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China Needs Larger-Scale Farming for Food, Crop Security - Report

 

 

 

DJ LIVESTOCK HIGHLIGHTS: Top Stories of the Day

 

Curt Thacker - Dow Jones Newswires

via Agriculture.com - Jan 31, 2013

 

TOP STORIES

 

China Needs Larger-Scale Farming for Food, Crop Security - Report

 

China must get farmers working larger-scale farms to ensure food and crop security, China's state radio reported the State Council as saying Thursday. The government has to accelerate land transfers to support growing important crops, Agriculture Ministry Chief Economist Bi Meijia said in the report without elaborating. It must also watch carefully investment by industry in agriculture to ensure the agricultural sector isn't harmed, the report on the council's proposal said.

 

STORIES OF INTEREST

 

Australian Agricultural Swings to Loss on Indonesia Impact

 

SYDNEY--Australia's largest beef producer said it swung to an annual loss after a slump in live-cattle exports to Indonesia sent beef prices plunging and devalued the company's property assets. Australian Agricultural Co. (AAC.AU) Thursday reported a loss of 8.4 million Australian dollar (US$8.7 million) in calendar 2012, which the company adopts as its financial year. That compares to a A$10.5 million profit in 2011. The loss followed a sharp drop in the value of the company's properties in the Northern Territory after the Australian government suspended live exports to Indonesia in 2011 and the country later halved its import quotas.

 

Hillshire Brands 2nd-Quarter Profit Drops; Raises Outlook

 

Hillshire Brands Co.'s (HSH) fiscal second-quarter profit fell 86% from the year-earlier period that included a hefty contribution from discontinued operations, while revenue edged up. The company raised its full-year earnings estimate to between $1.60 and $1.70 a share, from its previous view of $1.40 to $1.55 a share. Hillshire also guided for slightly positive sales growth for the year, though it expects commodity-input costs to become more challenging as the calendar year progresses.

 

THE MARKETS:

 

Cattle Trading Near Done in South, Waiting to Start in North

 

Cash-cattle trading from Kansas to Texas may be nearly done for the week after light to moderate sales developed there on Wednesday at mostly $1.25 a pound on a live basis, up three cents from a week ago. The day's trading volumes were estimated around 20,000 in Kansas and about 4,500 in Texas. Some late-day sales may not have been reported yet so the tallies could grow a bit more. There may also be a few additional deals done throughout the day and/or on Friday that could add to the weekly totals. The cash market in Nebraska has been quiet so far but some trading may develop there during the day.

 

Cash-Hog Prices Seen Mostly Flat to Firm

 

The Midwest direct-hog markets Thursday are predicted to be mostly flat to firmer in a few locations as some packers need additional animals to fill their weekend slaughter schedules and all plants will be adding to their inventories for next week. Transportation of livestock to processing plants was hampered in some areas of the western corn belt Wednesday due to blowing snow which contributed to a reduced slaughter for the day estimated at 417,000 head. Cold brisk winds in the northern portions of the western corn belt could limit selling interest for immediate shipment among producers there Thursday. Actual temperatures near zero degrees Fahrenheit and wind gusts of 15 to 25 miles per hour could cause producers to hold off selling for now rather than open the barn doors for loading and allowing the cold air to enter, livestock dealers and market managers said.

 

more

http://www.agriculture.com/markets/newswire?page=story&id=8412447

 

 

Future Profits? Think China

 

By: Ed Clark, Top Producer Business and Issues Editor

via AgWeb - January 30, 2013

 

During the next decade, a country some 7,000 miles away will have more to do with your profits than any other factor. Through 2020, demand from China is mostly a good-news story; there are some caution lights at the margins—economic and political.

 

The numbers are nothing short of phenomenal: 63% of U.S. soybean exports go to China, or more than one out of every four bushels produced. "During the last decade, Chinese imports have gone up so fast that the rest of the world has gone down," says John Baize of John C. Baize & Associates, an international agricultural trading and policy consulting firm. "China has outbid the rest of the world."

 

As late as 1995, China was a net exporter of soybeans. This year, USDA estimates exports to China of 63 million metric tons (MMT). "That will grow to 80 MMT by 2020 at the latest," Baize says. China’s demand for soybeans is growing at a rate of 2 to 3 MMT per year.

 

Is Corn Next? China has given up trying to be self-sufficient in soybeans, but that isn’t the case for corn and wheat—primarily for political reasons. However, corn could give China trouble and it might have to turn to the U.S. for more supplies unless it allows global seed companies to sell genetically modified seed to its farmers. China has been dragging its heels, but aside from  boosting imports, there is no way it can obtain the increasing amounts of corn it needs for human, livestock and industrial needs, Baize explains.

 

Darrel Good, a University of Illinois ag economist, disagrees. "They have put significant effort into increasing production with hybrids and fertilizers," he says. "They also carry large reserves of corn." In individual years when China has a poor crop, it might import significant amounts of corn, but such imports will be inconsistent, Good says.

 

DDGs Fill Containers. China has become a major importer of dried distillers’ grains (DDGs), Good says, so much so that the Chinese government has accused the U.S. of dumping DDGs onto the world market. China largely imports DDGs so containerships that delivered manufactured goods to the U.S. don’t have to come back empty.

 

Baize does not see a slowdown in the increasing demand for corn and soybeans to fuel China’s plan to grow its livestock industry.

 

While Baize is bullish long-term on Chinese demand, the nation will have to work through two problems. First, it faces huge internal debt, some of which will never be repaid, as the loans funded projects that have little chance of success. Second, the nation must work through its political problems. "People are fed up with corruption and the abuse of power," Baize says. Last year, there were more than 200,000 protests.

 

Baize predicts economic growth of 7.5% to 8% this year, which is strong but not the double digits realized in much of the last decade.

 

Good does not expect the growth in soybean exports to China to continue at the torrid pace of the past 10 years—on the order of a four- to fivefold growth. However, he does not foresee exports to China declining, either. He believes more moderate growth will continue between now and 2023.

 

Baize and Good are not the only ones bullish on China...

 

more

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