Tag Archives: grain
South Africa Biofuels Seen Raising Sorghum Output Fivefold
By Tshepiso Mokhema – Oct 7, 2013 South Africa ’s plan to source all grain needed for biofuels production locally means sorghum output will have to climb at least fivefold, the nation’s biggest representative of commercial farmers said. Biofuel must comprise at least 5 percent of diesel and 2 percent to 10 percent of gasoline starting Oct. 1, 2015, Energy Minister Ben Martins said in a Sept. 30 Government Gazette. South Africa’s sorghum harvest probably increased 11 percent to 151,064 tons in the season that ended in April from a year earlier, the Pretoria-based Crop Estimates Committee said in its final forecast on Sept. 26. “We need an additional volume of 620,000 tons of sorghum to produce enough bioethanol to meet the 2 percent inclusion rate,” Wessel Lemmer, a senior economist at Grain South Africa, said in an e-mail. That would equate to output of about 771,000 metric tons. “The grains need to be produced locally, providing additional jobs in the value chain.” Forty-seven percent of South Africa’s sorghum, the country’s biggest summer crop after corn, soybean and sunflower seed, is grown in the Free State province, according to the committee. The grain is used as a staple food in some rural communities, livestock feed and to make traditional beer. “ Food security , in terms of availability or affordability, will not be impacted negatively,” Lemmer said. One ton of sorghum produces about 400 liters (106 gallons) to 440 liters of bioethanol, according to Lemmer. Competitive Prices Sorghum futures rose 1.5 percent to 3,350 rand ($333) a ton on Oct. 4 on the South African Futures Exchange, the highest since at least May 2010. They were unchanged by midday today. “The biofuels industry will be able to offer competitive prices for sorghum, enabling producers to plant a profitable crop,” said Lemmer. “This will incentivize producers to increase the production of sorghum.” In August last year, Grain SA estimated sorghum production would have to increase by 600,000 tons. The only available starch crop for bioethanol is sorghum, while for biodiesel soybean, sunflower seed and canola can be used, Lemmer. Corn, one of the country’s staple foods, has been excluded from bioethanol production, he said. To contact the reporter on this story: Tshepiso Mokhema in Johannesburg at tmokhema@bloomberg.net To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net Continue reading
U.S. Farmland Market Cooling Entering Key Auction Season
By Christine Stebbins CHICAGO, Sept 27 | Fri Sep 27, 2013 2:03pm EDT (Reuters) – The red-hot rush for U.S. grain land is cooling after years of record prices, but prime acreage is still attracting top dollar in the heart of the Corn Belt so far this fall, according to land auctioneers. “On higher quality land it’s been pretty strong steady, but on medium and lower quality land we’ve seen some pullback,” said Randy Hertz, CEO of Iowa-based Hertz Farm Management. “There’s a lot of uncertainty out here in terms of what the future holds.” The key season for U.S. farmland sales is October through December, when Midwest and Plains grain farmers are rolling in harvest cash and planning their taxes. Most economists and bankers say it is too early to tell if land values have peaked. “We’ve peaked for right now unless the grain markets rebound sharply, when it might change things and go the other direction. But right now I think is probably a leveling off period,” said Eric Mueller, an auctioneer and broker at Omaha-based Farmers National, the largest farm management company in the country. Recent farmland sales from Ohio to Nebraska have ranged from about $3,000 an acre up to $16,000 for top quality ground. While prices are strong the rate of gain has eased from 2012 when prices jumped 20 percent to 30 percent. “Interest rates are creeping up a little. But, ultimately, I think the biggest factor is grain. There’s still a lot of money out there, but buyers are going to be a little bit less aggressive with the grain markets coming down,” Mueller said. “The sentiment is holding in Nebraska and Iowa.” Corn prices are down 30 percent since last fall on the outlook for a record harvest. But corn revenues this year are still seen strong with higher yields after last year’s drought. “Frankly the last 10 years have been phenomenal. It’s off-the-chart good,” said Brent Gloy, an agricultural economist with Purdue University. “It looks like to me this is the first time we’ve seen some substantial headwinds in the market for a while.” Chicago Board of Trade December corn on March 1 was $5.57, but closed at $4.57 on Thursday. A year ago, the price was $6.20. “If it becomes obvious that corn prices are going to shake out below $4 in the $3 range, we’re at a peak,” Gloy said. “The lower commodity prices are hard to justify the really high land prices we’ve been seeing. If you take high quality farmland in Indiana, if you get much over $10,000 an acre, you’ve got to have cash rents over $300 an acre, in some cases $400 or $500. If corn prices are below $5, it’s going to be hard to pay those rents.” Bankers and economists watch farm land prices closely. Land represents 85 percent of farmer assets – and loan collateral. Federal Reserve banker surveys for the quarter ended in June cited lower rates of gain in land prices. At the same time, bankers cautioned farmers against chasing price dips with borrowed money, dreading another 1980s farm debt crash. “The difference with the 1980s is that 75 percent of land then had mortgages. Today, 25 percent does,” said Jeff Obrecht, an Iowa-based real estate broker with Farmers National. “That makes a big difference. We just don’t have the debt out there that we had. Part of that is lenders are requiring more. If you buy at $10,000 acre, you’re going to have to put $5,000 down.” Auctioneers said that, in recent weeks, more ‘no sales’ have been reported at Midwest auctions as buyers think through revenue, cash and borrowing fundamentals. “When I sold a piece a property two years ago for $14,600 we got there in less than 5 minutes,” said Bruce Huber of Hickory Point Bank in Decatur, Illinois. “Some of these auctions are taking longer, fewer bidders. You can just tell the enthusiasm for the higher prices seems to be wanting yet the prices are still there.” So as land auctions pick up starting in October, auctioneers are expecting some price resilience. “Farmers buy about 70 percent of the farms in the Midwest,” said Hertz. “They’ve got cash, there are record amounts of cash. That cash at a bank or short-term deposits doesn’t pay much – essentially, less than 1 percent. Compare that to a farm that can earn 3-4-5 percent.” (Reporting by Christine Stebbins.; Editing by Andre Grenon) Continue reading
