Autumn Deluge Destroys More Than $1 Billion Of Delta Crops

October 30, 2009

Weeks of almost-continuous, torrential rains have destroyed over a billion dollars worth of what was originally expected to be a bumper fall crop in the U.S. Delta.

ARKANSAS: “It’s a serious problem right now. At this stage, yield/quality losses for Arkansas ‘ major row crops could easily exceed $650 million,” said Arkansas Farm Bureau President Randy Veach Thursday.

The state has received measurable rainfall every day for the past seven consecutive weeks, preventing fields from drying out, and overripe crops from being harvested. Arkansas farmers still have 85% of their cotton, 61% of all soybeans, 10% of their corn and 5% of all grain sorghum remaining to harvest; at a time when picking is usually of most commodities is already complete.

“We’re going to try to do as much as we can as quickly as we can, but assessing the damage—and what the damage is— does require some time,” said Sen. Blanche Lincoln (D., Ark.), chair of the Senate Agriculture Committee. “I wouldn’t be surprised if all 75 counties in this state are declared a disaster,” thus making producers eligible for U.S. Department of Agriculture emergency loans.

On average, all areas of Arkansas have received 17 inches more rain than normal during 2009. Even with two months left to go, 2009 is already the 11th-wettest year on record in Little Rock , which has been flooded with 62.57 inches of rain. That total will only increase, as the National Weather Service was predicting another 2 of rain for portions of Arkansas, by nightfall Friday.

MISSISSIPPI: Non-stop rains have also taken $371 million from the pockets of Mississippi producers this autumn, according to calculations made this week by the Mississippi State University .

“Total losses for row crops are expected to be around 23% of the potential value of the crop,” said MSU agricultural economist John Michael Riley. With nearly 40% of all fields still standing, soybeans have suffered the worst hit in cash-value hit, losing 30.2% of their expected value, or $212 million in all.

“Half of the crop left in the field is very poor, to possibly a complete loss,” said MSU extension soybean specialist Trey Koger. “Damage estimates for the portion of the soybean crop we last harvested nearly two weeks ago, averaged 8%-15%. Final damage to the state’s soybean crop may reach levels as high as 50%.”

Earlier this month the USDA forecast the Mississippi fall grain harvest at 92.3 million bushels of corn, nearly 83.5 million bushels of soybeans, 16.184 million hundredweight of rice, and 888,000 bushels of sorghum. Economic losses have been measured at $91 million for cotton/cottonseed, representing about 47% of that crop’s original prospective value.

“Environmental conditions in 2009 have proven to be the most difficult that many growers have ever experienced,” said Darrin Dodds, MSU cotton specialist.

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Fall Downpours Causing Major Damage To Unharvested US Grain Crop

October 27, 2009

Guide Rock farmer Jim Richardson says the quality of the 2009 corn crop in the Republican River Valley of Nebraska has now deteriorated to the point where the top 3 inches of unharvested ears are simply rotting off and falling to the ground.

“My neighbor say it’s the weirdest thing you’ve ever seen…they pull into the field with the combine and see all these half-ears laying all over,” he said. “It seems to be connected to variety…and all this rain.”

The variety of moisture-loving pathogens reportedly affecting unpicked U.S. row crops reads like the nutrition label of a Halloween witches brew: mycotoxins, mold, mildew, fungus, and other diseases.

Most sections of the U.S. grain belt have received more than twice as much precipitation as normal this month, causing unprecedented delays in the harvest of the nation’s two-most important cash-crops. The resulting quality degradation is so bad that some producers are harvesting their remaining acreage with a plow, instead of a combine.

“We’ve had 28 inches of rain here since Oct. 1,” southwestern Arkansas grower Jim Caswell told Dow Jones Newswires Monday. “There is a big farmer down here who’s disking under 7,000 acres of corn, because it’s got such bad mold that the elevator won’t take it anymore…and it’d been yielding 185 (bushels an acre).”

Overripe grain in the Delta is under the greatest threat of deterioration, with many fields standing exposed to weeks of nearly continuous rain.

“The longer it’s out in the field, the more likely it will develop grain quality problems, weak stalks or seed quality damage,” said Jim Herbek, grain crops specialist with the University of Kentucky.

Harvest figures released by USDA Monday said half of the nation’s top-producing corn states still had more than 80-90% of their corn and half of their soybeans standing in the field, at a time when some are nearing completion.

“You can’t find a year in USDA’s data (which goes back to 1972) on corn harvest activity that is as slow as this year [20% complete]. Period. That underscores just how tough this fall has been,” said Roger Bernard of Pro Farmer. “In soybeans, the 44% complete on harvest is the slowest pace since 1985 and 1986.”

Harvest season rains have robbed southern soybean growers of what was expected to be a bumper crop.

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Statements from the Federal Reserve

October 29, 2008

Release Date: October 29, 2008

The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 1 percent.

The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures. Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit.

In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate in coming quarters to levels consistent with price stability.

Recent policy actions, including today’s rate reduction, coordinated interest rate cuts by central banks, extraordinary liquidity measures, and official steps to strengthen financial systems, should help over time to improve credit conditions and promote a return to moderate economic growth. Nevertheless, downside risks to growth remain. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

Release Date: October 29, 2008

For release at 3:30 p.m. EDT

Today, the Federal Reserve, the Banco Central do Brasil, the Banco de Mexico, the Bank of Korea, and the Monetary Authority of Singapore are announcing the establishment of temporary reciprocal currency arrangements (swap lines). These facilities, like those already established with other central banks, are designed to help improve liquidity conditions in global financial markets and to mitigate the spread of difficulties in obtaining U.S. dollar funding in fundamentally sound and well managed economies.

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Dearth of Ships Delays Drilling of Offshore Oil

June 19, 2008

By JAD MOUAWAD and MARTIN FACKLER
New York Times

As President Bush calls for repealing a ban on drilling off most of the coast of the United States, a shortage of ships used for deep-water offshore drilling promises to impede any rapid turnaround in oil exploration and supply.

In recent years, this global shortage of drill-ships has created a critical bottleneck, frustrating energy company executives and constraining their ability to exploit known reserves or find new ones. Slow growth in oil supplies, at a time of soaring demand, has been a major factor in the spike of oil and gasoline prices.

Mr. Bush called on Congress Wednesday to end a longstanding federal ban on offshore drilling and open the Arctic National Wildlife Refuge for oil exploration, arguing that the steps were needed to lower gasoline prices and bolster national security. But even as oil trades at more than $135 a barrel — up from $68 a year ago — the world’s existing drill-ships are booked solid for the next five years. Some oil companies have been forced to postpone exploration while waiting for a drilling rig, executives and analysts said.

Demand is so high that shipbuilders, the biggest of whom are in Asia, have raised prices since last year by as much as $100 million a vessel to about half a billion dollars.

“The crunch on rigs is everywhere,” said Alberto Guimaraes, a senior executive at Petrobras, the Brazilian oil company that has discovered some of the most promising offshore oil but has been unable to get at it.

“Almost 100 percent of the oil companies are constrained in their investment program because there is no rig available,” he said.

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Investing: Playing the Brazil Boom

June 10, 2008

New wealth from commodities is fueling growth and expanding the consumer economy. And that presents great opportunities for investors

by David Bogoslaw
businessweek.com

The Brazilian economy is barely recognizable to those who knew it more than five years ago. In those days it was plagued by mountains of debt and boom-and-bust cycles. Now everything is different. Indeed, 2008 is quickly shaping up to be the Year of Brazil.

The economy is ready to burst at the seams—but this time the growth looks sustainable. And foreign investors are taking notice in a big way. Should you join them?

First, it’s worth looking at some telling figures. Brazil’s gross domestic product increased 4.5%, to $1.3 trillion, in 2007, and grew by 5.8% in the first quarter of 2008. The country’s benchmark stock index, the Bovespa, is up 5.9% thus far in 2008.

Brazil is on the right side of the global commodities boom. It has enjoyed a 65% price hike for the high-grade iron ore it sells to steelmakers around the world. In the midst of a staggering increase in world energy prices, Brazil stands ready to capitalize on newly discovered offshore oil deposits that may be part of one of the biggest oil fields in the world. Major credit-rating agencies have given their stamp of approval on its government debt by upgrading the country’s sovereign rating from junk.

What makes the story even more compelling is how Latin America’s biggest economy has largely kept a lid on inflation, even as central banks around the globe continue to battle it. The reason: Brazil’s self-sufficiency in many of the commodities whose price run-ups are causing consumer prices to soar worldwide.

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Keep Drilling

May 14, 2008

IEA: Replacing World Biofuels Would Require 1M B/D More Oil

To replace the global supply of ethanol and biodiesel-based biofuels added to the U.S. and European markets since 2005 would require an additional 1 million barrels of crude oil to be processed per day, the International Energy Agency said Tuesday.

Rising food prices have damped the political will behind biofuel policies, however, the IEA said it was unlikely biofuel targets would be scrapped in the near term.

“It is sobering to realize the amount of oil that would be needed to replace them,” said the IEA.

Global biofuels supply is expected to grow to 1.5 million barrels per day in 2008, said the report.

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Brazil’s Offshore Fields

Zeihan predicts a 2012 start to production at Tupi. Technology needed to tap fields like Tupi, which sit hundreds of miles offshore beneath thousands of feet of rock, sand and salt, hasn’t been developed, he said.

Petrobras, Chevron Corp., Royal Dutch Shell Plc and Norsk Hydro ASA plan to start pumping oil from eight Brazilian fields in the next 2 1/2 years that will produce a combined 1.02 million barrels a day, enough to supply two-thirds of the crude used by U.S. East Coast refineries.

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Brazil’s energy producer Petrobras on $112.7 billion expansion

As a result of these huge finds, Petrobras is looking to expand its infrastructure to meet processing requirements. This week, investment bank UBS estimated that the Tupi and Carioca finds off Brazil would need about $600 billion to develop, a massive windfall for oilfield services companies all over the world.

The offshore fields underpin Gabrielli’s plan to increase output 79 per cent by 2015 to the equivalent of 4.2 million barrels of oil. If the company maintains its current proportion of crude and natural-gas production, it will have about 3.5 million barrels of oil a day to refine.


New Stock Picks

May 8, 2008

Water
NWPX – Pipes
CCC – Purification
INSU – Pipe rehab
LNN – Irrigation for Agriculture

Oil & Gas
CLR – Bakken
KOG – Bakken
ENB – Canadian oil pipeline
NGS – Nat Gas Service Equip (non-conventional production)
SGY – US Oil & Gas Producer
XTO – Oil & Gas Producer
CRZO – Barnett Shale
ATW – Deep water driller
RIG – Deep water driller
PBR – Brazilian Oil Producer

Agriculture/Commodities
MEA – Scrap Metal Recycler
TWI – Ag Equipment
MOS – Fertilizer
POT – Fertilizer
MTL – Russian Mining/Steel

Brazilian Banks (Brazil’s credit rating just raised to investment grade)
ITU
UBB
BBD

Others
ELMG – Wireless Communications/Defense (excellent weekly chart)
VISN – Chinese Mass Transit Ads (IPO off to a very strong start on major growth)
WGOV – Turbine and Electrical Controls for Alternative Energy Generation via Wind/Steam


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