Mr. Gary Drimmer

GLG News by Mr. Gary Drimmer, Chief Executive Officer

GLG News is now G+ Insights

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USDA's Crystal Ball for 2007-2016

February 16, 2007

Analysis of:USDA publishes food forecast to 2016 | www.foodnavigator-usa.com

The USDA's Agricultural Baseline Projections for 2007-2016, are just that, a good base to start from. These are going to be very dramatic years for the agricultural sector as biofuels and world food demand will push up prices most dramatically for corn and vegetable oils.

The report lays out the USDA's assumptions on world economics, trade and even foreign exchange. They do a good job of making their global agricultural production numbers provide the supply needed to fit their demand projections. These numbers get tighter and tighter even with the modest numbers they use for corn ethanol and biodiesel production. There is no room for droughts or trade swings. Not only will the US agricultural sector expand in this projection, but Brazil, Argentina, Russia and the FSU are all going to have opportunities to feed and fuel the world.

We're #1 in Renewable Energy

February 16, 2007

Analysis of:Ernst & Young Renewable Energy Country Attractiveness Indices | business.timesonline.co.uk

Ernst & Young's periodic ranking has put US in the #1 spot in its  Renewable Energy Country Attractiveness Indices. The US moved ahead of Spain on this listing that ranks the top 20 countries in the world based on their support for renewable energies.

This report for Q3 2006 was released two weeks after President's Bush State of the Union which called for an increase push for renewable fuels The report is of interest in that it focuses on the government policies for renewable energies in a quickly changing environment. In this report E&Y compares the rapid rise of the largest populated countries, China and India with changing attitudes towards the cost in the more mature markets of Europe.

It is good to see that India has moved to third place and close to a tie with Spain for second place,  while China moved up to 6th place. and The author of the report expects China and India to take two of the top three places within 5 years, which would be a very positive development as their economies are on fire. One would hope that the US, as the largest economy and the largest user of energy, would strive to remain #1.

What's needed for corn after corn seeding in addition to more nitrogen

February 14, 2007

Analysis of:Key Steps for Managing the Risks of Continuous Corn | corn.osu.edu

It is clear that there will be a large increase in corn seeding this Spring. Much of this will come from acres that would have been planted to soybeans in a normal corn-soybean rotation. That means there will be more corn after corn planting, due to the better potential returns from corn.

To be able to maximize profits, farmers need to take several steps to avoid a significant drop in yields. This report from The Ohio State University's Agronomic Crops Team has some important recommendations including fertilizers and genetically modified seed selection.

So what can I expect my corn yield to be if I don't rotate?

February 14, 2007

Analysis of:The Rotation Effect For Corn Yields | www.extension.umn.edu

There is a lot of attention to the change of corn-soybean rotation that will be occurring throughout the corn belt this year. There is another article that I just posted on what a farmer should do to get the highest yield including seed selection and additional nitrogen application. I titled it What's needed for corn after corn seeding in addition to more nitrogen.

But what can the farmer (and the rest of us) expect the yields will be on these acres? This article from the University of Minnesota's Extension Service's Crop eNews has some projections that will prove of interest to those monitoring the potential supply of corn this coming crop year.

Corn Appetite Growing

February 7, 2007

Analysis of:The Price of Corn | www.nytimes.com

The press is starting to pay attention to corn and corn prices. Normally when a price increase hits the major newspapers it is a sign that the markets are about to turn south.

In this editorial by the NYT they have most of their facts right, but maybe not their conclusion that we are going to have to change the size of our appetites.

Winners and Losers in Corn Ethanol

February 7, 2007

Analysis of:Whoops | members.forbes.com

There are going to be winners and losers in the corn ethanol industry and this article from Fortune lists several of them including ADM, VeraSun Energy, Monsanto and Burlington Northern and tax payers.

The article, which appeared last week on Fortune.com via Yahoo, shows a date of 2/12/07. This shows that they are a little ahead of themselves. It was in fact written prior to last week's  State of the Union Address. The article reflects some of the rumors that were circulating prior to the president's call for 35 billion gallons/year of biofuels by 2017, but the winners and losers remain the same.

The final paragraph's conclusions bring up the ongoing question about the environmental cost of corn ethanol and the continued support of politicians. I think everyone, excluding corn farmers know that there has to be an alternative or additional source of ethanol (read cellulosic ethanol) to reach the 35 billion gallon/year target.

Agribusiness giants ADM, GM and McDonald's Accused of marketing unhealthy foods

February 5, 2007

Analysis of:Agribusiness' Endless Appetite for Profit | www.alternet.org

This article is an interview with the author of a new book, Appetite for Profit , which is another attack on the food industry. This book is probably not going to get as much attention as "Fast Food Nation" unless there is a documentary made based on it. Nevertheless the book would appear to make for some non-appetizing reading.

Ms. Simon's book appears to be more of an effort to promote herself and her personal organization, then to inform the public with new researched facts. From the interview in this article one gets a feeling that there are less facts and more exagerations fantasies in this book.

US Agriculture Secretary Proposed Major Overhaul But Europe Doesn't Buy It

February 2, 2007

Analysis of:Europe slams new U.S. farm bill | news.monstersandcritics.com

US Secretary of Agriculture Johanns announced the Bush administration's proposals for a new farm bill yesterday. There are many articles out today commenting on the proposal, with many groups supporting the cuts to large farmers, and increased research funding for ethanol and conservation (see link below for the USDA's analysis). There are as many people opposed to the proposal as there are in favor.

Overall spending increases in many areas and there are cuts in many others. It is reported to spend $10 billion less over the next 5 years than the 2002 bill spent over the past 5 years (it expires on September 30th of this year). With these cuts mainly aimed at large farmers and crops that do not need as much support in the near term, one would expect Europe to see this as a major sign of the administration's desire to make concessions to finally allow for the conclusion of  the WTO's Doha Round. According to this article you would be wrong. The EU want to see more  still more cuts from the US.

Morales will nationalize Bolivia's mining sector this time

January 30, 2007

Analysis of:Bolivia eyes nationalizing mining industry | edition.cnn.com

Last year President Evo Morales of Bolivia had to abandon his efforts to nationalize the mining sector. The miners of Bolivia have been a radical and violent group for decades and major supporters of President Morales and his nationalistic campaign. He would have gone ahead with the nationalization last year of the mining sector with support from President Chavez of Venezuela, if he had not run into financial problems with the nationalization of the energy sector and political problems with his desire to rewrite the constitution and the land reform.

With the energy nationalization behind him he is now ready and able to proceed. It is likely that this sector is too important and too complicated for him to nationalize all of the mines 100%.

Ethanol springtime enroute to summertime?

January 30, 2007

Analysis of:Springtime for Ethanol | www.nytimes.com

The article and the NYT followup editorial on 1/25/07, "Energy Rhetoric, and Reality", did not get the story right any more then the President did in his State of the Union Address.

The President increased his push for alternative fuels, raising the bar from last year's 7.5 billion gallons by 2012 to 35 billion barrels by 2017. The NYT editorial stated that corn ethanol " cannot be expected to provide more than 15 billion gallons without driving up food prices."

The "Springtime for Ethanol" believed  the President would double the requirement of ethanol for 2012 and expected at least half of that would come from cellulosic ethanol. With not a single commercial cellulosic plant in operation, what is reasonable?

Bush Warming up to Global Warming

January 19, 2007

Analysis of:Bush to outline global warming policy in State of Union | www.boston.com

The President's State of the Union Speech next week is going to contain a change of course relative to its global warming policy according to the British paper The Observer.

Pressure is snowballing for the Bush Administration to take the lead on this major issue before the Democrats, who now control Congress, take the lead on making  this a major issue for the 2008 Presidential and congressional elections.


Tony Snow, the White House Press Secretary, according to this article, states that reports that the Administration would agree to mandatory emissions caps are false.  With NOAA,  and other US Government Agencies confirming that 2006 warmth was tied not just to El Nino, but to man greenhouse emissions, can the administration wait long before signing the Kyoto Protocols, or at least taking on some serious measures on renewable energy, biofuels, and greenhouse gas emissions. 

Can 10.3 Million Farmers be wrong about Biotech Crops

January 19, 2007

Analysis of:Global biotech crop acres grow as debate persists | asia.news.yahoo.com

The ISAAA announced on 1/18/2007 that for 2006 the world seeded 252 million acres with genetically modified  (GM) seeds, a 13% increase over 2005. There are now 10.3 million farmers growing GM crops, a 21% increase from the previous year. According to this article that number could jump by 80 million farmers once GM rice is introduced in Asia.

At the same time Greenpeace International says that concerns about the safety and benefits of GMs has limited its acceptance. The article quotes  Jeremy Tiger, a Greenpeace spokesman : "There is irrefutable evidence that governments, farmers and consumers throughout the world recognize that genetic engineering is unreliable, unviable or downright dangerous."

After 10 years, it is hard to question the viability and acceptance of GMs by farmers. What will happen over the next 10 years?

Is the ethanol bubble bursting?

January 11, 2007

Analysis of:Sector Snap: Ethanol Companies Decline | www.forbes.com

According to this article from the Associated Press from 1/9/07 one would think that the ethanol industry was about to collapse just as new production in being announced.

Is the largest agri-industrial company Cargill announcing a major expansion of capacity with the planned addition of 4 new ethanol plants just as oil and ethanol prices are dropping? Or, does this company that has been the largest agri-processor for many years recognize that there is an underlying trend that they wish to continue to be a major player in?

A year ago with low corn prices and high oil and ethanol prices, it appeared that building an ethanol plant was a sure way to make a pot of gold. Is that pot no longer made of gold?

British Secretary for Environment and Food says organic is no better

January 10, 2007

Analysis of:'No proof' organic food is better | news.bbc.co.uk

England's consumers are as organic as they get, and yet their Secretary of state for the Environment, Food and Rural Affairs says that Organic Food is no better than nonorganic farm food. What's happening in this very green country? Is the sky falling or will this market continue to grow in the UK as well as the "colonies".

Early Holiday Season for Wet Corn Milling Industry

December 19, 2006

Analysis of:Tate&Lyle sees higher margins, but shares sour | yahoo.reuters.com

Early conclusion of the contracting of High Fructose Corn Syrup (HFCS) for 2007 is a great present for the wet corn millers. Tate & Lyle is the first company to come out publicly with a statement that they have been able to obtain the higher HFCS prices they were aiming for to cover the jump in corn prices as well as the continued high energy and transportation costs. High capacity utilization has allowed the wet corn millers to lock in better margins for next year. T&L stock dropped even with this announcement due to lower margin forecast for ethanol and continued pressure on the sugar and sweetener industry in the EU.

Bigger Push Towards Alternative Fuels and Midwest under Senator Harkin

December 18, 2006

Analysis of:Sen. Harkin's ag committee | deltafarmpress.com

Senator Tom Harkin (D-IA) is slated to take over as Chairman of the Senate Committee on Agriculture, Nutrition and Forestry next month. He played a major part in writing up the 2002 bill with a major push on renewable energy and conservation. With Collin Peterson (D-MN) slated to head the House Ag. Committee, the Midwest holds these 2 key posts just as the farm bill will be rewritten in 2007. While farmers in general are happy with all the subsidies (or should I say support) they receive, there is going to be some tweaking. I expect that there will be a considerable push away from support to big farmers in rice, sugar and cotton, and more support towards production and research in soybeans, corn and cellulosic alternative biofuels.

Competition for Roundup Ready Soybeans

December 18, 2006

Analysis of:DuPont on track to launch new biotech soybean | www.foodnavigator-usa.com

Monsanto's highly successful Roundup Ready soybean is finally looking at some serious competition, but not until 2009. DuPont has just announced that they will be releasing their own Roundup Ready tolerant genetically engineered soybean trait in 2009. People generally do not recognize how time consuming it is to introduce a new genetically engineered grain or oilseed to the market, not to mention the very high cost which makes some traits uneconomical to bring through the whole process.

Argentine farmers halt exports of corn, soybeans, wheat and beef

December 4, 2006

Analysis of:Argentina: First ever Rural Society strike | www.mercopress.com

Argentina is the 2nd largest corn exporter in the world, the 3rd largest exporter of soybeans and beef and a major wheat exporter. High commodity prices and a favorable exchange rate for exports have been good from the whole Argentine agriculture sector, and yet for the first time in history, major farm organizations announced a week long strike during which time they will make no deliveries to protest government policies. Some organizations will strike for 9 days in an attempt to force changes.

This is not peak export season south of the equator, but should Argentine farmers begin to unite to gain political power, there could be more of these efforts, which could even be adopted by neighboring countries Brazil, Paraguay and Uruguay. Global supplies of key farm products are in tight supply and export disruptions from a major country like Argentina would have major repercussions.

How high is corn going?

December 1, 2006

Analysis of: Corn for ethanol demand driving prices higher | southeastfarmpress.com

One of the key take away points of this article is the relationship between the stock-to-use ration and the price of corn. For the third time in the past 15 years the ratio is at or below 10%. According to the article the high of $5.54 set in July 1996 was when the ratio was at 5%. I was very glad in the Summer of 1996 to have had a long position in corn.

The other issues that are pushing corn prices: demand from the ethanol industry, export demand, drought in Australia, drought in Northern China, growing demand for meats in China and continued demand from the US livestock sector have all been discussed before. I will touch on China's growing demand below. All of these will push the ratio down from 10% and will approach the dangerous 5%, unless price increases begin to limit demand now.

Cellulosic Ethanol: Brion and DuPont to be the first?

November 27, 2006

Analysis of:Iowa scores an ethanol coup | desmoinesregister.com

The Des Moines Register announced a major coup for the state with the announcement that Brion Cos. will convert their Voyager Ethanol plant in Emmetsburg from a 50 million-gallon-a-year dry corn ethanol plant into a 125 million-gallon-a-year cellulosic plant.

This would be the first commercial cellulosic plant in Iowa according to this article, as well as the first in the US as it intends to beat Iogen and Abengoa to market if it can obtain a U.S. Department of Energy (DOE) grant to support the project.

In many ways they should have the inside track, even if they are the last of the three projects to make a request for the grant.

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