World Grain -- December 2013 - 20

newsreview
Deyu reports loss in third quarter
BEIJING, CHINA - Deyu Agriculture Corp., a Shanxi, China-based
vertically integrated producer, processor, marketer and distributor of
organic and other agricultural products made from corn and grains,
announced on Nov. 15 a net loss of $15.2 million in the third quarter.
That compares to net income of $3.5 million in the third quarter of
2012. Loss per diluted share was $1.43, compared to income of 28¢
per diluted share a year ago. Gross profit fell 60.9% to $4 million in
the third quarter.
"2013 has been a very challenging year. Our Q3 2013 financial results
showed a large decrease in net income," said Greg Chen, chief executive
officer. "China's ongoing economic slowdown has been imposing challenges on us. In addition, unexpected extreme weather conditions and
increased corn imports have added to an already challenging situation.
"Corn is mainly used as raw material for livestock feeds and processed products. The corn market experienced a boom in the past several years. However, since the beginning of 2013, its market demand
has been decreasing. In contrast, with rising labor costs and inflation in
China, the minimum farmers' selling prices supported by the government due to its farming protection policies, continues to rise.
"Livestock farming has been going through a very difficult time
in 2013. The demand for processed corn products has also been very
weak. The price of ethanol hit its lowest level in the past three years.

Meanwhile, with a good corn harvest in 2012, there has been an influx of low-cost corn imported into the market in China. With another
good corn harvest in sight for 2013, anticipated increases in corn imports in the coming year, and extended current economic conditions
in general, we anticipate the market demand will remain low.
"The deteriorating efficiency of existing retail distribution channels curtailed our retail grain package sales amidst the increasing
competitiveness in the market. We allocated more grain resources to
bulk trading activity, yet the slowdown in consumer market growth
has had negative impacts on the grain bulk trading business."
The company's net revenue for the quarter was $68.3 million compared with $56.5 million in the same period a year ago.
Net revenue for the Corn Division was approximately $47.6 million, an increase of $12.7 million, or approximately 36.5%, as compared to $34.9 million for the third quarter of 2012, which was mainly attributable to the increase in sales volume under the strategy of
accelerating the sale of the company's corn inventory with the management's anticipation of continuous decline of corn's selling price.
Net revenue from the Grain Division was $9.9 million, a decrease
of $7.5 million, or 43%, as compared to $17.4 million for the third
quarter of 2012, which was mainly due to the decline of retail sales
in supermarkets and convenience stores.

U.S. EPA proposes lower RFS target
WASHINGTON, D.C., U.S. - The U.S. Environmental Protection
Agency (EPA) on Nov. 18 proposed 2014 renewable fuel standards
that for the first time would reduce the volume of ethanol refiners must
add to the fuel supply relative to targets established under the Renewable Fuel Standard in 2007 (RFS). The EPA proposed that 15 billion
to 15.52 billion gallons of ethanol be added to the fuel supply in 2014
compared with 18.15 billion gallons as targeted by current law.
The EPA in its announcement pointed to what it called an "E10
blend wall" as a reason for the lower target.
"Nearly all gasoline sold in the United States is now E10, which
is fuel up to 10% ethanol," the EPA said. "Production of renewable
fuels has been growing rapidly in recent years. At the same time,
advances in vehicle fuel economy and other economic factors have
pushed gasoline consumption far lower than what was expected
when Congress passed the RFS in 2007. As a result, we are now at
the 'E10 blend wall,' the point at which the E10 fuel pool is saturated
with ethanol. If gasoline demand continues to decline, as currently
forecast, continuing growth in the use of ethanol will require greater
use of higher ethanol blends such as E15 and E85."
The announcement elicited both ire and praise.
Senator Debbie Stabenow, chairwoman of the U.S. Senate
Committee on Agriculture, Nutrition and Forestry, said, "The socalled 'blend wall' is a crisis manufactured by the oil industry,
which is interested in eliminating the competition so they can

continue reaping even greater windfall profits.
"The proposed rule could cost thousands of good paying clean energy jobs and mean less competition at the pump. I urge the administration to take a hard look at how this could seriously set back growth
at a crucial time when tremendous progress is being made toward
commercial-scale production of advanced biofuels."
Martin Barbre, president of the National Corn Growers Association, said, "This recommendation is ill-advised and should be condemned by all consumers because it is damaging to our tenuous
economy and short-sighted regarding the nation's energy future. Agriculture has been a bright spot in a failing U.S. economy, but current
corn prices are below the cost of production. EPA's ruling would be
devastating for family farmers and the entire rural economy."
Barbre noted the EPA proposal would make investments in new
biofuels plants very risky, stagnate investment in infrastructure by
petroleum marketers and send the wrong signals to automakers who
want more direction on where they should be spending millions of
targeted investments on research and development.
Robb MacKie, president and chief executive officer of the American Bakers Association (ABA), said, "The baking industry recognizes the EPA's modest proposal to lower the corn-based ethanol
mandate. However, ABA strongly encourages EPA to move to further
alleviate the pressure corn-based ethanol puts on grain availability
and costs."

Vietnam's 2013 rice exports reach nearly $2.5 billion
HANOI, VIETNAM - The Vietnam Food Association (VFA) announced in November that Vietnam exported over 5.7 million tonnes
of rice worth nearly $2.5 billion in the first 10 months of 2013.
In October, the price of exported rice dropped by around $2 per
tonne to $435.37 per tonne.
Africa is emerging as a market with great potential for Viet20

namese rice exports, according to the VFA.
VFA noted that in the first nine months of 2013, African countries
imported over 4.79 million tonnes of rice worth $2.05 billion from
Vietnam, making the continent the largest importer of Vietnamese
rice during the period. It is followed by Asia, the Middle East, U.S.
and E.U.
December 2013 / World Grain / www.World-Grain.com

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World Grain -- December 2013

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