WPI Spotlight

Spotlight

How Oilseed Supply Can Meet Burgeoning Demand

If global soybean demand continues to grow at the pace of the last two decades, then world soybean supply will need to increase by 70 mmt in a decade to meet demand. That is a lot considering it is about equal to this year's forecasted production of soybeans in Brazil, the world's second-largest producer. It also is equal to about 27 percent of forecasted global soybean production in 2010/11.

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The Uncertain Political Situation Continues to affect Markets

The main news in the Mediterranean region is still Libya, and military actions against Libya are continuing as this report is written. The military action following the U.N resolution is limited to military targets and should not, one hopes, have any effect in other areas.

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Market Volatility takes on a new meaning

The week of 14-18 March 2011 had to be the most volatile weeks in the history of agricultural markets—if not all markets. I didn't look backwards to try to find another period of similarly explosive moves first lower and then higher, but it's hard to imagine it could have ever been worse.

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How low can the corn carryout go?

Yesterday's WASDE from USDA sent sort of a shock wave through grain markets. Although there was good reason for USDA to increase estimated corn use from a statistical perspective, traders were nevertheless surprised that USDA chose to do so in February. Most thought that further tightening of the U.S. corn S and D would happen in a later month. On the other hand, we have heard speculation that USDA raised estimated use and dropped ending stocks to a "pipeline" level in February hoping the price reaction would stimulate the necessary demand rationing earlier rather than later. We doubt it is fair or accurate to accuse USDA and the World Board of such a devious approach. It seems much more likely that USDA/WOAB analysts simply called things as they saw them, as they should.

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Outbreak may lead to deficits in beef, pork, and poultry

The Korean Government has ordered the culling of deer, goats, swine and bovines per an outbreak of foot and mount disease. Total cull is more than 1.3 million head. The first case was verified on 29 November and the cull has been taking place for the past 30 days. To date, more than 112 cases have been confirmed. Korea was hit with FMD in 2000, 2002, and two more times in 2010. Before the latest set of outbreaks, Seoul had used vaccines only once, in 2000. Korea starting vaccinating on Christmas Day, 25 December, and has plans to vaccinate 2.15 million head of livestock.

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Brazil's Palm Oil Expansion is set to begin

We have long predicted that Brazil would one day decide to get into palm oil production in a big way. It has a huge amount of land along the Amazon River that is located near the equator and ideally suited for oil palm production. With rising global demand for palm oil for food and biodiesel it made sense for investors to expand palm oil production in Brazil.

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