Thursday July 26 Ag News

Rural Poll: Smaller Towns' Residents Less Likely to Attend Church

Residents of Nebraska towns smaller than 500 in population are less likely to attend church than those who live in larger towns, perhaps a sign that churches are not the community resource they once were, according to the Nebraska Rural Poll.

The 17th annual University of Nebraska-Lincoln poll was sent to 6,350 households in Nebraska's 84 nonmetropolitan counties in March and April. Results are based on 2,323 responses.

As in past years, the poll asked questions about rural Nebraskans' attitudes about their communities including, for the first time, questions about church attendance and perceptions about church.

The survey used the word "church" generically, and it may apply to a small number of respondents from non-Christian faith groups.

Seventy-five percent of poll respondents said they are members of a church, with 39 percent saying they attend services weekly or more often. By community size, residents who live in or near towns of fewer than 500 were least likely to attend weekly church services; thirty-five percent reported doing so.

That was a bit of a surprise, said Philip Schwadel, an associate professor of sociology and member of the Rural Poll team.

"I expected them to be more highly churched," said Schwadel, who specializes in issues related to religion and faith.

The relatively low rate of church attendance in the smallest communities may stem from decreased numbers of churches, including a lack of diversity in denominations available in small towns, Schwadel speculated.

"Church doesn't seem to be the symbol of stability it once was," he added.

However, rural Nebraskans remain satisfied with religion/spirituality, the poll indicated. Seventy-five percent said they were somewhat or very satisfied with this part of their lives.

By region, the Panhandle lags in church membership, at 65 percent, far lower than membership in the Northeast and Southeast regions, which is about 78 percent. Cheryl Burkhart-Kriesel, a UNL Extension educator based there, said that likely is a result of the distances that must be traveled to reach churches of one's denomination.

Other poll findings about rural Nebraskans and church:
– Eighty-six percent of people 65 and older are church members, compared to 64 percent of those 19 to 29. Also, 59 percent of older rural Nebraskans attend church at least weekly; just 23 percent of those in the younger age group do so.
– Eighty-three percent of those with agricultural occupations are church members, compared to 56 percent of those who work in production, transportation or warehousing businesses.
– Respondents with at least a bachelor's degree were more likely than those with a high school degree or less to be church members, 81 percent to 74 percent, and more likely to attend services at least once a week, 46 to 41 percent.
– Overall, 77 percent of respondents say their church serves as a resource to the entire community, though there are differences again between groups. For instance, 80 percent who live in cities of 10,000 and up agree with that; 70 percent in towns of fewer than 500 do. Older rural Nebraskans are more likely than the 19-29-year-old group to say that, by 81 to 72 percent.
– Sixty-seven percent believe their church is financially stable, and 66 percent say they are not concerned that their church may need to close or consolidate. Fifty-two percent said they don't think their church will decline over the next few years. Again, differences emerge between categories of communities, with those in the smallest communities less confident about their churches' financial stability and future than those in larger towns.

Other poll findings are similar to past years'.
-  Fifty-one percent of respondents believe they are better off than they were five years ago, the third-highest in the poll's history.  When the poll was taken in the spring, noted Randy Cantrell, UNL rural sociologist, the agricultural economy was strong. "There is a relationship between how that sector is doing and how people feel about their general condition," he said.
-  Forty-five percent of respondents believe they'll be better off in 10 years and 20 percent believe they'll be worse off – both numbers, again, fairly close to trends over the poll's history.
-  Rural Nebraskans are most satisfied with the conditions of their marriage, family, friends, spirituality and the outdoors, while less satisfied with job opportunities, current income and financial security during retirement. However, satisfaction with job opportunities increased from 38 percent in 2011 to 46 percent this year.

Cantrell speculated that rural Nebraskans' satisfaction with job opportunities and other factors may be based in part on the attention the state has received nationally for weathering the recession much better than other states.

The Rural Poll is the largest annual poll of rural Nebraskans' perceptions on quality of life and policy issues. This year's response rate was about 37 percent. The margin of error is plus or minus 2 percent. Complete results are available online at http://ruralpoll.unl.edu.

The university's Center for Applied Rural Innovation conducts the poll in cooperation with the Nebraska Rural Initiative with funding from UNL Extension and the Agricultural Research Division in the Institute of Agriculture and Natural Resources.



Insurance Coverage for Drought-Damaged Crops

Nearly 90 percent of the corn and soybean acres in Iowa are covered by multiple peril crop insurance. Drought damage is an insurable loss under these policies. Producers should consult with their crop insurance agents before harvesting or destroying any drought-damaged crops, said William Edwards, an Iowa State University Extension and Outreach economist.

"The agent will notify a certified crop adjustor to appraise the insured crops," Edwards said. "Keep in mind that when damage is widespread, adjustors cannot be everywhere at once. The adjustor may declare the crop a complete loss. If it has significant yield potential, it can be left and harvested in the fall. If the producer elects to harvest it early, as silage, check strips can be left to verify the actual yield achieved. In any case, the acres must be released by the insurance company before the crop can be harvested early or destroyed."

Any insurance indemnity payments will be settled based on actual harvested production over the entire insurance unit, Edwards said. Fields declared a complete loss will be combined with any harvested acres in the same insurance unit to calculate the final yield. Yield losses are equal to the farm's historical yield times the level of guarantee purchased, minus the actual yield.

Ninety percent of the insured acres in Iowa are covered by Revenue Protection insurance policies in 2012. Yield losses will be paid at a rate equal to the average CME futures price during the month of October, if it exceeds the average February price of $5.68 for corn (December contract) or $12.55 for soybeans (November contract).

Following harvest, the usual evidence of actual production should be collected and submitted to the crop insurance agent as soon as possible if it appears that a payment is likely, but not later than 15 days after the end of the insurance period, which is Dec. 10 for corn and soybeans in Iowa. If a producer has a history of selling more than half the crop in the tax year following harvest, reporting of crop insurance proceeds can be deferred to the next tax year, Edwards said.

More information about crop insurance policies and procedures can be found on the Ag Decision Maker website at www.extension.iastate.edu/agdm/cdcostsreturns.html. For additional crop, livestock and home and yard drought related information see Dealing with Disasters.



Stretch Pastures in Drought Conditions

As the drought continues, cattle producers are asking how to stretch their pastures. Two major techniques may be pursued, according to Iowa State University Extension and Outreach beef program specialist Denise Schwab. One is to reduce the grazing pressure from the animal side, and the other is to supplement the amount of feed available.

"Animal grazing pressure can be reduced in two ways, reducing cow numbers through selective culling and weaning calves early," Schwab said. "Consider culling any cows with structural, health, reproductive or attitude problems. Early pregnancy checking with ultrasound may be another tool to help tighten the calving period and cull very late cycling, open cows."

Research has shown calves can be successfully weaned as young as 90 days or less, but consistently weaned at 100-120 days of age. Some of that success depends on giving one round of vaccinations to the calves prior to weaning, and creep feeding for 10-14 days prior to weaning. Weaning reduces the nutrient requirements of the cow 30-50 percent, allowing for energy intake to go toward cow maintenance rather than milk production. Creep feeding is another tool to reduce the feed requirements on the cow, but feed efficiency of creep feeding is extremely variable. Calves tend to be more efficient after weaning when fed directly.

"The second technique is to supplement the cow while on the pasture," she said. "There are several considerations for this, including labor and equipment to feed, controlling feed waste, and the cost of the supplemental feed."

Feed cost really needs to be the major consideration, followed by the issue of how to deliver and control wastes. Many producers will want to feed hay as the supplement, which seems like the logical solution, Schwab said. However, if feeding hay on pasture, producers need to be extremely conscientious about control waste and limiting intake. If allowed full-time access to hay, cows can easily consume far more than is needed. Remember, you want to supplement pasture, not completely replace grazing.

Also, as hay price approaches $150-200 per ton, this probably isn't the most cost effective option, she said.

"For example, a mature 1,350-pound cow fed completely in dry lot could consume about 38 pounds of hay per day, which would cost $2.78 per cow per day if hay is priced at $150/ton," she said. "Studies have shown that cows need about 0.5-1.0 percent of the cow's bodyweight in supplemental feed per day, or 7-13 pounds of hay to substitute for available forage, which would cost $0.50-$1 per cow per day. Another option is to supplement 3-5 pounds of grain or co-product and 5 pounds of hay per day which would cost between $0.65-0.75 per cow per day in addition to the available forage."

Another possibility is to supplement only the grain/co-product while on pasture at about 5 to 6 pounds per head per day. Depending on the current pasture situation, this may or may not have enough total feed available to meet all the cows' needs. Doubling the quantity and offering it only every other day is also a supplementation strategy that has been proven to work.

"How do you know which feeds are the most cost effective? You really need to determine the price per pound of energy or protein in the feed to compare multiple feeds," Schwab said. "A quick way to do that is to use the Iowa Beef Center's spreadsheet 'Feed Energy Index,' which is available as a free download from the IBC website. By simply typing in the various feeds available and their costs, you can get a quick comparison of which feeds provide the lowest cost energy."

There are multiple strategies that can help stretch pasture in drought situations such as this year. However, they should be individualized to meet the specific needs of each producer and pasture. For more help on stretching pasture, contact an ISU Extension beef program specialist.



Blue-Green Algae a Concern for Iowa Livestock

Already this summer there have been reports of blue-green algae blooms in Iowa ponds, prompting farmers to pay close attention to grazing and water resource location for their livestock.

Blue-green algae are commonly found in Iowa lakes, ponds, rivers and streams during summer and autumn, and can form dense algal blooms that resemble mats on the water surface. These blooms can be stimulated following storms or heavy rainfall when surface runoff containing phosphorus and nitrogen enters the water. The blooms can be quite bad when storm events are followed by prolonged periods of hot temperatures.

"Because blue-green algae can produce poisonous neurotoxins and hepatoxins, they also are a potential health concern to livestock, pets, wildlife and humans, and can be fatal if consumed," said Steve Ensley, Iowa State veterinary diagnostic and production animal medicine clinician.

Ensley and Chris Filstrup, of the Iowa State Limnology Laboratory, explain how to recognize blue-green algae in a one-page fact sheet they have written. The fact sheet also describes potential toxic effects of the algae, proper sampling methods for testing and suggests ways to reduce the incidence of blooms in lakes and ponds.

The Limnology Lab focuses on research and analyses of aquatic ecology in the Midwest, and offers a variety of tests and information on water-based information and resources.



Waiving RFS isn't solution to dramatically lower corn prices

New analysis from the Center for Agriculture and Rural Development (CARD) at Iowa State University suggests that calls for the immediate reduction, revision, or repeal of the Renewable Fuel Standard (RFS) would not achieve the stated goals of those industries calling for such action.

“The desire by livestock groups to see additional flexibility in ethanol mandates may not result in as large a drop in feed costs as hoped,” wrote Iowa State Professor Bruce Babcock, author of the study.

Babcock analyzed 500 different scenarios assuming varying levels of corn yield this year.  In his research, Babcock determined that a total waiver of the RFS would reduce corn prices less than 5% and cause less than a 5% reduction in ethanol production.

Babcock states the modest results are due to flexibilities in complying with the RFS in 2012 and 2013. Specifically, an estimated 2.4 billion excess Renewable Identification Numbers (RINs) can be used in place of physical gallons to demonstrate RFS compliance.

“[T]he flexibility built into the Renewable Fuels Standard allowing obligated parties to carry over blending credits (RINs) from previous years significantly lowers the economic impacts of a short crop, because it introduces flexibility into the mandate,” wrote Babcock.

Removing the mandate altogether decreases corn prices by only $0.28 per bushel relative to the case where excess RINs are used for compliance. This is equivalent to roughly 3.5% of recent corn prices and 4.6% of the CARD study’s projected season-average.

In a blog post, Renewable Fuels Association (RFA) Vice President of Research and Analysis Geoff Cooper outlined the flexibility that exists in the RFS and how it can be used to ensure the RFS works as designed.  Cooper’s blog can be read here.

“All available market data suggests that the Renewable Fuel Standard is working,” said RFA President and CEO Bob Dinneen.  “Strong supplies of ethanol in storage and an abundance of RINs combine to make the RFS a workable and achievable program in 2012 and 2013.  Let’s be clear; the weather impacting much of the country is a very real cause for concern.  The ethanol industry, like any other end user of corn, understands this point and the industry has significantly reduced its corn consumption in recent weeks.  However, some appear to be trying incite panic rather than objectively review the facts.  The final crop is not yet in the bin.  There will be corn available this fall and the market will ration its use.  The questions will be how much and how will farmers respond during next year’s planting season.”

Currently, weekly ethanol production has fallen below 800,000 barrels per day – a level not seen since June 2010.  This reduction in production clearly shows that the market is responding by rationing demand.

“Now is not the time to implement knee-jerk reactions that arbitrarily reduce RFS requirements based on historically variable corn supply estimates or waive portions of the RFS,” said Dinneen.  “Such actions would likely do more to disrupt the fuel market than alleviate concerns over high corn prices.  If given a chance to work, the RFS will demonstrate itself to be a thoughtful energy initiative with the kind of flexibility to absorb situations like the one we are in and still achieve its goals.”



NPPC Says Trade Barriers Need To Fall

Pork producers and the U.S. economy are losing billions of dollars in exports because of non-science-based food-safety and health barriers erected by foreign countries, the National Pork Producers Council today told a House subcommittee.

Testifying on behalf of NPPC, Jim Boyer, a hog farmer from Ringsted, Iowa, told the Small Business Committee’s agriculture, energy and trade panel that so-called sanitary and phytosanitary (SPS) measures are restricting market access for U.S. pork and are adversely affecting U.S. pork producers, particularly small ones like him.

Those trade-restricting barriers must fall, said Boyer in discussing SPS issues NPPC wants addressed in any trade agreements the United States negotiates, including:
-    Trans-Pacific Partnership: While the U.S. pork industry supports the TPP – an 11-nation regional trade pact – countries that are part of the agreement must eliminate their SPS barriers. The deal also should include an SPS chapter with a meaningful dispute-settlement provision.

-    Russia: The country, which soon will join the World Trade Organization, has a number of SPS measures that restrict U.S. pork imports, including a zero-tolerance standard for pathogens on meat, a standard no country can meet. Russia should abide by the WTO’s Agreement on the Application of Sanitary and Phytosanitary Measures.
-    European Union: Although it should be one of the largest export markets for U.S. pork, the EU is one of the smallest because of its SPS barriers. Any U.S.-EU trade agreement must address such non-science-based trade restrictions.
-    Taiwan: The Asian nation unfairly restricts U.S. pork exports from hogs fed ractopamine, a feed additive approved by the U.S. Food and Drug Administration, 25 other countries and the U.N.’s food-safety standards-setting body. Taiwan’s entry into the TPP negotiations should hinge on it eliminating that SPS barrier.

“We are convinced that if we sit by passively while SPS measures are erected and maintained, we will see our exports rapidly erode,” Boyer testified. “Pork producers understand that the future of our industry depends on adopting new and safe technologies and in expanding exports. We must protect our current market access from unfair barriers or such expansion will be impossible.”



Soybean aphids: A late-season game-changer

Hidden within the soybean canopy is a tiny but highly destructive pest known as the soybean aphid.  This pest can destroy your soybean field before exhibiting a single trace of evidence. Leaving no visible feeding scars, soybean aphids threaten to significantly reduce soybean yields by feeding on the stems and undersides of soybean leaves. Because of the lack of evidence, these inconspicuous insects are difficult to detect before they have reduced yields.

Soybean aphids can appear on soybeans through pod fill and can quickly reach damaging economic thresholds if left uncontrolled. Aphid populations fluctuate due to weather, predatory feeding, disease and plant stress. During favorable conditions, populations can double every two to three days. Soybean aphids have the ability to cover an entire field due to their rapid population growth, significantly impacting yields and profits.

Soybean aphid reproduction is slow in hot dry environmental conditions. Based on this, the 2012 season should be a light year for infestations. However, when the weather pattern becomes more favorable for aphid reproduction, aphid numbers are still expected to rise in late summer/early fall.

“Soybean aphid pressure hasn’t been too high yet this growing season,” said Troy Griess, agronomic service representative, Syngenta. “However, in Minnesota and parts of Iowa, some growers are already seeing these pests in their fields. Soybean aphids become a problem when they reach the economic threshold of 250 aphids per plant in 80 percent of your field and need to be treated properly.”



North American Manure Expo to be Hosted in Wisconsin

The North American Manure Expo, which is an educational program that travels to different host states each year, returns to Wisconsin next month. The event will be held August 22 at the USDA-Dairy Forage Research Center farm located just north of Prairie du Sac.

This year's expo will feature field demonstrations, hands-on product and safety education, educational sessions, exhibitor booths, and commercial vendor displays. There is no cost to attend the forum.

Organizers say this is the 10th Manure Expo since the program started in Wisconsin. Other states that hosted the event include Minnesota, Michigan, Ohio, Iowa, Pennsylvania, and Nebraska.

The North American Manure Expo is presented by the Professional Nutrient Applicators Association of Wisconsin, University of Wisconsin Extension Nutrient Management Team, USDA-Dairy Forage Research Center and is supported in part by a consortium of land grant universities and conservation agencies from across the country.



IGC Cuts World 2012-13 Corn Output

The International Grains Council said Thursday it had cut its estimate for world corn production in 2012-13 by 53 million metric tons to 864 million tons, as high temperatures and severe drought in the U.S. have reduced yield prospects.

The London-based body said its forecast for the U.S. corn crop had been cut by 50 million tons, to 300 million tons, while its view on the country's soybean harvest had also been reduced by 8.3 million tons to 79 million tons.

The IGC said export availability of corn is tightening and global carryover stocks are now expected to decline to their lowest level in six years, while world demand is projected to rise about 1% on the year.

However, it added that forecasts for feed use had been trimmed due to higher prices and lower supply, while industrial use is also expected to decline, with U.S. ethanol production likely to fall on the year.

The IGC said that world soybean production is expected to recover sharply in 2012-13, rising by around 9% on the year, although that forecast hinges on a strong rebound in output from South America, where planting begins in the fourth quarter.



European Commission won’t levy preliminary duties on U.S. ethanol imports

Yesterday, the European Commission (EC) informed European Union (EU) member states that it would not be issuing any order imposing preliminary duties in connection with the anti-dumping/anti-subsidy case filed with the EC by EPure, the trade association representing Europe's ethanol industry.  In response, the Renewable Fuels Association (RFA) and Growth Energy (GE) issue the following release:

"We are pleased to learn that the European Commission will not impose provisional countervailing (aka anti-subsidy) or anti-dumping duties on ethanol produced in the United States.  The RFA and GE appreciate the Commission's hard work and careful consideration of the facts in these proceedings.  Both organizations will continue to cooperate fully with the Commission and both look forward to the speedy resolution of these proceedings."



Updated Land Values Report Finds Land Values Increased More Strongly than Expected

Farmland values that increased by as much as 20 to 30 percent, and the factors that may eventually slow those growing ag land values, headline an updated land values analysis issued today by the Rabobank Food & Agribusiness Research and Advisory (FAR) group.

“The six year surge in U.S. agricultural land values continues to be top-of-mind for many in agriculture,” notes report author Sterling Liddell, Vice President, Food and Agribusiness Research & Advisory. “We expected land values to grow significantly in late 2011 and early 2012 and the growth was even stronger than we predicted; in excess of 30 percent in some cases.”

In the report, “U.S. Farm Land Continues to Dazzle,” Liddell draws a strong correlation between the rate of growth and higher corn, soybean and wheat prices, which resulted from persistently tight global grain stocks and low interest rates.

“Strong fundamentals including elevated commodity prices, low interest rates, increasing rental rates and strong relative returns to agriculture will continue to make U.S. farmland an attractive investment,” says Liddell.

The U.S. Corn Belt region continued to lead land value growth in 2011 and 2012. States including Iowa, South Dakota and Nebraska were estimated by the USDA to have doubled their 2005 values. An expanded group of states, which adds the Northern Plains and Minnesota, saw year-over-year growth in the range of 15 to 30 percent in 2012

The report considers interest rate increases to be the key medium-term threat to maintaining current levels of ag land values.

Looking ahead to the first half of 2013, U.S. farmland values are likely to increase at a slower rate than in 2011 and 2012. The slowdown is a result of the dramatic 2012 jump in values as well as looming macroeconomic worries. This slowdown will help to keep values in line with underlying fundamentals. As a result, such a slowing would be beneficial for the long-term financial health of the U.S. crop production industry.

“The prospect of strongly higher interest rates post 2014 and softening commodity prices from current highs present the key long term risks for U.S. farmland values,” notes Liddell.



Bunge Q2 Profit Down 13%

Bunge Ltd. expects strong earnings in its grain handling business through the rest of 2012 despite a severe drought that is decimating U.S. grain supplies and sending prices to what its chief executive called "crisis" levels.

Bunge, one of the world's largest grain traders and soybean processors, said profits in its corn agribusiness segment surged vs. a year ago even as its overall second-quarter earnings declined 13% due to troubles with its sugar-milling business.

The company said that while dwindling U.S. corn supplies and surging prices could cause weaker demand, any loss in volume would be made up by its South American grain operations.

Prices for corn and soybeans have soared recently, setting all-time records at the Chicago Board of Trade last week as the drought intensified. That has prompted worries about a pending global food crisis.

The situation may not be as dire as with other sharp price increases in the past five years, as Bunge Chief Executive Alberto Weisser said that supplies of wheat and rice -- two food staples that are often associated with political unrest -- remain adequate. Still, he noted that corn and soybean prices have surged even higher than in previous spikes.

"I think we are in a crisis," Weisser said in an interview. "Nobody likes these prices to be so high."

The situation could "turn very fast back to normal," he said, but that will take a large South American crop, which won't be harvested until next year.

In the meantime, the U.S. will have limited grain supplies to export by early 2013, Weisser said. This will create "nontraditional trade flows," which could benefit Bunge, which has a wide network of export terminals and storage facilities world-wide to fill buyers' needs.

The company's weaker second-quarter results stemmed largely from the sugar and bioenergy segment, which swung to a $28 million loss from a profit of $18 million a year earlier. Bunge, whose efforts to grow its Brazilian sugarcane milling business after buying five new mills in 2010 has been hurt by drought, said that rains in the quarter "interrupted milling operations and reduced the sugar content of harvested sugarcane."

Bunge reported a profit of $274 million, or $1.78 a share, down from $316 million or $2.02 a share, a year earlier. Excluding certain gains and charges, per-share earnings were $1.20 in the latest quarter, compared with $1.78 last year. Revenue grew 4.1% to $15.09 billion.

The company said its food and ingredients business was hurt by lower margins. The agribusiness segment reported earnings jumped to $386 million, from $308 million the prior year, due to strong South American results and added volumes from new export terminals in the Pacific Northwest and Ukraine.

While the second quarter is typically a slow period for Bunge's sugar and bioenergy business, Chief Financial Officer Drew Burke told investors the company had hoped to break even.

But the rains that hampered results in the second quarter should be a benefit later in the year, he said, as they will help development of the next sugarcane crop.



Dow Chem Q2 Net Income Falls

Dow Chemical Co.'s second-quarter net income fell 34 percent as weaker demand led to lower prices. Softness in Europe and a stronger dollar also weighed on results. The nation's biggest chemical maker expects to accelerate cost-cutting efforts.

Dow Chemical's results can offer a broad overview of global economic conditions because its products are used in nearly every sector. Its materials are used in products ranging from televisions and toys to automobiles.

Since the end of the first quarter, economies have slowed in the U.S. and China. Some European countries have fallen into recession as the massive debt crisis there continues. Manufacturing declined in all three regions.

Experts say that has cut demand for chemical products in a wide range of industries; including commercial construction, housing and consumer products like electronics.

"Sustained uncertainty in the world economy continues to present a challenging operating environment, and this quarter was no exception," Chairman and CEO Andrew Liveris said in a statement.

He said that Europe's troubles have continued to pressure the company, while activity in China and other emerging markets slows. The U.S. is also a factor, Liveris said, as the nation's recovery is moderating from earlier in the year due to weakening consumer confidence, softer trade flows and high unemployment.

To contend with these conditions, Liveris says that Dow Chemical will ramp up its efforts to cut costs.

"Despite these near-term headwinds, Dow has the right strategy in place to deliver over the long term," he said.

For the April-June quarter, Dow Chemical's earnings fell to $649 million, or 55 cents per share. That's down from $982 million, or 84 cents per share, a year ago.

Revenue dropped 10 percent to $14.51 billion, missing Wall Street's estimate of $15.69 billion.

Prices fell 5 percent, declining in all geographic regions. The biggest drop — 8 percent — was in Europe.

One bright spot was the agricultural sciences division, which reported a 12 percent rise in sales.

Sales declines were reported by the electronic and functional materials unit, coatings and infrastructure solutions, the performance materials segment, performance plastics and the feedstock and energy division.




BASF Q2 Profit Down 15%

BASF SE, the world's largest chemicals company by sales, Thursday confirmed its full-year outlook despite lower second-quarter profit being hit by destocking by customers and stalling demand in China.

"Our customers are continuing to act cautiously and are reducing their inventories, also in expectation of falling prices due to declining raw material costs," Chief Executive Kurt Bock said in a statement.

He added in a conference call with reporters that the company doesn't expect a revival in orders in the second half of the year.

The Chinese growth engine has started to slow and BASF's sales fell in local-currency terms in Asia in the second quarter, as they also did in the first quarter of 2012, Bock said.

Although the company had planned a slight increase in its workforce, especially in emerging markets, in 2012, BASF said it will now slow down the process as it can't estimate when business in Asia will pick up again. Investments, however, won't be affected by the decline, Bock stressed.

After reporting first-quarter earnings in April, BASF said it expected a stronger second half of the year, with demand mostly coming from emerging markets. However, at the end of May, Vice Chairman Martin Brudermueller said business momentum in Asia including China had been weaker than expected, with the European debt crisis weighing on Asian markets.

The debt crisis hasn't affected paying habits in Europe, however, and invoices are still paid on time also in weaker euro-zone countries, Bock told reporters.

Bernstein Research, meanwhile, noted that earnings per share came in below its expectations with the company admitting that prospects are dampened by uncertainty. "We remain cautious due to industry sentiment remaining negative and volatile," analyst Jeremy Redenius said.

Second-quarter sales in the German group's chemicals segment came in lower on the year, due to weaker demand and the optimization of the supply chain for steam cracker products carried out in the third quarter of 2011. The company said it doesn't expect to match that unit's 2011 performance this year.

The agricultural unit, meanwhile, went strong, being with oil & gas the main positive drivers of second quarter results, and Bock told CNN in an interview that 2012 could become a new record year for the Agricultural segment.

For the group, BASF continues to guide for an increase in sale and earnings on the year in 2012.

"Our forecast is especially supported by the resumption of our crude oil production in Libya," Bock said.

To counter macroeconomic challenges BASF wants to protect its margins and create value, saying its STEP excellence program, which it expects to contribute around 1 billion euros ($1.21 billion) to earnings each year as of the end of 2015, is fully on track.

Second-quarter net profit came in below analysts' expectations at EUR1.23 billion, down 15% on the year, while sales rose to EUR19.5 billion, up 6% on the year mainly due to positive currency effects and a weaker euro, the company said.

Peter Spengler of DZ Bank said net profit was also dented by an increased tax rate, as greater-than-expected oil production in Libya led to higher nondeductable oil tax.

BASF's closely watched adjusted earnings before interest and taxes was EUR2.49 billion, up 11% on the year.

The group's update follows that of other chemicals companies. U.S.-based DuPont Co. (DD) on Tuesday reported a decrease in second-quarter net profit, due to lower volume and adverse currency moves and now expects 2012 adjusted earnings at the lower end of its current forecast range. Sales in DuPont's agricultural unit, however, rose 13%, and sales in developing markets also showed a solid increase.