Thursday October 11 Ag News

The “Explore Beef Experience”

Building on the success of last year’s event in Nebraska, the beef checkoff, in partnership with the Kansas Beef Council, Nebraska Beef Council, New Mexico Beef Council, and Washington State Beef Commission, recently hosted six “Explore Beef Experience” work days at feedlots and cow/calf operations. The program brought together industry representatives, veterinarians, producers and influencers who spent time working with producers, asking questions and getting their boots dirty in an effort to help them better understand modern cattle production and everyday life on a farm.

Participants included a variety of experts across the fields of nutrition, food safety, culinary, environment, animal welfare and food security.

“The impact of these events extends far past just the day on the farm,” says Joe Guthrie, cow/calf producer from Dublin, Va., and chair of the checkoff's Joint Issues Management Subcommittee. “For instance, one attendee is now a panelist at a sustainability summit; attendees from Hyatt hotels invited a producer to attend a meeting with their chefs, helping them see how animal care and beef sustainability fit within Hyatt’s recently announced global food/beverage philosophy.”

Those are just two examples of how the events further emphasize the industry’s commitment to educating influential audiences who, in turn, communicate about modern beef production to their viewers, shoppers, patients, students and readers.

“These events let people ask the tough, burning questions they’ve been wanting to ask for a long time – and they get to ask a real farmer,” says Guthrie. “We’re happy to see that after a great event in Nebraska last year, even more state beef councils are getting involved in hosting events in their areas. This is a great way to bring the farm to the city and impact a lot of people and their perceptions about beef.”

Among the tour stops this year were Albers Feedlot near Wisner, NE, and Loseke Feedyard near Columbus, NE. 



Iowa Cattlemen's Association will note 40 years at December convention

The Iowa Cattlemen’s Association will celebrate its 40th Anniversary at its 2012 Convention and Annual Meeting, Dec. 10-12 at the Prairie Meadows Events Center in Altoona. “Kickin’ It Cowboy Style!” will be the theme for this year’s meeting.

“We are ‘kicking up’ the quality of this year’s convention because we are proud of all that ICA has accomplished the past 40 years,” said ICA CEO Matt Deppe. “We have nationally known speakers that will be providing information and education, and we also have well-known cowboy humorist Baxter Black who will be providing entertainment on Tuesday (Dec. 11) evening.”

Other well-known speakers during the convention will include J.D. Alexander, the Nebraska cattle feeder who is president of the National Cattlemen’s Beef Association; Curt Pate, the Montana cowboy who conducts stockmanship clinics internationally; and Dr. Kim Stackhouse, NCBA’s Director of Sustainability Research, where she focuses on greenhouse gases and the carbon footprint from livestock.

The first day of the convention will be a Cattlemen’s College on two tracks – one focusing on cow-calf issues, and the other on the feedyard. Both tracks will include a low-stress cattle handling session with Pate. In the separate tracks of Cattlemen’s College, sessions for cow-calf producers will focus on forage strategies and pasture improvement following this year’s drought, and breeding program improvements. For those with feedyards, the sessions will emphasize how to find the most competitive calves for your feedyard, and risk management for feeders.

The convention tradeshow opens with a social after the Cattlemen’s College, and the evening ends with a program about solving issues in farm business succession.

On Dec. 11, the day begins with comments from J.D. Alexander and Kim Stackhouse. Alexander will talk about challenges and opportunities ahead for cattlemen nationally, and Stackhouse will talk about the sustainability of the beef cattle business. Info/Expo sessions will be held throughout the day on topics such as the impact of ethanol on cattle feeding in Iowa, animal welfare and the cattle industry, regulation updates, understanding the FDA process for technology approvals, and engaging consumers in beef conversations.

ICA’s three policy committees – Business Issues, Cattle Production, and Beef Products – will also hold their meetings that day to suggest policies the ICA should adopt at its annual meeting on Wednesday.

Other events on Dec. 11 include the Hall of Fame award, recognition of Brand Wall contributors, county awards, and youth winners of scholarships and the Foundation Heifer Award. The day will end with entertainment by Baxter Black.

On Wednesday, Dec. 12, ICA members will discuss national regulatory issues, and adopt ICA policy for 2013 at its annual meeting. Retiring ICA officers and board members will be recognized, and newly elected board members will be introduced.

Deppe is encouraging Iowa cattle producers to take advantage of the early registration price. “Since this is our 40th anniversary, we worked hard to keep the costs as low as possible for registration,” Deppe said. Early registration paid before Dec. 1 is just $75 per person and covers all events and meals during the three-day event. Full registrations after that time will be $125 per person.

For those who want to attend the meeting at a lower cost, a registration level that doesn’t include any meals will be available. The cost will be $25. This allows attendance to the educational events, although access to entertainment by Baxter Black may be limited.

More information and conference and hotel registration information can be found online at www.iacattlemen.org, or with the registration form included in the October, November and December issues of the Iowa Cattleman magazine.



Register Soon for SowBridge Distance Educational Program

The successful distance education program SowBridge begins its fifth year Nov. 7. Iowa State University animal science associate professor and extension swine specialist Ken Stalder said people need to register soon.

“The year-long program is offered by subscription only with an Oct. 15 deadline to ensure participants will receive materials for the first session on Nov. 7,” he said. “SowBridge provides all participants with the opportunity to hear directly from experts, and to contact those experts following the individual sessions at the reasonable price of $250 for the entire year.”

Entities with more than one location have the opportunity to add locations at a lower rate. Cost is $250 for the first registration from an entity and $125 for each subsequent subscription from the same entity. This provides access to one phone line per session and all program materials for each registration. Materials, delivery process and program costs are slightly different for those with non-U.S. mailing addresses, and potential subscribers from outside the U.S. should contact Sherry Hoyer at the Iowa Pork Industry Center by phone at 515-294-4496 or email shoyer@iastate.edu for more information.

A brochure with information and a registration form is available on the IPIC website at www.ipic.iastate.edu/SowBridge/2012BrochureIPIC.pdf. Iowa residents who want more information can call Stalder at 800-808-7675.  To see presentations and hear audio from SowBridge sessions in earlier years, visit www.ipic.iastate.edu/sowbridge.html.

SowBridge is sponsored by a group of 11 state universities – including Iowa State and University of Nebraska-Lincoln – from the major swine producing states.



Leading journal publishes research about the unintended consequences of not using productivity-enhancing technologies to raise cattle

The Journal of Animal Science has published new research looking at the consequences if U.S. farmers and ranchers no longer used productivity-enhancing technologies to raise beef cattle. The peer-reviewed article, “The environmental and economic impact of removing productivity-enhancing technologies from U.S. beef production,” was co-authored by Jude Capper, Ph.D., of Washington State University, and Dermot Hayes, Ph.D., of Iowa State University, and appears in the Journal’s October issue.

This research, which also was presented at the 2012 American Society of Animal Science annual meeting, found that discontinuing use of scientifically proven, U.S. Food and Drug Administration (FDA)-approved technologies would create sobering unintended consequences. To produce the same amount of U.S. beef annually without using these technologies, U.S. farmers and ranchers would need 10 million more beef cattle, 81 million more tons of feed, 17 million more acres of land, and 138 billion more gallons of water. In addition, 18 million extra metric tons of carbon dioxide equivalent (CO2eq) would be released in the United States alone.

“These effects are equivalent to imposing an 8.2 percent tax on U.S. beef farmers and ranchers, leading to a 17 percent reduction in U.S beef production by 2023,” says Capper. “In turn, other countries would increase beef exports. Environmentally, this would mean the release of 3.1 billion more metric tons of CO2eq, and the destruction of 16.9 million acres of Amazon Rainforest and forests in the West Central Cerrado regions of Brazil.

“The bottom line is that losing the ability to use safe, approved technologies will create significant environmental and economic challenges that are undesirable and unnecessary,” Capper concludes.

Subscribers to the Journal of Animal Science will find the article on pages 3,527 through 3,537 of Volume 90 (the October 2012 issue), and online. Non-subscribers may read the article abstract at www.JournalOfAnimalScience.org. They also can obtain free reprints of the complete article by emailing a request to info@sustainablebeef.org or purchase short-term access to the article from the Journal’s website for $15.

PDFs of an executive summary and a handy recap of key points from this research are available at www.sustainablebeef.org.

The Sustainable Beef Resource Center (SBRC) was formed at the suggestion of beef producers and branded-beef marketers who recognized the need for a centralized source of facts about technologies used in sustainable beef production. SBRC works with third-party experts to develop factual, science-based information about the important role of technologies in producing safe, affordable beef through socially and environmentally responsible practices.



ASA Responds to Misinformed Article on Waterways Investment

In response to an article by Washington University Professor Robert Criss published last week in the St. Louis Post-Dispatch criticizing much-needed investment in dredging and locks and dams along the Mississippi and Missouri rivers, American Soybean Association Board member Dean Campbell of Coulterville, Ill., defended the investments, highlighting the importance of the inland waterways system to the soybean industry, and the contributions of the industry to the local and national economy.

"Dr. Criss’ presumption that locks only benefit the operators on the rivers ignores the importance of soybean exports to global markets, and the positive impact those exports have on our economy," wrote Campbell. "The vast majority of American soybeans are grown here in the Midwest. Illinois is the second largest producer and Missouri the seventh, with a combined annual crop of more than 600 million bushels, valued at over $7 billion. This sizable contribution helps to make soybeans our nation’s largest agricultural export commodity, and I’m curious how the professor proposes we move that product to market."

"Citing increased efficiency and reduced impact," Campbell added, "Dr. Criss suggests that we should instead use rail cars or trucks, ignoring the fact that more than 1,000 trucks—or 216 rail cars pulled by 16 locomotives—are needed to move the same soybeans as just one typical barge tow. We rely on our inland waterways to move our product efficiently and effectively to market, while helping to sustain vital local economies. The Mississippi River, for example, carries 850 million bushels of grain and provides $160 billion to our economy each year."

Supporters of Agriculture Research Coalition Moves Forward
The Supporters of Agriculture Research (SOAR) coalition, of which the American Soybean Association is one of 10 founding members, met in Washington this week to discuss ways in which it can move forward in its mission to support USDA’s Agriculture and Food Research Initiative (AFRI).

AFRI provides competitive grants for proposals that meet the key challenges in food and agriculture. SOAR is hoping to follow the model of the biomedical community, where stakeholder groups broadly support the work of the National Institutes of Health (NIH) and have been successful in greatly increasing federal funding for NIH research.

SOAR is in its beginning stages and working through issues including membership, outreach, and legislative strategy for the next Congress. Learn more about SOAR at www.supportagresearch.org.



Ethanol Stocks Build; Production Jumps

Domestic ethanol inventories rebounded last week, rising 441,000 barrels (bbl), or 2.4%, to 19.256 million bbl for the week-ended Oct. 5 while up 14.2% from a year ago, data from the Energy Information Administration shows.

Production of ethanol by U.S. plants rose 15,000 barrels per day (bpd), or 1.9%, to 800,000 bpd last week, while down 6.9% compared to the year-ago output rate.

Implied demand, as measured by refiner and blender net inputs, rose 2,000 bpd, or 0.2%, to 823,000 bpd for the week-ended Oct. 5. Refiner and blender net inputs represent a major portion of implied demand for ethanol.

Elsewhere, the EIA reported that implied demand for motor gasoline fell last week by 46,000 bpd to 8.587 million bpd for the week-ended Oct. 5, while four-week average gasoline demand at 8.7 million bpd was down 3.3% from the level seen a year ago.



Grant RFS Waiver To Help Producers, Says NPPC

In comments submitted today to the U.S. Environmental Protection Agency, the National Pork Producers Council said EPA should grant a waiver of the federal requirement for the production of corn ethanol because the mandate, coupled with a summer drought that has reduced yields and pushed up prices of feed grains, is causing severe economic harm to pork producers.

The federal Renewable Fuels Standard (RFS) requires 13.2 billion gallons of corn-based ethanol to be blended into gasoline in 2012 and 13.9 billion gallons in 2013, amounts that will use about 4.7 billion and 4.9 billion bushels, respectively, of the nation’s corn crop. The U.S. Department of Agriculture’s Oct. 11 crop report estimates that just 10.7 billion bushels of corn will be harvested this year.

With the RFS, NPPC pointed out in its comments, a weather-driven supply shock no longer simply results in higher prices for feed grains but causes “explosively higher prices, crippling credit and liquidity shortfalls and the frightening prospect that some producers ... cannot assure stable access to ... corn to feed their animals.”

The organization also pointed to three analyses on the effects of the RFS – ones from the Food and Agricultural Policy Research Institute at the University of Missouri, Iowa State University and Purdue University – that concluded that a waiver of the federal mandate would have a marginal effect on ethanol production but alleviate the severe economic harm that is being experienced in various states and regions and by pork, poultry and livestock producers.

In a July 30 petition to EPA Administrator Lisa Jackson, NPPC and other livestock and poultry organizations asked for a waiver “in whole or in substantial part” of the amount of renewable fuel that must be produced under the RFS for the remainder of this year and for the portion of 2013 that is one year from the time the waiver becomes effective.

EPA is expected to make a decision on the NPPC waiver request and on petitions from seven governors in mid-November.



Economic Data Suggest RFS Waiver Would Reduce Corn Prices More than $2.00 per Bushel

A full waiver of the 2013 Renewable Fuels Standard requirement would reduce the price of corn by more than $2.00 per bushel, according to economic data cited in comments submitted today by the National Chicken Council (NCC) to the Environmental Protection Agency in support of a full, one-year waiver of the RFS.

NCC also hand delivered almost 10,000 individual comments from those whose livelihoods depend on the chicken industry, almost three quarters of which came from chicken farmers.

"Our comments prove in detail that the RFS is causing severe economic harm to the U.S. economy, and the 2013 requirement must be waived in full," said NCC President Mike Brown.

"Today's corn crop report released by USDA verifies that this harvest will mark the lowest production since 2006.  Despite 13 percent less corn than last year to go around, it is irresponsible to divert more than 40 percent of it to use as a second-rate motor fuel."

"A California poultry company just this week filed for bankruptcy citing rising feed costs, making it the eighth company in the last two years to file for bankruptcy, be sold or simply close its doors," Brown continued.  "How many more jobs and family farms have to be lost before we change this misguided policy and create a level playing field on the free market for the end users of corn?"

NCC's comments are available in their entirety by clicking here.  A summary of which is available below:

The comments cite an August 2012 report prepared for the Farm Foundation by three Purdue University economists that evaluated how an EPA waiver of the ethanol mandate would affect the corn and ethanol markets.  Calculations from their model found that reducing the amount of ethanol blended into gasoline in 2013 would reduce corn prices by $2.00 per bushel, a nearly 25 percent reduction.

A decrease in the price of corn by $2.00 per bushel would significantly alleviate pressures on both consumers at the grocery store and the food, livestock and feed industries.  Given the vital role of corn in U.S. food production, as the price of corn decreases, so do the prices of meat, poultry, dairy products, and the foods that contain corn-based sweeteners, starches, flours, and oils, as well as substitute products such as wheat and soybeans and any foods made using them.

A marginal decrease in corn price of 24 percent, based on a reduction in the price of corn by $2.00 per bushel, would result in a decrease of approximately 2.4 percent in retail food prices.  USDA estimates that food prices will increase 3-5 percent next year.  In other words, less than half of the price increase caused by the RFS requirement is equivalent to half-to-nearly-all of the projected increase in the price of food.

More dramatically, a decrease of $2.00 in the price of corn per bushel is equivalent to a decrease of $71.43 per ton of corn, which results in feed costs that are $32.14 to 47.86 lower per ton.  The broiler industry uses 1.25 billion bushels of corn each year.  Savings of $2 per bushel of corn would amount to $2.5 billion in annual savings to the chicken industry.

Since the RFS went into effect in October of 2006, the chicken industry has had to endure more than $30 billion collectively in increased input costs.

As processing plants find themselves unable to keep pace with the increasing costs of grain, the growers and farmers who produce poultry and livestock suffer.  And when poultry processing plants shutter, the economic effects ripple through the entire local community, reaching those employed both directly and indirectly by the plant.  The total direct and indirect employment by the U.S. chicken industry in 2011 was about 1,010,250 workers, producing wages of $47.3 billion and generating $197.6 billion in economic activity.  At the local level, a single processing plant is supported by about 300 farm families.  The direct effect of the increased price of corn is to put local farmers and workers employed by the chicken industry out of business.

The U.S. chicken industry has suffered in the years since the implementation of the RFS, in contrast to the industry's average annual growth rate of 4.0 percent and historical resiliency even during difficult economic times.  In 2009, U.S. broiler production decreased by 3.8 percent, the largest decrease since 1970.  The years 2011 and 2012 each saw a 1 percent decrease in production, representing the first time in this period that the broiler industry has seen two consecutive years of negative growth.  These recent trends demonstrate that a historically resilient industry has seen the greatest decrease in growth (indeed, it has shrunk) in more than forty years during the implementation of the RFS, when it has seen demand for one of its primary inputs drastically and artificially increased.  Because of the importance of corn in so many aspects of food production, the entire food industry—and ultimately, the consumer—are suffering because of the RFS.

"Viewed together, these factors demonstrate the RFS must be waived to relieve the severe economic harm the RFS is causing," NCC's comments concluded.



NCGA: RFS Important; Waiver Request Premature

In comments submitted to the U.S. Environmental Protection Agency today, the National Corn Growers Association expressed strong support for the Renewable Fuel Standard and noted that granting a waiver at this point would be premature.

"NCGA and our member associations have long supported the RFS2, including the waiver provision process," wrote NCGA President Pam Johnson, an Iowa corn grower.  In response to a 2008 waiver request, EPA had established that severe harm to the economy attributed to the RFS was one of only two grounds for granting a waiver. "We believe the burden of proof for severe harm to the economy falls on the petitioner," Johnson said. "Since higher feed prices are only one piece of a complicated economic puzzle we believe the petitioners have failed to establish this proof."

NCGA also pointed out that, with harvest still underway, a complete count of the 2012 corn crop is unavailable, and that this information is needed for an informed decision by the EPA.

"USDA will continue to refine the crop production estimates throughout the fall," Johnson noted.  "There is potential for this yield forecast to change, up or down, as well as future changes in harvested acreage.  Based on these crucial changes we encourage the Agency to wait until USDA has produced the November report before making any decision tied to corn availability."

Although most livestock groups have lobbied for some waiver relief from the RFS, a large waiver may not be in their best long-term interest, NCGA's comments state. Most notably, reducing the amount of corn processed for ethanol will cause a reduction in distillers grains. Several recent  studies have analyzed potential impacts on the feed markets from reductions in the RFS.  While a waiver may modestly lower corn prices, reduced distillers grains availability and increased soybean meal costs will negate a significant portion of the savings from reduced corn prices.

The Renewable Fuel Standard, NCGA asserts, has been a success.  Since its enactment in 2005, and expansion in 2007, it has increased national energy security by creating a market for renewable fuel as a substitute for petroleum-based fuel thereby accelerating the nation's progress toward energy independence; contributed to the reduction of greenhouse gas emissions, thereby reducing the nation's contribution to global climate change; and had an overall positive impact on the U.S. economy.



RFA to EPA: RFS is Working; Waiver Requests are Incomplete, Insufficient and Factually Flawed

The Renewable Fuels Association (RFA) today strongly encouraged the Environmental Protection Agency (EPA) to deny requests from several states to waive the requirements of the Renewable Fuel Standard (RFS).
 
“EPA has no option but to deny the waiver requests because they are procedurally incomplete, legally insufficient, and factually flawed,” said Bob Dinneen, RFA President and CEO.  “Perhaps most outrageous is the fact the petitioners make no mention of the RFS program’s inherent flexibilities, and they blatantly ignore the fact that the ethanol industry is responding rationally to current grain market conditions by significantly reducing production. Supporters of a waiver overlook the impact of RIN credit banking, borrowing, and trading provisions. The very provision that allows obligated parties to meet up to 20 percent of their current year RFS obligation with RINs generated in the previous compliance year was designed specifically to mitigate the impacts of a drought on agricultural markets. The RFS is unquestionably working as intended. It is a proven success, and it absolutely should not be waived.”

To obtain a waiver, a petitioner must show that there is severe harm to the economy of a state, a region, or the United States; that the harm is being directly caused by the RFS; and that waiving the RFS would cure the claimed harm. The waiver requests completely fail to satisfy the statutory waiver criteria for the following major reasons:

• No showing of severe harm.  The net state-level impacts of changes in corn price that might result from a waiver of the RFS would be trivial. For example, the impact of changes in corn price that might result from a waiver would be equivalent to no more than 0.01 percent of the North Carolina’s Gross Domestic Product (GDP), 0.02 percent of Arkansas’ GDP, and 0.01 percent of Georgia’s GDP. These effects can hardly be considered severe economic harm, particularly when they do not take into account the benefits to the state economies from the use of ethanol, such as lower fuel prices.

• No showing that the RFS itself is causing the claimed harm.  The petitioners do not establish that RFS implementation itself is the cause of the higher feed costs facing their state livestock and poultry industries; rather, the waiver request letters explicitly recognize that the drought of 2012 was the root cause of the increased feed costs.

• No showing that waiving the RFS would cure the claimed harm. Studies estimating the impact of a potential RFS waiver on corn prices show that waiving the requirements in 2013 might reduce corn prices by as little as $0.04 per bushel, or just 0.5 percent. Further, prices for other feed key ingredients (e.g., distillers grains) may increase in response to a waiver, meaning net feed costs would be unchanged or may actually increase for some species.

• Failure to recognize the impact of RFS compliance flexibilities. The petitioners make no mention of the RFS program’s flexibilities that mitigate the impacts of marketplace anomalies and allow markets to adjust rationally. Specifically, the petitioners ignore the impact of RIN banking, borrowing, and trading provisions. In fact, the provision allowing obligated parties to meet up to 20 percent of their current year RFS obligation with RINs generated in the previous compliance year was designed specifically to mitigate the impacts of a drought on agricultural markets.

• Failure to consider the economic benefits of the RFS. The RFS has facilitated the achievement of significant economic benefits, including job creation, increased farm income, lower consumer fuel prices, and enhanced energy security. EPA’s evaluation of the requests must consider not only the alleged impacts to the livestock and poultry sectors, but also the economic benefits that would be foregone if a waiver was granted.

Congress first established the RFS in the Energy Policy Act of 2005 and later expanded the program in the Energy Independence and Security Act (EISA) of 2007.  The multiple intents of the RFS are to enhance energy security, decrease fuel prices by diversifying energy supplies, create jobs and stimulate the economy, and improve the environment.  According to the RFA comments, “Without question, the RFS is achieving those goals today and providing tangible benefits to the American public. Unfortunately, the requests for a waiver of the RFS attempt to derail this progress and undermine the national goals of enhanced energy and economic security.”



Alltech Predicts a Contraction in Global Feed Production in 2013

Speaking in Rome at the Food and Agriculture Organization of the UN, Alltech vice president Aidan Connolly presented the results of the 2011 Alltech Feed Tonnage Survey along with results from previous surveys, showing a steady increase in feed production year on year.

The 2011 survey, covering 128 countries, put the total feed at 873 million tonnes. The 2012 survey, due to be published soon and covering more than 130 countries, is expected to show a further increase. For 2013, however, Connolly, presenting at the IFIF-FAO joint meeting, predicted a contraction in the region of 3 – 5%, driven by the following three factors:
-    Continued global recession affecting protein consumption.
-    The conversion of large amounts of feed stocks and materials into biofuels.
-    Reduced feed supply due to a global drought, specifically in the US.

In addition, a mycotoxin survey, also carried out by Alltech, indicates that the surviving US harvest will be highly contaminated with up to 37 different mycotoxins, due to crop vulnerability from adverse weather conditions. The resulting percentage contraction in feed production will then be determined by the ability of integrated food producers, farmers and food companies to pass on the increased feed material cost to consumers without any loss in overall consumption levels.

“We are facing a completely new era for the agriculture industry where, for the first time in history, feed production for 2013 will be lower than for 2012, and it is clear that efficiency in converting feed into food will be more critical to food companies than ever,” said Connolly. 



Market Fundamentals, Not Government Intervention, May Control Russian Wheat Exports
Shawn Campbell, USW Assistant Director, West Coast Office

U.S. Wheat Associates (USW) and most of the world’s wheat buyers have been speculating about whether or not Russia will implement grain export curbs. Some conflicting statements by Russian government officials about how best to deal with a much smaller grain crop following a significant drought only clouded the waters, but basic market forces of supply and demand may reveal some answers.

For example, over the past few weeks, Russia’s Deputy Prime Minister Arkady Dvorkovich and Agriculture Minister Nikolai Fedorov released statements claiming that no grain export curbs will be necessary. In contrast, Economy Minister Andrei Belousov claimed that export restrictions may still be needed. Russian President Vladimir Putin stated yesterday that the government has no plans to implement any export curbs.  However, he also said the government should ensure that only surplus grain is used for export and that the situation with rising domestic wheat prices needs to be monitored on a daily basis. 

Russian wheat prices provide a better picture. Recent SovEcon reports show that Russian wheat export prices have risen 40 percent over the past four months. Some grain traders estimate that Russian wheat prices are currently US$15 to $20 per MT above world prices. Prices pushed upward as concerns about securing supplies fueled growing domestic demand. Russian wheat export supplies are now much less competitive, which can be seen in Egypt’s shift away from importing Russian wheat (USDA now expects Russia will export just 9.0 MMT of wheat in 2012/13).

In mid-August, Egypt released tenders for September and October delivery. Russian grain exporters dominated that business, with up to 11 companies offering for each tender. Based on public information about the transactions, prices offered by Russian traders into Egypt were $21 per MT cost and freight (C&F) lower than French wheat and $47 per MT C&F lower than U.S. soft red winter (SRW) from the Gulf. By the end of September, Egypt tendered for December delivery. Only one Russian grain exporter made an offer, at a price into Egypt that was $22 per MT C&F higher then French wheat and $2 per MT C&F higher than SRW. In Egypt’s tender that closed Oct. 3, Russian wheat was not even offered. 

Russian wheat exports went from a torrent to a trickle, all without direct government intervention, though the mixed messages concerning market intervention has undoubtedly influenced the sellers and buyers. Ultimately, diminishing supplies have pushed up Russian wheat prices and buyers are naturally turning to newly price competitive suppliers.