply and Demand Estimates on September 12. Private forecasts already suggest the new WASDE report will cut its estimate for this year's average U.S. corn yield, which currently stands at 153 bushels per acre.

"We have a bunch of private ag economists who have provided their estimates for the yield this year," said Ticonderoga Securities analyst Mark Gulley. "It is well below 150 bushels per acre -- that's a five bushel-per-acre number below the last WASDE number, which is just enormous."

Just a month ago, the USDA trimmed its average corn yield forecast to account for the impact of high temperatures and below-average rainfall in much of the U.S. Corn Belt. A further reduction in the forecast would put more pressure on grain inventories and cause corn prices to spike.

"People are still fussing over the harvested acreage, but that's going to be lower than WASDE's showing as well," Gulley said. "So you are coming up with very low carry-overs, high corn prices and that's positive for fertilizer equities."

Even if the USDA trims its corn consumption forecast, due to a weaker macro outlook, analysts say inventories are bound to remain tight.

"We expect sector fundamentals to remain healthy through year-end, and given our expectations for ending stocks and acreage, we are projecting another strong year for farm income in 2012," Piper Jaffray analyst Michael Cox said in a note to clients.

PROMISING OUTLOOK

The bullish grain price outlook is sure to encourage most farmers to invest more in fertilizers, seeds and other inputs.

Potash Corp, the world's largest fertilizer maker, produces nitrogen, phosphate and potassium-based fertilizers. It stands to reason that profits will rise with an increase in fertilizer demand and the ongoing run-up in crop nutrient prices.

While fertilizer prices have risen this year, farmers are not suffering from the kind of sticker shock that led them to pullout of the market during the 2008 peak.

Agrium, the largest North American ag products retailer, is also one of the region's largest producers of nitrogen-based fertilizers that are essential for growing corn. Its stock is down about 7 percent in the last six months, while shares of U.S. rival CF Industries (CF.N: Quote) have jumped. Many analysts now expect Agrium's stock to play catch-up in coming months.

Another company that stands to benefit is Viterra (VT.TO: Quote). The grain handler and farm products seller recently reported a huge jump in profit and forecast strong results.

"I don't see anything wrong, I think this is the rally that no one's talked about as much as they should have," said Chris Damas, an independent analyst and investor who owns shares in both CF and Agrium. "All systems are a go."

http://www.confectionerynews.com/Financial/Kerry-acquires-SuCrest-gains-sweet-expertise/?c=nr4GVAI4KC00fKP448cLTieTxbaF06pY&utm_source=newsletter_daily&utm_medium=email&utm_campaign=Newsletter%2BDaily

Sep. 12, 2011; By Jane Byrne, ConfectioneryNews.com

Kerry acquires SuCrest, gains sweet expertise Kerry Group's acquisition of sweet ingredients provider SuCrest will extend its technology and expertise in that arena, said the global flavour and ingredients powerhouse.

The takeover of the German ingredients business for an undisclosed sum was announced this morning.

SuCrest, with product lines targeted at the confectionery, bakery, ice-cream, cereal and snack sectors, has production facilities at Hochheim in Germany and Vitebsk in Belarus, and a sales office in Moscow.

It had reported annual revenue of €50mn in the financial year ended 31 December 2010.

Speaking to FoodNavigator.com, Frank Hayes, director of corporate affairs at Kerry said that the acquisition expands the group's capacity in terms of sweet coatings, compounds and caramel technology.

It will also provide Kerry with new customers and strengthen the global group's foothold in the EMEA (Europe, Middle East and Africa) region, he continued. "SuCrest has a strong presence in Germany and the Northern European markets in particular," reports Hayes.

He added that integration of the supplier into the wider group is "already underway".

In terms of Kerry's potential acquisition of Cargill Flavor Systems, Hayes commented that the consultation process with employee representatives "progressed satisfactorily" and discussions with the US company on the deal are into the next phase.

The Irish ingredients group confirmed to this publication in July that it was in "exclusive talks" with Cargill in relation to the sale.

Kerry intends to pursue additional acquisitions before the end of the year, said Hayes, with it looking to grow its business organically and through takeovers. He added that the group's strong balance sheet means it is in a good position to acquire other flavours and food ingredients businesses.

November 2010 saw Kerry acquire California-based Agilex Flavors, which develops sweet, fruit and brown flavours for nutritional, beverage, bakery and confectionery.

http://online.wsj.com/article/SB10001424053111904353504576566382419166832.html

Sep 12, 2011; by Tom Polansek, THE WALL STREET JOURNAL

USDA Cuts Corn Production Forecast Again Federal forecasters cut their outlook for the size of the U.S. corn crop for the second straight month, yet they expect surging prices to cool demand and prevent supplies from falling to an all-time low next year.

The U.S. Department of Agriculture, in a monthly crop report released Monday, said farmers will produce 12.497 billion bushels of corn, a 3.2% reduction from last month's forecast. The harvest is still expected to be the third largest on record but falls short of expectations in the spring when farmers planted a huge crop in response to tight supplies and high prices.

The production cut was expected after the hottest summer since 1936 damaged the crop in states such as Illinois and Indiana. Yet the reduction in expected demand for corn was surprising, with some analysts and traders dismissing it as a way to prevent concerns over shortages by next summer.

"It's easy enough to say we're going to have a reduction in consumption, but whether or not we do is a different story," said Sid Love, an analyst for Kropf & Love Consulting, an agricultural advisory firm in Kansas.

Corn prices climbed Monday on the Chicago Board of Trade as traders continued to worry the harvest that is getting underway won't keep up with demand for the world's largest corn crop.

Futures prices already have surged this summer, with corn for December delivery, the most actively traded contract, hitting a high in late August of nearly $7.80 a bushel. Prices have since pulled back but remain up nearly 20% since July, with the December contract up nine cents, or 1.2%, to settle at $7.3425 a bushel Monday.

"To ration demand, prices still need to move higher," wrote analysts for Morgan Stanley.

The USDA lowered its outlook for demand for corn by 3% to 12.76 billion bushels, trimming its forecasts for exporters, ethanol and animal feed. Yet some traders noted margins for ethanol production remain positive and the USDA continues to report fresh export sales, including 114,300 metric tons of corn to unknown destinations Monday.

"Taking the demand down by 400 million bushels is aggressive in my opinion," said Terry Reilly, an analyst for Citigroup in Chicago.

Still, the USDA backed up its expectation for lower demand by raising its estimate for prices, which could cause grain users to cut back. The average price farmers are expected to be paid for corn over the next year is now $6.50 to $7.50 a bushel, an all-time record.

The USDA had a brighter outlook for the soybean crop. Forecasters surprised traders by raising its prediction for the upcoming crop to 3.085 billion bushels from 3.056 billion in August. The USDA also increased its outlook for domestic wheat supplies, bucking expectations for a slight reduction in inventories.

Soybeans for November delivery tumbled 30.75 cents, or 2.2%, to settle at $13.96 a bushel. Soft red winter wheat for December delivery slid 2.5 cents, or 0.3%, to $7.2725 a bushel.

The USDA raised its forecast for the soybean yield to 41.8 bushels an acre from 41.4 bushels in August, while analysts were looking for a decline to 41 bushels an acre.

Soybean ending stocks were projected at 165 million bushels, up 10 million bushels from August due to the increased outlook for production. For wheat, the USDA raised its ending-stocks forecast to 761 million bushels from 671 million bushels in August.

The USDA said it expects 940 million bushels of wheat to go to U.S. food production this year—a five million-bushel decrease from a month ago—and exports to total 1.025 billion bushels, down from 1.1 billion bushels.

http://www.confectionerynews.com/Markets/Surging-supply-projections-do-little-to-suppress-cocoa-prices/?c=nr4GVAI4KC12BFxpN0NQD8cPOnleYKba&utm_source=newsletter_daily&utm_medium=email&utm_campaign=Newsletter%2BDaily

Sep 13, 2011; By Michelle Knott, ConfectioneryNews.com

Surging supply projections do little to suppress cocoa prices

Surging cocoa supplies did little to prevent front month prices for cocoa (cocoa futures) creeping up by 4 per cent throughout August, according to Euromonitor. "The big surprise has been that this rise has taken place on the back of strong supply projections," said senior foods analyst Francisco Redruello.

Exports from Ivory Coast are up by almost 30 per cent from last season, while Ghana is set for a record breaking crop. Ghana previously indicated that it aimed to reach one million tonnes of production in the 2012/2013 season, but output is now set to surpass that target by the end of the 2010/2011 season.

Christian Walter, managing director of Ferrero UK, told ConfectioneryNews.com that historic shortages are one of the factors keeping prices up: "There have been shortages in the past and the stocks need to be built up."

Powder vs. butter

A further apparent anomaly is that prices for cocoa butter are low, while cocoa powder remains buoyant.

Redruello believed that the answer to this lies on the demand side, where the market for cocoa powder is not as closely bound up with the chocolate confectionery business: "Cocoa powder has a wider range of applications in products such as chocolate coatings, bakery products and hot drinks. Demand for these products in emerging economies continues to grow steadily. Take chocolate hot drinks, for instance. We predict an increase of almost 8,000 tonnes in 2011 in Latin America.

But he added that there is also good reason to be positive in confectionery: "Demand for dark chocolate with a higher cocoa powder content in developed markets continues to grow, despite difficult economic conditions."

Walter agreed that chocolate confectionery is holding up reasonably well: "The global market for chocolate confectionery is growing by between 1 and 2 per cent on average, with a little more growth in the US and a little less in Europe. But an increase of 1 or 2 per cent is still a lot of product. We feel the outlook is positive for cocoa without expecting any huge increases to come. "

Grindings figures

Cocoa grindings figures are sometimes used as a barometer of the level of demand pulling cocoa through the supply chain. Grindings in both Europe and North America increased in the second quarter of 20 II, with the European Cocoa Association reporting an 8.3 per cent increase in activity and the national Confectioners' Association reporting an increase of 6.22 per cent for North America.

However, this apparent predictor of major growth is an illusion, according to Walter: "There was a halt in grinding in Ivory Coast during the export ban. You'd normally say that grinding increases as demand increases but this is to do with a transfer of activity, not increased consumption. "

http://www.kansas.com/2011/09/13/2014198/to-cut-south-central-kansas-corn.html

Sep. 13, 2011; BY DAN VOORHIS, The Wichita Eagle

Heat to cut south-central Kansas corn yield by 40%

Months of blistering heat and drought is forecast to cut the south-central Kansas corn harvest almost 40 percent below last year, according to the U.S. Department of Agriculture.

In Kansas as a whole, the corn crop is predicted to be 473 million bushels, down 19 percent from last year, even though farmers planted more acres.

The weather took its toll on farmers' yields, the amount of corn harvested per acre. Last year south-central Kansas farmers averaged 137 bushels of corn an acre. This year, they averaged 97 bushels per acre.

The difficult conditions have carried over into the soybean and grain sorghum crops, which are harvested in the fall. USDA is forecasting that soybean yields statewide will fall 20 percent and production will be down 10 percent from last year. It expects grain sorghum yields to dip 27 percent and production to fall 28 percent.

Gary Cramer, Sedgwick County agricultural extension agent, said many farmers are asking him what to do with a field of crops that just can't be harvested.

The drought, Cramer said, even threatens next year's wheat crop, for which planting has just begun.

"If this continues into next year, it will be devastating on these guys," Cramer said. "I hope they have a good relationship with their banker."

Tighter corn supplies mean higher corn prices, which is bad news for the consumers of corn such as livestock farmers, ethanol plants and food processors.

It takes about six months for corn prices to trickle down to products at the grocery store.

But many food producers are already being squeezed by the higher prices. Chicken producer Sanderson Farms reported its third straight quarterly loss late last month, in part, because of increased costs for feed. Smithfield Foods, the world's largest hog producer, said last week that high feed costs would remain a problem this year.

"Ingredient prices are going to stay high for a while," said Jason Ward, an analyst with Northstar Commodity in Minneapolis, Minn.

The USDA estimated Monday that a surplus of 672 million bushels of corn will be left over at the end of next summer. The estimated surplus is down from last month's forecast and well below levels that are considered healthy.

This spring, farmers planted the second-largest crop since World War II. But high temperatures stunted the plants.

"We just didn't have a good growing year," Ward said. "It was too hot... too dry at the wrong time."

The price of corn was relatively unchanged at $7.33 a bushel on Monday. While that's down from its peak of $7.99 reached in June, it's still nearly twice the price paid last summer.

http://www.reuters.com/article/2011/09/14/pioneer-pricing-idUSS1E78D0Y120110914

Sep 14, 2011; By Ernest Scheyder, REUTERS

Pioneer plans to raise corn, soy seed prices * Plans to raise prices in mid-single digit range

* Took share of U.S. corn, soybean market

* Not seeing insect resistance to Herculex product

NEW YORK, Sept 14 (Reuters) - DuPont's (DD.N) Pioneer seed unit plans to raise prices in the mid-single-digit range next year as it takes U.S. corn and soybean market share from Monsanto Co (MON.N) and other rivals.

The price increase would be in line with a similar move the company undertook for the 2011 North American planting season and comes as corn prices Cc1 sit near all-time highs.

Even as flooding, drought and other weather phenomena have hurt parts of the U.S. corn crop, farmer income has continued to rise, buoyed in part by the high corn prices.

That has only increased the appeal for Pioneer's genetically modified seeds, which help farmers fight insects and boost yields, among other benefits.

"In 2011, we met our expectations on price and at the same time delivered market share growth," Paul Schickler, Pioneer's president, said in an interview at Reuters offices in New York. "As we look to 2012, we would expect the same combination to occur."

Pioneer's seeds yielded a bigger share of the U.S. corn and soybean market in 2011, though exactly how much won't be known until final U.S. Department of Agriculture figures are released in January, Schickler said.

In 2010, Pioneer had 32 percent of the U.S. soybean seed market and 35 percent of the U.S. corn seed market.

Monsanto, one of Pioneer's largest rivals, has had problems recently with corn pests that appear to be growing resistant to the company's popular corn seed product that is genetically engineered to protect against insect damage. [ID:nN1E7870O7]

Herculex, an insect-resistant product that Pioneer developed with Dow Chemical's (DOW.N) DowAgroSciences unit, is so far working as designed, Schickler said.

"We have not seen evidence of insect resistance," he said.

Pioneer's rivals include Syngenta (SYNN.VX) and BASF (BASFn.DE).

The September issue of the SUGAR AND SWEETENERS OUTLOOK is available in PDF format. You are able to view this publication at: http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1386 Acrobat Reader 5.0 or higher is required to view and print this document. To download and get help using the Adobe Acrobat Reader, please go to: http://www.adobe.com/products/acrobat/readstep2.html The next issue of SUGAR AND SWEETENERS OUTLOOK will be released on October 17, 2011. This report examines world and U.S. production, consumption, trade, stocks, and prices for beet and cane sugar, and high fructose corn syrup.

http://www.capitolweekly.net/article.php?xid=zztxg5cuy5h6ow

09/15/11; By John Howard, CAPITOL WEEKLY

At the heart of agriculture is the struggle for water North and south, California farmers struggle regularly to get enough water to nourish their crops. But even after a wet winter that left reservoirs full and rivers swollen, the fundamental question remains: How can a reliable supply of water be assured season to season to feed a state of 38 million people?

Not easily.

Largely dependent on fickle supplies, California’s farmers run up against nature, politics and the law to irrigate their fields. They also face each other, as those with senior water rights have priority over those with rights that are lower down the food chain.

In dry years – and most of them have been dry until recently – the amount of flowing water available is down, while options to get more water, such as from the ground, may be limited.

In wet years, short-term water is available but other problems arise. “We rely on snow melt,” said Burt Bundy, a Los Molinos farmer with orchards, a catfish farm and beef cattle. “But we don’t have any storage. The alternative to some people is pumping groundwater, but that is kind of an unknown here,” said Bundy, a former Tehama County supervisor.

Down south the situation is different, although the ultimate issue of water availability is the same.

The chokepoint is the Sacramento-San Joaquin River Delta east of San Francisco, the vast estuary and marsh crisscrossed by aging levees and dotted with farms and small towns. Through the Delta, water flows from the north and east and heads south to state and federal pumps that suck the water up and push it ultimately into the California Aqueduct. About half of the state’s drinking water flows through the delta.

There are myriad issues in the fragile delta. Except for the seven-year period from 1928-1935, the delta reportedly is at its saltiest level in thousands of years, experts say. The pumps create reverse flows, confusing fish, or suck the fish into the machinery, killing them. The flows through the delta can be slowed, or even stopped, building stagnation and bacteria that are difficult to remove.

Court-ordered and regulatory protections for the delta’s environment require water to be retained – water that otherwise could be used for growing crops. Environmentalists believe that the Delta’s unique ecosystem would be devastated without controls. For farmers, it seems as if the rules are tilted against them, although those in the delta have the most senior water rights in the state.

But whether farmers rely on state or federal water contracts, or whether they rely on water purchased through exchanges, the bottom line is that farming is chancy.

“The farmers are very uncertain about their supplies, even if the dams are full,” said Assemblyman Jim Nielsen, R-Gerber. “There has been no new development of surface storage or underground storage. The whole debate has been over the sharing of scarcity, with the environmental use of water having a vastly superior right to the human use of water.”

Adding to the uncertainty is the water needed to meet environmental regulations.

“The immediate concern is how much more will be needed for environmental flows in the delta, especially if there is an alternative conveyance, such as a canal, a tunnel or whatever. What flows will be required out of the north?” said Tim Johnson, CEO of the California Rice Commission, which represents some 2,500 farms on 550,000 acres, most north of the delta. Johnson noted that his members are crucial to dozens of species, including the birds along the Pacific Flyway.

“So what is the impact on the ecosystem in the Sacramento Valley? It could be significant,” he added.

Surface storage – a euphemism for reservoirs – is anathema to most environmentalists, who believe the huge projects disturb the environment, waste resources and in the end don’t provide more water, anyway. Better alternatives include conservation and tight groundwater controls, they note.

But one fundamental problem in the state is that, on the natural, there is not enough water to go around for everybody. Some farmers see reservoirs as an obvious way to store water in wet years for use in dry years.

Down the Valley, the Westlands Water District – the largest irrigation district in the country – serves more than 700 farms and represents perhaps $1 billion annually in farm receipts, about a fifth of the cash yield in Fresno County, the nation’s richest agricultural county.

Westlands uses entirely federal water through the Central Valley Project, nearly 1.2 million acre-feet annually, so what happens in the delta directly affects Westlands. And Westlands believes their flows are pinched by environmental regulations.

The 600,000-acre district has seen the amount of water that it is contracted to receive through the CVP drop dramatically over the years. During 1978 through 1990, the average was about 92 percent of their allocation. Since then, the proportion has steadily declined. In 2009, the allocation had dropped to 43 percent. According to Westlands, the decline reflects court and regulatory decisions to divert water to protect fish, including winter-run salmon and the delta smelt, and to restore fish habitats.

“The key point is that the unreliable water supply is due to the ESA (Endangered Species Act) laws that have gone into effect,” said Westlands spokeswoman Gayle Holman. “If there weren’t as many environmental regulations in place, we could have 15 percent more. Even in this record year, we have had flood control measures, reservoirs across the state are full and we have historical highs, but we are only allocated 80 percent. And that’s because of the environmental rules that protect fish species,” she said. “That is not a sustainable water supply to enable growers to continue providing the water that their crops need.”

Although Westlands has other issues unrelated to the Endangered Species Act – drainage problems and land out of production, for example – and it is not high on the CVP’s water-delivery priority list, the district believes environmental rules are particularly troubling.

But Westlands doesn’t get a lot of sympathy from environmentalists, or from the farmers in the Sacramento Valley and points north, where the water the southern district wants will come, in the end, from the northern water. “They don’t get full deliveries all the time, in fact they never get them,” noted Ron Stork of the Friends of the River. “There is just not enough water to go around to meet all the demands of the San Joaquin Valley. They are attempting to rewrite the rules for folks who currently have a higher priority than Westlands.”

“The water equality and environmental restrictions are meant to protect the delta and the ocean fisheries, too, which is a food-producing industry,” he added. “It is not an accident. Westlands was the last major CVP contractor to come on line. It is at the end of a long chain, and that means others with a higher priority get their water first.”

If too much gets diverted from the north to the south, the north could be forced to pump it out of the ground. “Pretty soon, you end up with short supplies, and you don’t want that to happen,” Bundy said.

In the delta, the water flows are particularly critical for the Contra Costa Water District, the only district in California that gets all of its water from the delta.

“The main issue of water in this state has always revolved around the right to take water out of Northern California and send it to another area, and the protections that are required for the areas of origin,” said Greg Gartrell, the district’s general manager.

“The best solution is going to be a negotiated one, not an imposed one, and a modest one adequate to what is needed to protect the species and people’s water supplies,” he added.

http://beta.apk-inform.com/en/agronews/112469#.Tn6FYdTq6XE

9/16/11; Agronews

As of September 1, Russia increased grain production by 44% compared to last year – Rosstat As of September 1, 2011, agricultural enterprises of all categories in the Russian Federation (agricultural organizations, farmers and population) produced 64 mln tonnes of grains in bunker weight, an increase of 44.4% compared to September 1, 2010, declared the Federal State Statistics Service (Rosstat).

Agricultural enterprises, which cultivate 74.2% of sowing areas of grains and leguminous crops in the country (excluding maize), harvested grains throughout 60.5% of the general sowing areas (52.3% on the same date in 2010). Taking into account the summer losses of crops sowings and usage for fodder aims, agricultural enterprises still had to harvest nearly a third of the sowing areas of grains and leguminous crops (excluding maize).

Agrarians harvested flaxseed throughout 58.4% of the planned areas as opposed to 45.1% in 2010.

The North Caucasian and Southern Federal Districts harvested grains and leguminous plants throughout 92.4% and 92.2% of the areas respectively, the Central District - 86.9%, the Volga and Far East Districts - 69.1% and 68.9% respectively, the Northwestern District - 62.6%, the Urals District - 15.5%, the Siberian District - 14.4%.

http://www.agweek.com/event/article/id/19110/

September 19, 2011; By: Mikkel Pates, AGWEEK.com

A prediction on American Crystal’s lockout situation

FARGO, N.D. — I’ve often been asked what I think the future of the labor lockout between American Crystal Sugar Co. and the Bakery, Tobacco Workers and Grain Millers International Union locals. So here’s what I think.

First, Crystal long has been an ally of this union and vice versa. “These are OUR workers,” said one Crystal administrator early in the process. This hasn’t stopped the company from being firm in its position to change the contract. But it still is true.

Second, costs of health care have gone up 15 percent annually. This particular union has been especially effective at making sure the company covers its workers as part of a comprehensive contract. But the union also makes the point that Crystal has been successful, financially, despite this increase.

Third, this union has had strong language that protects the position of the longer-term employee. That is an issue that other industries — even journalism — have had to grapple with. Some younger more tech-savvy people in journalism may rise to levels of grandeur in the editorial ranks, while other older luddites remain staff writers — or columnists. I am sure the union is considering this. I am not smart enough to say whether Crystal is union-busting (the union’s line) or not (the company’s line).

Fourth, it is the company owners — the shareholders, represented by their elected board members — who set the overall strategy for companies. This especially is evident in cooperatives such as American Crystal Sugar Co. It is this board that reviews the reports that lead to company managers getting 6 to 8 percent annual salary increases while lower-paid laborers get 2 percent annually. It is the board members who decide whether they want executives who are cultivated internally or selected from outside the company. It is these folks who determine the triggers that allow a president of the company to get $1.9 million in an annual compensation. It is the shareholders who have seen the annual beet payments continually look healthy and their beet stock rise, so that the executives can receive this kind of compensation.

The union workers, while important in the whole process, have skills that are not the same as company managers. I wonder if the company hasn’t also studied what welders, electricians and rest are being paid in a community, but the answer apparently isn’t the same as the study regarding executive compensation. Apparently, the farmer/shareholders, their boards and the managers of the company simply don’t want a compensation package — pay, benefits, rules — that they consider to be more than they need to offer.

But on to the prediction: I think the company has planned for this confrontation for a long time. It has its replacement workers (company term) or scab (union term) program for some period of time. I think the period of replacement workers will last at least through the pre-pile harvest at the end of September.

To make their point, the workers will have to prove that they can handle the 24-hour, full-scale harvest conditions that start Oct. 1. I think they’ll need to do that for a period of weeks — maybe a month or more. I don’t know what they’re paying these folks, but I’m betting they’re paying a premium to get people in for this period. They’ll have to do it without major safety or other processing incidents.

I think the issue will get solved before Thanksgiving, when the families of the farmer/shareholders have to rub shoulders with their relatives who work in the factories. I think the holidays will be especially uncomfortable in rural places such as Drayton, N.D., and Hillsboro, N.D., where unemployment benefits have not been granted, but also in Crookston, Minn.

Who will have blinked? That depends.

http://www.iscnewsroom.com/2011/09/20/september-wasde-update/?utm_source=rss&utm_medium=rss&utm_campaign=september-wasde-update

Sep 20, 2011; by Frank Jenkins of the Jenkins Sugar Group, Imperial Sugar Newsroom

September WASDE Update The following is an analysis of the September 2011 WASDE report provided by Frank Jenkins of the Jenkins Sugar Group.

The USDA released updated supply and demand data for the US and Mexican sugar markets. The report showed an ending stocks/use ratio of 15.2 % for 2010-11, down from 15.5 % in the August report and 9.8 % for 2011-12, down from 11.7 % in the August report. For 2010-11, the estimate of the TRQ shortfall was increased by 40,000 tons, dropping the import figure to 3.786 million tons and total supply to 13.230 million tons. For 2011-12, the beet crop estimate was reduced by 175,000 tons to 4.575 million tons. Since the July report, the 2011-12 beet estimate has been reduced by a total of 225,000 tons. There are issues to keep in mind – the timing of the harvest and the condition of the crop. All August/September 2011 production is counted in the 2010-11 crop figure. Today’s estimate includes 300,000 tons of new crop production in 2010-11. The 2010-11 crop yielded an estimated 425,000 tons of August/September 2010 beet production.

US beet crop: A look at crop progress and condition reporting as of Sunday is enlightening. In Minnesota, only one percent of the crop had been harvested as of Sunday, down from nine percent last year and five percent on the five year average. In North Dakota, the crop was two percent harvested, compared to nine percent last year and six percent on average. In light of this, we are surprised that the 2010-11 crop was not reduced to some extent – the estimate has been fixed at 4.800 million tonnes

since November of last year. As noted, the estimate contains 300,000 tons of August/September beet production. United Sugars only began the pre-pile harvest last week and is reportedly harvesting just enough beet to keep those factories which have opened up and running. While yields vary widely on US beets, Minnesota and North Dakota represent over 57.5 % of US planted beet acreage and over 57.1 % of forecast harvested acreage, it seems reasonable to assume that roughly 200,000 tons less sugar has been produced from beet than last year through Sunday. Conditions are good for harvesting, but that is a lot of ground to make up in 19 days. This has more to do with which year the production should register as opposed to the overall size of the new crop.

As we have stated, the condition of the new crop looks satisfactory – until compared with its predecessor. This year’s condition follows, with the prior year in parentheses. In Colorado, the crop was rated one percent very poor (none), three percent poor (two percent), 31 % fair (seven percent), 47 % good (71 %) and 18 % excellent (20 %). In Minnesota the crop was rated five percent very poor

(none), 13 % poor (two percent), 33 % fair (five percent), 40 % good (57 %) and nine percent excellent (36 %). In North Dakota, as of Sunday two percent of the crop was rated very poor (two percent), eight percent poor (two percent), 26 % fair (11 %), 57 % good (48 %) and seven percent excellent (37 %). While the 225,000 ton reduction in the new beet crop looks quite reasonable at this point, we think it makes sense to shift 150,000 tons of the 2010-11 beet supply out to the 2011-12 year.

Mexico: Another crop which merits attention is the 2011-12 Mexican crop. Conditions have been challenging, though conditions have improved with regard to rainfall. The USDA estimate for 2011-12 shows a 5.650 million metric tonne Mexican crop – a 155,000 tonne increase over the 2010-11 crop. While much remains to be seen regarding the new crop in Mexico a combination of weather events have stressed, consensus from sources in Mexico is that 5.0 million metric tonnes “as made” is a good working number. This equates to 5.350 million metric tonnes raw value. As our adjusted Mexican S&D indicates, this will only allow for Mexican exports to the US of 848,000 metric tonnes, or 935,000 short tons. Two caveats: The S&D assumes some rebuilding of stocks in Mexico, but the 953,000 tonne ending stock figure is barely sufficient to bridge to the new crop. Secondly, HFCS consumption appeared to have peaked at roughly 1.70 million tonnes sugar equivalent. Should Mexico’s bottling industry actually move beyond 50 % HFCS as has been suggested, the parameters can change quickly.

Consumption: USDA Sweetener Market Data for July shows Total Sugar Use for 2010-11 up 3.8 % year-on-year through 10 months. Deliveries for human consumption are up 2.1 % through 10 months. Total use could moderate somewhat in the next few months, but the main components of the data set – deliveries by beet processor and deliveries by cane processors and cane refiners – are stable, mature data sets. The estimate of imports for direct distribution is less stable and subject to swings and adjustments. Assuming that total food use finishes the year 2.5 % up on 2009-10 at 11.600 million tons, this would remove 115,000 tons of sugar from 2010-11 ending stocks. If 2011-12 follows with a more modest 1.5 % increase in demand (population growth is nearly 1.0 %) total use in 2011-12 would come in at 11.656 million tons.

What this means: By way of disclaimer, this report has been delayed mainly because the net result of the above is a supply and demand tight enough that we spent hours trouble shooting the numbers and trying to justify a more moderate S&D. Feedback from trusted sources served to give us confidence that our S&D is worthy of consideration. One trusted source in the beet industry even suggested that our beet estimate between the two years is overestimated by 150,000 tons. It is very early and every aspect of the balance sheet will evolve over time, but we believe that the figures shown here are a good starting place. The bottom line is a 4.19 % ending stocks/use ratio for 2011-12. In order to accommodate a 14.5 % stocks/use ratio for 2011-12, additional supply of 1.100 million short tons will be needed. Unless the Mexican bottling industry is willing to go well beyond 50 % HFCS in its blend and is able to find supply and work out the logistics of ramping up, Mexico is not likely to solve much of the US deficit. Thus in the 2011-12 program year, the USDA will be called on to provide additional supply equating roughly to the minimum quota in a timely fashion. The cane refining industry will be called upon to replace supply lost to the late, light beet crop, which will likely exacerbate the chronic lack of liquidity in terms of price cover in the #16 futures for all contracts from November’12 through May’13, and likely for the third-quarter positions as well.

Given the fact that the 2012 #16 futures have been above 30.00 for almost a year and between 35.00 and 41.00 for the past six months, it is reasonable to assume that the domestic cane producers are extremely well sold – particularly given that we have not even entered the harvest season. While we will undoubtedly see some soft spots, we see no reason to believe that raw – or refined – pricing in the US will be any softer than it was in 2010-11. And it will take a proactive, aggressive approach by the USDA to preclude prices from moving to high tier replacement levels.

http://www.mlive.com/news/bay-city/index.ssf/2011/09/sugar_beet_crop_not_expected_t.html

September 21, 2011; By Holly Setter | Booth, MLive.com

Sugar beet crop not expected to meet last year's, but still ahead of the curve

MONITOR TOWNSHIP — Trucks loaded down with sugar beets have begun to make their way to Michigan Sugar’s processing facilities, marking the start of what officials say could be a very good year.

Paul Pfenninger, vice president of agriculture for Michigan Sugar, said the cooperative began processing early deliveries of sugar beets last Wednesday.

“Basically, we’re only pulling in what we can use right now,” he said. “We have received just over 107,000 tons to date and all of those will be sliced and processed this week.”

He said they are pulling beets from some of the lower-performing fields for early processing while allowing others a little more time to mature. Michigan Sugar growers are anticipating a yield of 24.6 tons per acre — shy of last year’s 27.5 tons per acre, but still a good crop, Pfenninger said.

“I would say overall, we’re cautiously optimistic about this year’s crop,” he said. “We’d like to see some sunny days and cool, damp nights this fall.”

Early deliveries began sooner than normal again this year, although they didn’t quite match last year’s start. Pfenninger said they don’t have a lot of data to compare the early crop to because it’s coming in sooner than before.

The bulk of the beet harvest will start in late October, when cooler temperatures allow Michigan Sugar to store beets long term.

“We’re looking around the 20th or the 24th as the targeted date for open piling,” Pfenninger said. “That is when we’ll turn everybody loose.”

He said they have to wait that long because soil temperatures need to be around 55 degrees in order to reduce the risk of spoilage in the beet piles.

http://tcbmag.blogs.com/daily_developments/2011/09/fed-agency-sides-with-american-crystal-in-lockout-dispute.html

Sep. 29, 2011; by Christa Meland, Twin Cities Business

Fed. Agency Sides With American Crystal in Labor Dispute The National Labor Relations Board dismissed all four complaints filed by the union that represents workers who were locked out last month by American Crystal Sugar Company.

The National Labor Relations Board (NLRB) sided with American Crystal Sugar Company in its dispute with 1,300 union workers that it locked out on August 1 after they rejected a new labor contract offer.

The Bakery, Confectionery, Tobacco Workers and Grain Millers Local 167G—the union representing the workers—filed four complaints alleging that American Crystal failed to negotiate in good faith prior to the lockout and violated the National Labor Relations Act.

The NLRB dismissed three of the claims on September 9 and dismissed the final claim earlier this week.

In a Monday letter sent to an attorney representing the union, NLRB Acting Regional Director James L. Fox said that his organization’s investigation found that American Crystal clearly laid out its objectives when bargaining began and explained its proposed changes to the union.

The union “repeatedly refused” to consider American Crystal’s proposals and “made virtually no counterproposals” to try to address the company’s objectives, the letter said. Additionally, American Crystal’s last two proposals before the lockout contained “significant movement” and included “significant concessions” on “non-economic items.”

“Throughout the bargaining process, we have committed to good-faith negotiations in the interest of reaching a fair agreement with our employees,” Brian Inguslrud, American Crystal’s vice president for administration, said in a statement. “The National Labor Relations Board’s dismissal of the union’s charges clearly affirms that we have acted with transparency, clarity, and willingness to compromise.”

John Riskey, president of the union representing the workers, told Minnesota Public Radio (MPR) that the union will appeal the NLRB’s ruling.

Union spokesman Mark Froemke told MPR that he wasn’t surprised by the ruling and said there’s been no move to resume contract talks. “We surely hope as the union that American Crystal and us could get back to the table,” he told the news organization. “That’s what [we’ve] strived for since the first of May when we started the negotiation process.”

The lockout is reported to be one of the largest labor stoppages in Minnesota in recent years.

To read more about the labor dispute and the events leading up to the lockout, click here.