World Grain - August 2012 - 10

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U.S. drought driving increase in grain futures prices
KANSAS CITY, MISSOURI, U.S. — Amid rapid deterioration of the U.S.’s 2012 corn crop and mounting concerns about the prospective soybean crop, wheat futures prices followed corn and soy complex markets sharply higher in late July causing uncertainty for 2012-13 prices. Market analysts contacted by Milling & Baking News (sister publication to World Grain) described the corn situation as extremely serious but cautioned that many questions about the 2012 supply picture remained unanswered at present. Certain facts are known, though. “First and foremost, it is deﬁnitely bad,” one veteran market analyst said. “If you look at crop conditions as a proxy for bad, it’s bad, or if you simply look at the weather and aridity — the combination of heat and dryness. For corn, it can be warm or hot if you get rains to ‘heal the wounds.’ But this year we have the one-two combo — the worst of the worst. The way the southern Plains looked last year is creeping to all the major growing areas this year. A problem now is the race to who will come out with the lowest number. A couple weeks ago it was 157 bushels per acre. Then it was around 154. Now it’s 137. The lowest I’ve seen so far is 117-130 for a U.S. corn yield. I don’t think we’re there yet.” Drew Lerner, president of World Weather, Inc., said comparisons with earlier drought years such as 1988 are less helpful than they may appear. “It’s a serious drought, but one thing we don’t know is how well the new hybrids are handling it,” he said. “In the ﬁelds, the corn looks terrible, but there is a lot of variation within one part of a ﬁeld to others. “No one is saying less than 10% of the crop is lost, and most are estimating 15% to 20%,” Lerner said. “Some are saying the worst ever. I don’t think it will be as bad as 1988 when all is said and done, but from a meteorological point of view it will be the hottest we have had and the driest in quite a few areas.” The Crop Progress data from the U.S. Department of Agriculture (USDA) for the week ended July 29 indicated that in the 18 major corn-growing states, only 24% of the corn crop was rated good to excellent, down from 26% the previous week. A year ago in the same week, 62% of the crop was rated good to excellent and only 14% was very poor to poor. As of July 29, a total of 29% of the soybean crop was rated good to

excellent in the 18 major soybean-growing states. In the same week a year ago, 60% of the soybean crop was rated good to excellent and only 12% was very poor to poor. In contrast to corn and soybeans, the condition of the spring wheat crop remained strong. The USDA said 63% was in good to excellent condition in the six major spring wheat states, up from 60% in the previous week but below 70% in the same period a year ago. A total of 11% of the crop was in very poor to poor condition as of July 29, the same as in the previous week and up from 7% the same week a year ago, the USDA said. Declines of more than 20% in corn yields such as those that occurred in the 1980s are extremely rare. The only wider year-to-year decline in national corn yields in the 20th century was in 1901 when corn yields fell 35% from 1900 (to 18.2 bushels per acre). A yield of 117 would equate to a 20% decline and 102 would be down 30% from 2011. Far greater variability remains in the potential outcome for the 2012 soybean crop, but its fate largely will be sealed in the days ahead. “It is soybeans that has the greatest risk of loss still in front of it,” Lerner said. “It could turn around and turn out better if it begins raining in the next couple weeks. Current forecasts don’t point to that being likely, though I do see some signs of improving rainfall in August. But it may be too little too late.”

AB Foods acquires Elephant Atta flour brand
LONDON, ENGLAND — Associated British Foods plc (ABF) announced on July 6 the acquisition by Westmill Foods of Elephant Atta and smaller related ethnic ﬂour brands from Premier Foods plc. Elephant Atta was established in 1962 and is the leading ethnic ﬂour brand in the U.K. The brand is sold in a variety of medium, selfraising, white, brown and wholemeal ﬂours and is used to make chapatti and other unleavened ﬂat bread for daily consumption. Westmill Foods is the U.K.’s leading provider of ethnic food products to ethnic retailers and wholesalers.
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“Elephant Atta is the U.K.’s leading ethnic ﬂour brand and will complement Westmill’s other leading ethnic brands including Tolly Boy rice, Rajah spices, Lucky Boat noodles and Patak’s pastes and sauces,” said George Weston, chief executive of Associated British Foods. Premier Foods will continue to mill and package the ﬂour with the brands being managed independently from Westmill Foods until regulatory approval is obtained. The cash consideration for the acquisition is £34 million.
August 2012 / World Grain / www.World-Grain.com

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World Grain - August 2012

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