GLG News by Sugar Experts

Philip CorzineGeneral ManagerSouth American Soy LLC

Ethanol import tariff is now on the table, but move by Brazilian sugar industry could backfire

July 9, 2008

Analysis of:Brazil launches campaign to remove ethanol tariff | www.ethanolproducer.com

Changes in the ethanol production subsidy and import tariff would be an excellent way to moderate the increases in the short-term price of corn, easing the pain for the US livestock industry. But any change in these policies will have long term impacts on the biofuels sector. These changes were already being discussed, so the move by the Brazilian cane industry may place them into the sights of the US biofuels and ag industry that has already proved itself ready and willing to defend itself against all challenges, both domestic and now, foreign.

Philip CorzineGeneral ManagerSouth American Soy LLC

Failure to adjust policy now to lower feed costs will permanently change the US livestock industry.

July 1, 2008

Analysis of:American Feed Industry Association Urges EPA to Temporarily Waive RFS Mandate | www.grainnet.com

An over-emphasis on ethanol has combined with a poor production year and a major speculative push on commodity prices to push livestock net returns into the red. Animal feed has long been US corn and soybeans primary source of demand, but high feed costs, with no way to push up the selling price of their products, has created a situation that will soon, if not corrected, turn into a significant liquidation of the US pork industry. To push up commodity supplies, changes need to be made now in the US CRP program rules to push up 2009 planted acres. In addition, (possibly) temporary waivers in the ethanol subsidy and or import tariff should be considered to slow the conversion of corn into ethanol, keeping those supplies available for feed, and helping to ease the price of livestock feed.

Philip CorzineGeneral ManagerSouth American Soy LLC

Five percent increase (or less) in Brazilian soy acreage likely, unless fertilizer prices can be brought down in Brazil.

June 27, 2008

Analysis of:Brazil May Seize Fertilizer Deposits as Prices Surge | www.bloomberg.com

Just like this time last year, traders in Chicago may believe that Brazilian farmers are poised to significantly expand soybean acreage, as they have moved prices above $15 per bushel. However, just as they misjudged them last year, they may be doing it again, as fertilizer prices have doubled, and have brought potential net returns on Brazilian soy back down enough that a significant expansion is currently unlikely, unless fertilizer costs can be reduced, or prices go significantly higher, very soon.

Philip CorzineGeneral ManagerSouth American Soy LLC

CRP acres coming back, but how many will depend on what changes USDA does, or doesn't make in the program.

June 27, 2008

Analysis of:Options for the Conservation Reserve Program | www.card.iastate.edu

Expiring contracts may add two million acres a year to planted area in the US, but don't look for many contracts to be "broken" unless they were recently signed, as the penalty's are too severe, even with high commodity prices. It seems likely that given the current situation with a poor crop in the fields (flooding and late planting) and high prices, changes in the program are somewhat likely, and if they occur, they will have some market impact.