CHICAGO (Reuters) – Japan’s biggest potential investment in U.S. agriculture can be summed up in a single word: China.

Marubeni’s interest in buying U.S. grains merchant Gavilon to help provide grain to its hungry Asian neighbor would be a quantum leap from the 1970s and 1980s. Back then, Japanese trading houses tried to improve their own country’s food security by obtaining footholds in the U.S. grain supply chain.

“Consumption in Japan is flat to declining so this is all a game of supplying China,” said Gary Blumenthal, president of the consultancy World Perspectives in Washington, D.C.

“There are projections for China needing 20-25 million tonnes of corn in the next few years for its rapidly expanding livestock herds,” he said. “That’s the big enchilada that everybody is trying to position for,” Blumenthal said.

Marubeni, Japan’s fifth-largest trading company, is in advanced talks to buy Gavilon for about $5.2 billion including debt, a source close to the deal said on May 8. Marubeni later said it was interested in Gavilon but no decision had been made. Tokyo-based trading sources said this week that some board members may be concerned about the price tag on the deal.

Two other Japanese trading houses — the so-called “sogo shosha” who dominate Japan’s trade — have also explored a bid.

Obtaining Gavilon would deepen Marubeni’s “origination,” or control of actual grain supplies, at a time when big changes in grain merchandising and use are unsettling North America, the world’s top grain exporting region.

CHICAGO, May 15 (Reuters) – U.S. farmland prices soared to record highs in the first quarter of 2012 fueled by strong crop prices and buoyant farm income, with the pace of sales strongest in the Plains but firm also in the Midwest Corn Belt, according to two Federal Reserve bank surveys released on Tuesday.

The value of nonirrigated cropland in the Plains, which stretches across big wheat, cattle and corn states, was up 25 percent from a year ago and irrigated farmland prices jumped 32 percent, the Kansas City Fed said.

For irrigated farmland, the year-to-year percentage increase was the largest in the 30-year history of the survey. Ranchland values, rich in grazing pasture, gained 16 percent, with high feed costs boosting demand from cattle ranchers, the Kansas City Fed’s survey of 235 bankers stated.

“District farmland value gains accelerated in the first quarter even as record-high farmland values enticed more landowners to sell,” the KC Fed said. “For the first time since the survey began in the late 1970s, the annual value of District cropland rose more than 20 percent for two consecutive years.”

“It’s a very hot market. We’ve sold just over $400 million worth of land in the last seven months — and people are still interested,” said Jim Farrell, CEO of Farmers National Company, the largest U.S. farm management company, based in Omaha.

The price of prime farmland in the heart of the Midwest Corn Belt also rose — up 19 percent in the quarter compared to a year ago. Land values in Iowa, Illinois, Indiana, Michigan and Wisconsin kept rising at the start of the year but fell “short of the torrid pace of 2011,” the Chicago Fed said.

Prices of prime crop land rose 5 percent in the quarter compared to the final three months of 2011, the bank said based on its survey of 231 bankers across the district.

CHICAGO, May 15 (Reuters) – The price of prime farmland in the U.S. Midwest grain belt was up 19 percent in the first quarter compared with a year earlier, boosted by higher commodity prices and net farm incomes, the Federal Reserve Bank of Chicago said on Tuesday.

District land values extended their rapid rise at the start of the year but fell “short of the torrid pace of 2011,” with prices for good agricultural land up 5 percent in the quarter compared to the final three months of 2011, the Fed said in its quarterly survey of 231 bankers in the district.

“The number of farms sold, acreage sold, and the amount of farmland for sale over the winter and early spring rose more sharply than a year ago. Almost two-thirds of the reporting bankers anticipated agricultural land values to be stable during the second quarter of 2012, while a third expected further increases,” the Fed said in a statement.

The Chicago Fed district includes the heart of the U.S. Corn Belt states of Iowa, Illinois and Indiana, and parts of Wisconsin and Michigan. Iowa and Illinois combined produce about a third of the U.S. corn and soybeans, to help make the United States the world’s leading exporter of those key food and industrial crops.

The Kansas City Federal Reserve also released its quarterly farmland survey on Tuesday, showing values up 25 to 32 percent and at records highs, driven by the stronger grain prices and farm incomes.

Farmland values are closely watched by Federal Reserve economists and by commercial bankers as a barometer of U.S. banking assets and as a benchmark for agricultural balance sheets. Farmland is a basic collateral for farm loans.

FARMERS IN BETTER SHAPE THAN IN 1980S

April 10 (Reuters) – U.S. agribusiness giant Cargill Inc reported a rebound in earnings after its worst quarter in a decade, led by record profits in its global food ingredient businesses and stronger results in energy trading.

Minneapolis-based Cargill, one of the world’s largest privately held corporations, reported $766 million in earnings from continuing operations for the fiscal third quarter ended Feb. 29, just ahead of $763 million a year earlier.

Revenue rose 5 percent to $31.9 billion.

Third-quarter results represent a bounce back after Cargill’s second quarter profits fell 88 percent to $100 million – the worst quarterly performance since 2001, as earnings were hurt by investments made in equity markets and by distressed assets amid the European debt crisis.

“Cargill’s earnings strengthened in the third quarter, totaling more than twice that earned in the first six months of the fiscal year,” Cargill’s chief executive Greg Page said in a statement. “Although it continues to be an unsettled year for the global economy, we did a better job navigating the uncertainty.”

Despite the third-quarter rebound, profits were still below year-ago levels in four of Cargill’s five main business units. But there were “much stronger” results in the company’s energy businesses, the company said, which kept its big risk-management and financial unit slightly below the year-ago results.

Cargill and rivals such as Archer Daniels Midland Co and Bunge were hit late last year by volatile prices, with commodity markets often gyrating on news of the European debt crisis rather than the fundamental factors like food supply and demand.

CHICAGO (Reuters) – Many U.S. farmers are waiting for crop insurance coverage to kick in before getting too aggressive in planting corn early, resisting the temptation presented by record warm temperatures this spring, a top agronomist said on Wednesday.

“Monday’s numbers from USDA certainly showed ‘some’ early planting but the dam has not broken yet. The short-term weather forecast is favorable in terms of no expected heavy rains, but a cool off in temps may dampen some spirits,” Robert Nielsen, a state extension corn specialist with Purdue University in Indiana, told Thomson Reuters online ags forum. “Most have been impatiently waiting for the April 6 insurance date before getting too serious about planting corn,” he added. While Indiana farmers had seeded 1 percent of their corn as of Sunday, nationwide farmers had planted 3 percent, matching the earliest start on record since 1999. Some farmers took advantage of summer-like temperatures in March, brushing off crop insurance dates which do not kick in until the first or second week of April — betting on an early harvest so they can meet the world’s demand for corn amid a tight U.S. supply left from the 2011 harvest.

Farmers aim to get their corn planted by mid-May as yields tend to drop off after then. But heavy spring rains and flooding have put them behind in recent years.

“Risks to early planting include uneven stand establishment if soil moisture and temperature are not favorable, damage from a severe frost or freeze event once the plants have elevated above the soil surface,” said Nielsen referring to the V5 growth stage, or the emergence of the plant’s fifth leaf, around two to three weeks after planting.

Temperatures below 30 degrees Fahrenheit (near 0 Celsius) can be “lethal” to newly emerged corn, he added. Nielsen said the warm winter and spring also raised the risk of more pests, citing the chance of a higher infestation of cutworms and flea beetles which carry Stewarts wilt disease. Both can hurt corn yields. “Early application of pre-plant residual herbicides may not give long enough control of weeds and so may result in the need for post-emergence herbicides,” Nielsen said. “Given the continued spate of severe weather events already this year, one can only wonder what will happen the remainder of the year,” he said.

For more information on the Ags Forum, click: here

(Reporting By Christine Stebbins; Editing by David Gregorio)

CHICAGO (Reuters) – Agribusiness company Cargill Inc CARG.UL is expanding in the corn-based ethanol business despite a sluggish demand outlook for the renewable fuel, the head of the company’s corn milling group said on Thursday.

Alan Willits, president of Cargill Corn Milling, said the company is on track to spend $200 million retrofitting and expanding a corn processing facility in Fort Dodge, Iowa, that will employ 200 and open by the fourth quarter of 2013. “Biofuels have an important role to play as a fuel source in North America,” Willits said in an interview at the Reuters Food and Agriculture Summit.

“We want to be a part of that whether it’s serving our farm customers or our food customers. We don’t think we can be relevant to them if we don’t have some skin in the game relative to biofuels. That was one of the motivations to invest in that facility.” Minneapolis-based Cargill, a global commodities giant with annual sales of $119.5 billion in the year ended May 31, 2011, is one of the top 10 U.S. ethanol producers with about 215 million gallons a year – 180 million produced at its Blair, Nebraska, corn mill and another 35 million at its Eddyville, Iowa, mill. Fort Dodge, with a target of 115 million gallons a year, will provide a substantial boost. The investment comes at a time when ethanol – which has seen a huge boom in recent years to meet a federal government mandate to produce home-grown biofuels – is stalled. Willits pointed to “a blending wall” created by a limit on refiners mixing in a maximum 10 percent ethanol to gasoline fuels.

“We’re not going to be flipping a switch and going right to E-15,” he said.

The industry is waiting for a proposed expansion of that allowable blend to 15 percent, but implementation of the new limit is stuck, awaiting EPA and state regulatory approvals for ethanol’s use in newer model cars, made in 2001 and later.

In addition, EPA has yet to approve E15 use in older automobile models amid concerns about the effect of ethanol on combustion engines – and the liability for damage to them.

“It’s very economical to blend ethanol today,” Willits said, with ethanol prices 80 cents to 90 cents a gallon under the cost of wholesale gasoline. “But the reality is this liability issue that exists around going beyond E-10 is not an easy issue to resolve. It’s going to be a challenge for the industry.” U.S. ethanol output was 13.9 billion gallons in 2011, with exports of more than 1 billion gallons also a record. The Renewable Fuels Association (RFA) estimates output will reach 14 billion gallons this year. The 2007 federal Energy bill mandates U.S. corn-based ethanol output must reach 15 billion gallons by 2015, or roughly 10 percent of the fuel burned by cars and light trucks. RFA, the ethanol trade group, says it is optimistic that E15 may be allowed on the market by the summer of 2012. But Willits said Cargill was not counting on E15 being widely available any time soon, given regulatory approvals and other factors, such as shortages of ethanol pumps at rural filling stations. So in effect, the 10 percent blend limit is effectively a ceiling on the amount of ethanol that can currently be consumed in the United States. The end of a “blender’s credit” on January 1 also removed a tax incentive for refiners to blend. “Unfortunately, the installed capacity is higher than that ceiling,” he said. “That’s why you have ethanol trading at 80-90 cents a gallon discount to wholesale gasoline; to encourage that blending. It’s also why U.S. based ethanol is the cheapest today in the world. We exported over a billion gallons of ethanol last year outside the United States and we will certainly export a significant amount this year.” But Willits said Cargill’s commitment to the industry is long-term and will not be affected by the debate this year. “Ethanol today is trading at something close to variable costs, so we are seeing some plants slow down or even consider closing. Markets work, that will have an impact over time,” Willits said of the supply-demand fundamentals in ethanol. The production leader in ethanol is Archer Daniels Midland Co (ADM.N: Quote, Profile, Research, Stock Buzz), with about 1.75 billion gallons of annual capacity in the United States, according to the RFA.

CHICAGO, Feb 21 (Reuters) – The Farm Credit System, a giant government-linked lender to U.S. farmers and rural communities with $230 billion in assets, is confident it can stay mostly exempt from oversight by U.S. banking regulators despite bitter criticism by competing private banks, Farm Credit officials say.

“We are competitors. They’d be happy if the system didn’t exist,” Kenneth Auer, president of the Farm Credit Council, the system’s lobbying group, said in an interview. “We had our Dodd Frank moment in the 1980s,” he added, citing a bailout by Congress that revamped and tightened government oversight and laid the foundation for the System’s current strength.

The FCS, the single largest lender to farmers, was the first government-sponsored entity (GSE) set up by the United States in 1916, long before the better known — and now troubled — GSEs such as Fannie Mae or Freddie Mac. Such GSEs gain investor credibility from an “implicit” guarantee that the government will not let them fail financially.

The FCS is booming now and the strongest GSE financially, buoyed by extraordinary demand for U.S. food and farmland.

On Friday, FCS reported record 2011 earnings of $3.94 billion, up 12.7 percent. By comparison, Citigroup’s 2011 net profit was $11.3 billion and Bank of America’s $1.4 billion.

FCS is a network of more than 85 financial cooperatives owned by farmers, ranchers and rural customers and overseen by the Farm Credit Administration (FCA), a federal agency set up in 1933. Its mission is to fund farms and rural development, assuring that businesses far from money centers receive loans for food production and rural development.

Commercial banks are becoming increasingly critical of the advantages GSE sponsorship gives to the FCS, as the bankers learn more of how Dodd Frank rules will raise their costs.

CHICAGO, Feb 16 (Reuters) – The record rise in farmland prices for the U.S. Midwest Corn Belt slowed in the fourth quarter, tempering the biggest annual gain since 1976, the Federal Reserve Bank of Chicago said on Thursday in its quarterly survey of agricultural bankers.

Farmland values rose 22 percent last year, but gained only 4 percent from the third to fourth quarter and may have been “cooling some from the blistering pace,” the bank said in summarizing its survey results of 205 bankers in Iowa, northern Illinois and Indiana, Wisconsin and Michigan. In the third quarter, land values were up 25 percent year-over-year.

More than 40 percent of the bankers surveyed expected continued price gains in the first quarter of 2012 and only 2 percent expected a decrease, the Fed said.

“The year 2011 may go down in the annals of U.S. agriculture as a once-in-a-generation phenomenon,” the bank.

“Undergirding the huge upward movement in farmland values was an unusual shift up in agricultural prices across the board. Not only did major crop prices move higher, but key livestock and dairy prices were higher as well,” it said.

The Chicago Fed’s survey comes one day after the Kansas City Fed said farmland prices in the U.S. central Plains states rose to all-time highs in the fourth quarter of 2011, up 25 percent from a year ago.

Farmland values are closely monitored by economists at the Federal Reserve and by commercial banks, both as a barometer of U.S. banking assets and as a benchmark for agricultural balance sheets. Farmland is basic collateral for farm loans.

CHICAGO, Feb 15 (Reuters) – Farmland prices in the U.S. Plains states extended record-setting gains in the fourth quarter of 2011, rising 25 percent from a year earlier as cash-rich farmers competed for land, the Federal Reserve Bank of Kansas City said on Wednesday.

In a quarterly survey that provides an important gauge of the U.S. agricultural economy, the Fed also said credit conditions improved as farmers paid down debt at the year-end, comments that may help temper concerns of a land-price bubble.

“Strong farm incomes were fueling the robust farmland value gains,” the Fed said in the survey of 253 bankers in its district.

Non-irrigated cropland values jumped almost 9 percent in the last three months of 2011 and were 25 percent higher than year-earlier levels, matching the record pace in the third quarter. A separate survey on Midwest states is due from the Chicago Fed on Thursday.

“District bankers noted an increasing number of absentee landowners were putting their farms up for sale and attributed much of the auction activity to landowners seeking top-dollar prices. Farmers were the main buyers,” the Fed report said. It said the share of non-farmers who purchased land had diminished over the past six years to about one-quarter of all buyers.

The corn state of Nebraska saw the biggest jump — a 37.8 percent year-on-year price gain for non-irrigated cropland.

Farmland values are closely monitored by economists at the Federal Reserve and by commercial banks, as a barometer of U.S. banking assets and as a benchmark for agricultural balance sheets. Farmland is basic collateral for farm loans.

CHICAGO, Feb 7 (Reuters) – Illinois, a key farm state in the heart of the Corn Belt, is basking in its sixth warmest winter in 117 years — good news for residents who have not had to shovel snow but a red flag for some of the state’s most productive businesses: farms.

Illinois and neighboring Iowa – also in the midst of a balmy winter – produce about a third of all the corn and soybeans grown in the United States, the world’s largest exporter of both crops. Farmers in both states feel more comfortable when there is a substantial snow cover to ensure adequate soil moisture that can nurture crops through the region’s hot dry summers.

Illinois state climatologist Jim Angel said soil moisture, thanks to autumn rains, remained in good shape compared to pockets of drought in nearby areas of the Corn Belt, notably the high-yielding northern Iowa/southern Minnesota border area.

But this winter in Illinois has been a polar opposite of last year’s snowy, frigid season, Angel told Reuters on Tuesday.

Angel said the average temperature in Illinois for December and January was 33.4 degrees Fahrenheit (0.7 Celsius) , much warmer than the historical average of 27.2 degrees F. For January, typically the coldest month of the year, the average temperature was 31.4 degrees F, or 6.6 F above normal, making it the 13th warmest January on record.

Several southern Illinois locations hit a balmy 69 degrees F last month, including Belleville, Kaskaskia and Cairo.

“It’s just odd not to deal with much snow and it feels like we are in this continuous late fall pattern,” Angel said. “A big contrast to last winter.”