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Prices of agricultural commodities fell after U.S. Department of Agriculture figures reported that farmers had thrown market expectations out of sync by planting a large area with corn and soybean, reported the Financial Times.

The increased plantings take some of the pressure off global food prices and put to rest fears of a repeat of the 2007-2008 food crisis, which resulted in riots in developing nations.

The USDA reportedly stated that 87 million acres, not the expected 85 million acres, were planted with corn. Soybean acreage exceeded the 76 million acre estimate by 1.5 million.

Anticipated price of the soybean crop to be harvested November dropped 2% to $9.645½/bushel. Wheat prices fell to an intraday low of $4.95¾ a bushel.

For more information, please visit FeedIndustryNetwork

Aller, the Danish animal feed manufacturer, is for sale.

Aller Mølle A/S and pet food company Aller Petfood A/S are currently owned by the Bylling family, which announced that it is looking for a buyer or a merger for the feed businesses.

The pet food division will stay within the family, now in its fourth generation of operating feed-related interests in Denmark.

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The U.N. Food and Agriculture Organization has forecasted the world’s demand for food will double by 2050.

The amount of arable land available will not double in the next 40 years; in fact, FAO expects that only 20% of the increased food needs will come from added farmland. FAO expects a 10% increase in production from increased cropping intensity, but the remaining 70% increase in food output will have to come from increased adoption of either existing or new agricultural technologies.

A recently released white paper titled, Technology’s Role in the 21st Century: Food Economics and Consumer Choice, expresses the position that it is up to agricultural producers to defend consumer choice.

Jeff Simmons, president, Elanco Animal Health, states a case for maintaining consumer choice in the food system in the developed world, choice of specialty products like organic meats and produce as well as safe, wholesome inexpensive alternatives.

This paper presents an argument for continuing to adopt new technologies which improve production of crops and livestock so that an ample supply of food is available to feed and fuel the world. Failing to apply these technologies would result in moving food prices out of reach for billions of the world’s poorest consumers, according to this analysis.

For more information, please visit Feed Industry Network.

Feed additive company BASF will increase the price for calcium D-pantothenate (Lutavit Calpan) products for animal nutrition on April 1, 2009, respectively in line with existing commitments to minimum US$8.50 (€6.50) per kg for full container loads FCA Ludwigshafen (Incoterms 2000), according to a BASF press release.

According to the company, the price increase is necessary to continuously supply custo.mers with Lutavit Calpan products and services of the highest quality.

Calcium D-pantothenate is a salt of pantothenic acid, a vitamin, which is used in animal und human nutrition. BASF's plant for the production of calcium D-pantothenate is located in Ludwigshafen, Germany.

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Farmers will feel the effects of slowing economies, both global and domestic, as uncertainty continues, and consumers will see lower food price inflation, say economists with the Food and Agricultural Policy Research Institute (FAPRI).

In a report to the U.S. Congress, a 10-year FAPRI baseline shows all sectors of agriculture facing volatility in prices and continued high production costs.

Food inflation hit a high of 5.5% in 2008, but that has slowed in recent months. FAPRI projects food inflation at 2.7% for 2009.

U.S. consumers, facing higher prices and lost jobs, scaled back by buying fewer steaks and more hamburger. Food exports, such as grain, beef and dairy products, have dropped sharply, causing lower prices for farmers.

Volatility to continue in ag markets

“‘Volatility& rsquo; is the word that best describes agricultural markets,” said Pat Westhoff, FAPRI co-director and crops economist at the University of Missouri-Columbia. “After a record-breaking year in 2008, in 2009 the drops in crop and livestock receipts outpace any lowering of production costs.”

FAPRI projects that low prices can cut U.S. net farm income by $18 billion in 2009. Income is expected to recover slightly in 2010. However, a return to 2008 levels is not expected before 2014.

“The farm upturn projected for 2010 is based on a recovery in the general economy,” Westhoff said. FAPRI uses general economic projections from IHS Global Insight.

“Rising oil prices, strong global economic growth, a weakening U.S. dollar and poor weather in many countries contributed to high commodity prices in 2007 and early 2008,” FAPRI economists report. That changed in late 2008 with dropping oil prices, a faltering global economy and a strong U.S. dollar. Meanwhile, better weather around the world increased exports from grain- growing nations.

Farm commodity prices dropped, but they remain above pre-2007 levels through the decade. High feed prices continue to squeeze livestock feeders as meat prices fail to keep pace.

Volatility is illustrated by what dairy producers face as demand drops. Milk, with a short shelf life, has been highly volatile for more than a decade, said Scott Brown, FAPRI livestock economist. Milk prices, led by faltering world demand for U.S. dairy products, are forecast at near-historic lows in 2009. “The worst profit ever is not a record U.S. dairy farmers want to break,” Brown said.

Average prices in 2008 ran at more than $18 per hundredweight, with peaks over $20. FAPRI projects an all-milk average in 2009 at $13, with variations around the average dropping to $11.

Strong international demand for all dairy products led to record-high domestic milk prices. When world economies collapsed and the U.S. dollar strengthened, weak U.S. exports followed.

Crop farmers to fare better than livestock producers

Hog producers coped with plentiful production and rising feed costs by selling more pork overseas. However, record-high feed costs, particularly corn, have cut margins. Weaker domestic and global demand resulted in hog farmers suffering their worst profits since the record-low prices in the late 1990s.

Cow-calf producers responded to lower prices by culling cows, reducing feeder calves going to feedlots. Cow numbers went down 13% from the 1996 peak.

Contraction will be the theme in 2009 as the U.S. livestock industries search for higher output prices to offset higher production costs, Brown said.

Overall, crop farmers, with higher returns from grain, fare better than livestock producers. That differential will continue.

High crop prices drew more land into tillage. However, weakening global demands could lead to a 4-million-acre drop in area planted to 12 major crops in 2009.

“The baseline is not a forecast, but a projection of what can happen if current policies remain in place along with other assumptions, such as normal weather,” Westhoff said. The FAPRI baseline assumes biofuel taxes, tariffs and mandates stay in place.

The much-discussed ethanol biofuel mandates slow declines in grain prices. While corn exports and feed use decline, corn for ethanol continues up to meet mandates in the 2007 Energy Independence and Security Act.

While corn futures prices topped near $8 per bushel last summer, they fell below $4 by November. The average farm price is projected at $3.74 for the crop harvested this fall. By 2017, FAPRI projects more corn will go to fuel than will be fed directly to livestock.

Soybeans face lower demand from poultry and livestock feeders. Also, with lower global demand, soy oil prices declined sharply this year. More soy oil will be diverted into biodiesel.

Soybean farm prices drop from $9.37 per bushel to $8.76 for the crop harvested in 2009.

Lower petroleum prices lead to lower biodiesel prices. Existing excess biodiesel production capacity also lowers prices, even as use increases with federal mandates. Narrow margins discourage building future capacity.

Average Crop Revenue Election program

An uncertainty in the baseline is how many crop farmers will switch to ACRE (Average Crop Revenue Election), a voluntary income-support program in the 2008 farm bill. Producers can elect to stay with the 2002 price-based program or sign up for the new revenue-based program.

Repeated runs of ACRE pricing scenarios show advantages for producers of most crops in northern states, including the Corn Belt. However, the 2002 program offers advantages for southern crops such as cotton and peanuts.

The 2009 FAPRI baseline shows stochastic projections, which include 500 variations on possibilities beyond basic assumptions. In the past, FAPRI used “deterministic&rdqu o; models for projections, which projected one curve into the future.

The new model shows some of the volatility that is likely to continue in farm commodity markets, Westhoff said.

“Stochastic models give policymakers a better look at the range of possible prices or government costs, for example if droughts occur or oil prices rise sharply,” Westhoff said.

FAPRI computers make 500 runs, drawing random influences, such as weather, exports and exchange rates. Corn prices average about $4 per bushel over the next decade, with about 80% of results between $3 and $5.

“There are many risks not captured by 500 runs,” Westhoff said. “We’ve tried to capture the many sources of volatility, but it’s safe to say markets will continue to find new ways to surprise us in years ahead.”

The 66-page FAPRI report is at www.fapri.missouri.edu.

MU FAPRI maintains computer models of all U.S. crop acres and livestock herds and flocks. FAPRI at Iowa State University maintains models of global markets.

U.S. Congress funds FAPRI to give annual updates to the House and Senate agriculture committees. The baseline gives benchmarks to measure changes in government policy.

The Provimi Group announced that its sales increased to EUR$2,154.1 million, an increase of 12.3% compared to 2007.

On a like-for-like basis, sales growth was 13.9%, with particular good organic growth in France and the rest of the world.

Globally, the sales increase was linked to higher raw material prices. Higher sales in France were also linked to strong evolution of minerals and specialties for ruminants. In the rest of the world, the sales increase was also due to new contracts in South America, says the Provimi Group.

Food and Agriculture Consultancy Services (FACS) Ltd. has opened an office in Beijing, China, with the intention to provide a supplier audit service for feed and premix companies that are looking to source raw materials, feed additives, and medications from China.

The service will also be aimed at companies within China that are looking to demonstrate to their customers the highest levels of food safety, says managing director Jon Ratcliff.

Animal feed producers in Vietnam have reduced or halted production to avoid further losses caused by fall prices of raw material in international markets, according to Le Ba Lich, chairman of the Vietnam Animal Feed Association.

Feed producers, especially commodity traders, imported large volumes of soybean-based oil cake from July to September 2008 at the high price of US$550 per metric ton in fear that prices would continue climbing. Instead, the price dropped to US$360 per metric ton by October and between US$280 and US$300 as the year draws to a close.

Feed producers have no way to recoup their investment on the high-priced commodities. The stored soybean cake is estimated to be worth about US$16 million with a volume between 20,000 and 30,000 metric tons.

Pakistan: High energy, feed costs hamper poultry industry

The poultry industry in Pakistan has been hit by high feed and energy costs while the government's policy on import of parent birds, one-day-old chicks and poultry meat also hampers its growth. Former Pakistan Poultry Association chairman Abdul Basit said the cost of breeding chicken rose as prices of soybean meal, used in poultry meal formulation, increased from $200 per ton to $460 per ton in one year. Soybean constitutes 25 per cent of poultry meal. A poultry farmer, Muzaffar Rizvi, said the vaccination cost of broiler chicken, grandparent stock, and one-day-old chicks all have risen. He went on to state the electricity loadshedding had compounded the poultry farmers' problems and the poultry farmers had been forced to install generators to ensure an uninterrupted supply of electricity, adding that such an action would cost a farmer over Rs15 per unit for six to eight hours when supply of WAPDA electricity was disrupted. Basit said Pakistan produced three million chickens with average of one kg meat each and the poultry industry had not been given any protection from imports.

Since import duty was the same on one-day-old broiler chicks, which are produced in great number, as other broiler chickens, he suggested that the duty on one-day-old chicks should be 25 percent in line with duties applied to the import of industrial basic raw material, intermediary products and finished products.

Escalating feed costs are push for crop expansion in Thailand

Pornsil Patchrintanakul, president of the Thai Feed Mill Association, calculates that more costly raw materials livestock feed will increase production costs in Thailand by 20 percent this year. Between the first and final quarters of 2007, average feed prices in Thailand rose by 51 percent for maize and 40 percent for soybean meal. He also points to the rising trend in freight charges for shipping feed grains from abroad. By his figures, Thai importers paid US$110 per ton to have soybean meal shipped from Latin American countries last year, up from about US$35 per ton in 2006. Pornsil and other feed industry leaders in Thailand say the government should expand the area that its farmers have planted to grow maize in neighboring countries. Each year, Thailand imports about 100,000 tons of maize produced under a regional agreement known as Ayeyawady-Chao Phraya-Mekong Economic Co-operation Strategy (Acmecs).

This offers Thai farmers an opportunity to grow maize and soybeans at lower cost in Laos, Cambodia and Burma. The crops are grown on contract and can be imported for sale under a tariff-free arrangement backed by Acmecs. Vichai Poonpiriyasup, a senior vice-president for the maize integration business of the CP Group, said a number of Thai companies, including CP, were taking advantage of the Acmecs programme, but there was still much room for expansion. So far, for example, only a limited area in Burma has been used for growing maize. Although yields are still relatively low, Mr Vichai continued, the climate and soil conditions in these countries could make them very competitive for growing maize.