Index
Accuracy of USDA Crop Production Forecasts
Drs. Darrel Good and Scott Irwin, University of Illinois, released a report 'Understanding USDA Corn and Soybean Production Forecasts". The report concludes that with the exception of August corn crop production data and August and September soybean output data, USDA crop production forecasts are more accurate than those of private crop forecasters. Over the period 1970-2002, USDA corn production forecasts are more accurate more often than private forecasters with the exception of the August forecasts since the mid-1980's. The report also found that USDA corn production forecasts have the largest impact on corn futures prices in August, but that recent price reactions have been larger than historical reactions.E.U. Lowers Cereal Land Set-Aside
The E.U. is proposing to reduce the land set-aside ratio for the 2004/05 crop year in order to increase E.U. cereal production by 7 million metric tonnes (mmt). The mandatory set-aside of 10% of arable land in order to qualify for E.U. subsidies will be reduced to only 5% because of the severe drought experienced in the summer of 2003. E.U. grain production has been sharply reduced by drought with soft wheat production down 11.8% at 82.87 mmt, corn down 21.1% at 30.5 mmt, and barley down 4% at 45.9 mmt.
Chinese Corn Stocks-To-Use Ratio Continues To Drop
Recent USDA statistics suggest the Chinese corn stocks-to-use ratio has continued to slide lower since peaking at 85% in 1998/99. This meant that in 1998/99, there was enough corn left over at the end of the crop marketing year to cover 85% of the demand for the next crop year. However, by 2002/03 data suggest corn stocks-to-use ratio had fallen to 30%, with 2003/04 projected at 18%, and 2004/05 projected at only 12%. The USDA suggests Chinese corn stocks have been cut back significantly as their production flattened out in 2003 while domestic demand increased. If the USDA is correct, China may have to put the brakes on their aggressive corn exports. This could be long-term supportive for corn pricing in Chicago futures markets.Chairman Leaves WTO Agriculture Negotiations
On November 6, Stuart Harbinson, Chief of Staff to the World Trade Organization and Chairman of the WTO's agriculture negotiations, announced he was stepping down as the head of the agriculture talks after 18 months. The Doha Round of WTO talks ground to a screeching halt following the break-down in negotiations at the Cancun, Mexico discussions in September. Harbinson had tried mightily to bridge the gap between the conflicting positions (especially on agricultural trade, export subsidies, and trade distorting domestic agricultural support) held by the U.S., the E.U., and the newly structured grouping of developing nations headed by Brazil, India, and China. When meaningful reform in agricultural trade and subsidization proved too elusive, Harbinson decided to step aside saying, "we are now entering a new phase in the agriculture negotiations and I think a new chairperson may be better able to bring the fresh perspective which we now need."U.S., Mexico, and Canada Reach Agreement on Biosafety Protocol
At the end of October, the three NAFTA partners reached agreement with respect to documentation requirements of the Cartagena Protocol on Biosafety (CPB) pertaining to the transboundary movement of living modified organisms (LMOs) intended for direct use as food or feed, or for processing. Although neither the U.S. nor Canada has ratified the CPB yet, Mexico has. Article 24 states that all transboundary movements of LMOs between Parties and non-Parties must be consistent with the objectives of the CPB. Parties and non-Parties may establish arrangements to govern such trade especially as falling under Article 18.2 (a) of the CPB (shipments of LMOs intended for direct use as food or feed, or for processing). The three NAFTA parties agreed that Article 18.2 (a) of the CPB be implemented as follows:Bliss Baker Leaves Canadian Renewable Fuels Association
After 3 years heading the Canadian Renewable Fuels Association, Bliss Baker has taken on the responsibilities of Chief of Staff for the Honourable Rick Bartolucci, Minister of Northern Development and Mines in the new Ontario government. Bliss has represented the CRFA extremely well during his tenure, and played a large role in putting ethanol on the "radar screen" of bureaucrats and politicians across Canada. He was successful in getting ethanol recognized as a key part of the solution for meeting Canada's Kyoto Accord greenhouse gas reduction commitments. As a result of his efforts, $100 million in Federal government funding has been earmarked in the recently announced Ethanol Expansion Program to assist ethanol plant construction. Bliss will be missed. The OCPA wishes him all the best in his new position.Ottawa Announces Ethanol Expansion Program
On October 20, the Government of Canada launched the Ethanol Expansion Program designed to assist in the construction of new ethanol plants. As part of Ottawa's plans to achieve Canada's Kyoto Accord greenhouse gas emission reduction targets, $100 million will be available over the 3-year life of the program. The first $60 million will be available in the first round of funding, and $40 million in 2005. Ethanol projects submit proposals for funding by November 19, with successful project funding award announcements to be made by December 19. It is anticipated that there could be 4 proposals from Ontario, 1 from Quebec, 1 from Manitoba, 2 from Saskatchewan. After awarding, successful applicants have 90 days in which to finalize financing for their project and commence construction. Proposals will be assessed based on a criteria developed and administered by a committee headed by Natural Resources Canada (NRCan). In the selection process, points are awarded for, among other things, the project's perceived ability to reduce greenhouse gas emissions. Grain-based ethanol projects receive 5 points; cellulosic-based ethanol projects receive 25 points. The assumption is that cellulosic ethanol provides enhanced GHG reductions because the process byproducts are recycled (burnt) by the ethanol plant to provide heat and energy. Grain ethanol by-products are a saleable commodity (distillers grains as livestock feed). This preferential treatment in favour of cellulosic ethanol may not be a factor in the first round of proposals because cellulosic ethanol technology is still in development with no commercializable projects in the forseeable future. Of course, in subsequent rounds, this built-in bias might come into play. Interestingly, NRCan is an investor ($11.6 million already invested) in logen, an Ottawa-area enzyme developer and marketer passionately pursuing cellulosic ethanol from wheat straw, corn stover, wood chips, municipal waste, and other biomass sources.
New Corn Ethanol Project Announced In Michigan
Canadian Biotech Regulatory Pilot Project Launched
The Canadian Food Inspection Agency and Health Canada launched a pilot project to post safety assessment information on biotechnology-derived products on the Internet. Member companies of CropLife Canada have volunteered to provide information in the form of a "notice of submission" which will be posted to the CFIAs website. The pilot project is an attempt to provide access to information on new biotechnology crop, feed, and food product submissions under review by the federal government in the regulation of novel crops, feed, and foods.Adding Vitamins E And A To Corn
An Agricultural Research Service scientist at the USDA is developing new varieties of corn that have higher levels of vitamin E. Vitamin E is a generic name for naturally occurring compounds called tocotrienols and tocopherols. The gene for the enzyme homogentisic acid geranylgeranyl transferase is responsible for producing a tocotrienol form of vitamin E in cereals. The gene was isolated from barley and transferred into corn. Vitamin E content increased sixfold. Twenty-five percent of North Americans do not get enough vitamin E; some research has shown vitamin E can reduce the risk of heart disease; vitamin E is especially important in the diet of pregnant women for good fetal development; and the crop's shelf life was increased. Vitamin A is essential for vision, cell division and human growth. Beta carotene is converted by the human body into vitamin A. Beta carotene occurs naturally in corn (except white corn) giving the kernel its yellow colour. If corn varieties could be developed that are fortified with enhanced levels of beta carotene, vitamin A uptake could be dramatically improved. This is especially important in those 48 developing countries in sub-Saharan Africa where corn is a staple food. Corn is also a good way to deliver vitamin A because of the presence of fats and oils that help in its uptake in the human body. A current project at Iowa State University is screening existing corn hybrids to identify those that are higher in beta carotene. New varieties with enhanced content will be developed. The project will also identify how and how much of the beta carotene is absorbed by the body and converted into vitamin A.Minor Use Registration For Ultim On Long-spined Sandbur
The Pest Management Regulatory Agency (PMRA) has approved a "User Requested Minor Use Label Expansion" for Ultim 75 DF (rimsulfuron + nicosulfuron) herbicide for control of Long-spined Sandbur on field corn in eastern Canada. Ultim 75 DF herbicide (DuPont Canada) is already labeled on field corn for several grasses and redroot pigweed. This minor use registration is an important addition for those corn producers where Sandbur has become a problem. Ultim 75 DF can be applied as a post-emergent spray at 25 grams activeingredient (one water soluble bag per hectare) at the 1-6 leaf stage of corn and when Long-spined Sandbur is in the 3-5 leaf stage. Ultim 75 DF herbicide must be applied with a recommended non-ionic surfactant as per the main label (Citowett Plus, Agral 90, Ag-Surf, SideKick). Ultim 75 DF should not be applied to field corn within 30 days of harvest. OCPA thanks Dr. Peter Sikkema and Todd Cowan of Ridgetown College, University of Guelph for their work on this project.U.S. Registers New "Stacked" Corn Rootworm And Corn Borer Variety
On November 5, the U.S. Environmental Protection Agency approved a new Monsanto "stacked event" corn variety for use. The product, called YieldGard Plus, is the first genetically engineered crop that has the ability to control two different insect groups. The corn produces two different Bacillus thuringiensis (Bt) proteins, enabling it to protect from leaf and stalk damage caused by insects such as the European corn borer, and from root damage caused by the corn rootworm. The new variety of corn was produced by traditional breeding of previously-approved plant incorporated protectants. The previous varieties are "MON 810" (YieldGard) and "MON 863" (YieldGard Rootworm). The associated Bt proteins are Cry3Bb1 and Cry1Ab.USDA-funded Study Says Resistance To Bt Toxin Absent From Pests
The U.S. National Corn Growers' Association carried the following item. "The NCGA is encouraged by a recent study by USDA-funded scientists indicating insects are not developing resistance to transgenic crops containing Bacillus thuringiensis (Bt). According to an article published in the September 2003 issue of Nature Biotechnology, findings from the study suggest that transgenic Bt crops could enjoy more extended, more profitable commercial life cycles and that the measures established to mitigate resistance before the crops were introduced are paying off. "This indicates that refuges are working in the United States,' said Nathan Danielson, NCGA manager of research and business development. Helen Inman, chair of NCGA Biotech Working Group agreed with Danielson's assessment. "I feel this study indicates producers are following the guidelines of refuge, because if they were ignoring the guidelines, resistance would be developed.' As a result of the study, Danielson noted, there may be a movement to re-examine refuge criteria. "This is good, reproducible research that shows proper stewardship of biotechnology will pay off in biotech's continued effectiveness,' he concluded."
Monsanto Canada Inc. Restructures Business Operations
On November 4, Monsanto Canada announced a restructuring of its Canadian business operations, to concentrate research and development spending and business structure resources on its seeds and biotechnology business, including a refocusing of resources within its Roundup business. Ten percent of Monsanto Canada's employees have been affected through work force reduction.
Nacan to Close Collingwood Corn Wet Milling Plant
Nacan (the Canadian arm of U.S.-based National Starch & Chemical) announced November 4 that it will close its corn wet milling facility in Collingwood, Ontario by the end of December 2004 after 35 years of operation. Processing about 3.5 million bushels of corn annually, Nacan is the only industrial processor of waxy corn in the province (about 1.5 million bushels of waxy corn processed annually). Nacan is a supplier of specialty starches to the paper, cardboard, food processing, food ingredient, and industrial chemical sector.
Ethanol Futures Contract at CBOT
The Biofuel Age newsletter reports "the Chicago Board of Trade is well along in planning a futures market for ethanol, which could start trading some time in 2004. Also under consideration is a crack spread contract (the difference between the value of ethanol and DDGS and corn). Trade in both futures and options would be offered. New futures markets are difficult to start because of liquidity issues early on, but a functioning ethanol future would be of enormous value to the producing industry." Such a futures contract would provide risk hedging opportunities in Ontario as well, but would be complicated by currency exchange rate, basis, and transportation factors just as hedging in corn, soybeans, meal, hogs, etc. is now.
Ethanol Interest Outside North America
Interest in ethanol is not restricted to North America. In fact, Brazil is by far the world's largest producer of ethanol producing about 30 billion litres annually (versus less than 10 billion litres in the U.S.), almost all of it from sugar cane. More than 40% of sugar cane production is processed into ethanol. Brazil is extremely interested in exporting ethanol into the U.S. to supply the rapidly expanding demand. Brazilian sugar cane-based ethanol cost of production is considerably less than in North America, and Brazil claims no subsidies or incentives in support of ethanol production. Brazil claims the U.S. has erected a trade barrier counter to WTO rules because apparently the U.S. levies a high tariff against Brazilian ethanol imports. However, the world's largest ethanol project (Phase 1, 800 m litres; Phase 2 doubling capacity to follow when Phase 1 completed) is under construction in China. Chinese ethanol plants in operation, under construction or nearing construction will produce about 6.75 billion litres per year using 710 million bushels of corn. Ethanol processing on this scale could easily absorb corn China currently exports to markets in South Korea, Japan, and Southeast Asia.
Farmland Values Increase In Ontario
In its Farmland Values report for the fall of 2003, Farm Credit Canada (FCC) reports that "the value of farm land across the country increased during the first six months of 2003, a trend witnessed since January 2000. The largest increase was in Ontario at 3.8 percent with steady increases across the West and in Quebec." The average increase across Canada was 2.3%, which is down from the 2.6% growth in the last six months of 2002. For Ontario specifically, the report comments "over the fist six months of 2003, land values continued to move upward by an average of 3.8 per cent in Ontario, although not across all regions. The eastern sector showed little change. Northern Ontario saw stronger demand partly due to dairy farmers needing to increase forage production in the Thunder Bay and Cochrane areas." The report continues, "New regulations for nutrient management plans were an important factor in continued demand for land in livestock sectors in areas such as Bruce, Grey, Huron, Wellington, Perth, Oxford and Middlesex. Land values were static in most traditional cash crop areas of the southwest due, in part, to a weaker market for tobacco land and reluctance by farmers to buy land after a year where yields and incomes were reduced because of drought. There was weaker demand in many areas of the province for heavy clay soils that are harder to manage. As commuting zones increase in size around urban areas, lifestyle and hobby farmers buying farms for housing often pushed land values higher."
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