Plans to limit speculation in commodity markets could be approved by 20 of the world's leading agriculture ministers later this month.
French minister Bruno le Maire will lead his counterparts from G20 member countries on 23 June in seeking measures to reduce price volatility and improve food security.
Agricultural markets needed investment, transparency and international co-ordination, not speculation, said Mr le Maire at the International Grains Council's conference this week.
"We need investors not speculators - we do not need people who come and make excessive profits in a few days in agricultural markets," said Mr le Maire, commenting that in Chicago, more than 80% of positions were held by purely financial players who had no link with production agriculture.
"We don't want to control prices. What we want to fight is not higher prices but excessive volatility." Strategic emergency food reserves would also be part of the plan.
Addressing the challenges of world food security and price volatility, this year's French presidency of the G20 has developed a five-point action plan for agricultural markets (see panel).
However, grain traders at the conference were generally opposed to limits on speculation. "The best markets are unregulated and allowed to perform in a free manner," said Frontier's trading director Jon Duffy.
"Speculation will never make a market, the fundamentals will always make a market.
"The markets are where they are today because of pure supply and demand," he told Farmers Weekly.
"Speculation may make it get there quicker but I would be fairly wary of anything that's going to limit the free market; I don't believe it's good news for anybody. Controlling speculation won't alter food security."
Moves to limit speculation were roundly rejected by other speakers at the International Grains Council conference.
"The greatest risk for trade from government is not that they will do too little but that they will do too much," said US Wheat Associates president Alan Tracy.
"The markets are not perfect but at the end of the day signals given out by the market are better than those given out by governments," said Rod Gravelet-Blondin, senior general manager of commodity derivatives at the Johannesburg Stock Exchange.
In a similar bid to that of the G20, an EU review of financial regulation is also considering market intervention by limiting the size of positions which can be taken on commodity futures markets.
Source: http://www.fwi.co.uk/Articles/2011/06/09/127236/Farm-ministers-to-rein-in-commodity-speculation.htm
DGC Asset Management Limited provide Investors with the opportunity to engage in strategic mid term and long term asset-backed investments within the Agricultural, Timber and Renewable Energy sectors.
Thursday, 9 June 2011
Wednesday, 8 June 2011
Huge Timber Investment in Australia
STATE Treasurer Jack Snelling has met with a Victorian private plantation management company that is emerging as one of the possible contenders in the multi-million-dollar forward sale of the region’s plantation estate.
Mr Snelling met on May 18 with representatives from Hancock Victoria Plantations (HVP), which is part of a global timber resource management group.
According to Mr Snelling’s office, Hancock is the only potential buyer he has met with to date.
“It was best described as a preliminary meeting and it would be more than likely that he would meet with any other interested parties down the track, but Hancocks was the first one,” a spokesperson said.
Mr Snelling — who attended yesterday’s first roundtable forestry meeting in Adelaide with key South East stakeholders — announced last month that the government planned to move ahead with the forward sale, despite widespread outcry.
HVP — which has a regional office in Mount Gambier and owns some softwood plantations in the South East — is one of Australia’s largest privately-owned plantation timber companies and is owned jointly by Australian and US superannuation and investment funds.
The Hancock Timber Resource Group also purchased 204,000ha of Queensland Government-owned plantations last year for $603m under a 99-year lease.
While the government has not revealed the reserve sale price for South Australia’s sprawling plantation estate, the price is reportedly between $500-$700m.
No comment was available from Hancock on the issue.
According to a local timber industry expert, Hancock could be interested in the historic deal after buying the rights of Victoria’s plantation estate in 1996 for 99 years.
“They could be well-positioned to make an offer,” said an industry insider, who did not want to be named.
They said Hancock had a track record in managing plantation estates in Victoria.
Meanwhile, another forestry expert — who also did not want to be named — said Hancock had done an “excellent job” in managing plantations in Victoria.
“They could be interested, but it is not confirmed,” the industry person said.
According to the company’s website, HVP manages around 245,000 hectares of land across Victoria, including 50,000 hectares of native vegetation for conservation.
“HVP annually supplies some three million tonnes of softwood (pine) and 300,000 tonnes of hardwood (eucalypt) to sawmillers, panel producers and pulp and paper mills in Australia and overseas,” the website said.
“Each year, HVP plantation timber is replacing half a billion dollars of potential forest product imports into Australia, supporting local investment and employment.”
The company supplies around 1.5 million tonnes a year of sawlogs and pulpwood to sawmills in Victoria’s Gippsland region, including Australian Paper’s Maryvale pulp and paper mill.
Through a joint venture business, Softwood Plantation Exporters (SPE) in Geelong, which processes plantation pine thinnings and sawmill residues for export, HVP also contributes to Australia’s export performance in expanding overseas markets
According to the company’s website, it also has an extensive firefighting commitment to the sector.
HVP fire crews are part of the Victorian Country Fire Authority, registered as CFA Forest Industry Brigades.
“As active members of the CFA, our fire crews are trained in wildfire control and work alongside other CFA volunteers on the fire frontline,” the company’s website said.
The company’s firefighting effort includes 235 trained firefighters, 40 support staff, 18 fire tankers, 32 smaller fire fighting appliances, 28 bulldozers available, six graders available, four fire towers, one aerial fire surveillance plane and two first attack helicopters.
Hancock Timber Resource Group is a global timberland investment management organisation based in Boston, Massachusetts, that manages more than two million hectares of timberland in Australia, New Zealand, Canada, Brazil and the United States.
Source: http://www.borderwatch.com.au/archives/9278
Mr Snelling met on May 18 with representatives from Hancock Victoria Plantations (HVP), which is part of a global timber resource management group.
According to Mr Snelling’s office, Hancock is the only potential buyer he has met with to date.
“It was best described as a preliminary meeting and it would be more than likely that he would meet with any other interested parties down the track, but Hancocks was the first one,” a spokesperson said.
Mr Snelling — who attended yesterday’s first roundtable forestry meeting in Adelaide with key South East stakeholders — announced last month that the government planned to move ahead with the forward sale, despite widespread outcry.
HVP — which has a regional office in Mount Gambier and owns some softwood plantations in the South East — is one of Australia’s largest privately-owned plantation timber companies and is owned jointly by Australian and US superannuation and investment funds.
The Hancock Timber Resource Group also purchased 204,000ha of Queensland Government-owned plantations last year for $603m under a 99-year lease.
While the government has not revealed the reserve sale price for South Australia’s sprawling plantation estate, the price is reportedly between $500-$700m.
No comment was available from Hancock on the issue.
According to a local timber industry expert, Hancock could be interested in the historic deal after buying the rights of Victoria’s plantation estate in 1996 for 99 years.
“They could be well-positioned to make an offer,” said an industry insider, who did not want to be named.
They said Hancock had a track record in managing plantation estates in Victoria.
Meanwhile, another forestry expert — who also did not want to be named — said Hancock had done an “excellent job” in managing plantations in Victoria.
“They could be interested, but it is not confirmed,” the industry person said.
According to the company’s website, HVP manages around 245,000 hectares of land across Victoria, including 50,000 hectares of native vegetation for conservation.
“HVP annually supplies some three million tonnes of softwood (pine) and 300,000 tonnes of hardwood (eucalypt) to sawmillers, panel producers and pulp and paper mills in Australia and overseas,” the website said.
“Each year, HVP plantation timber is replacing half a billion dollars of potential forest product imports into Australia, supporting local investment and employment.”
The company supplies around 1.5 million tonnes a year of sawlogs and pulpwood to sawmills in Victoria’s Gippsland region, including Australian Paper’s Maryvale pulp and paper mill.
Through a joint venture business, Softwood Plantation Exporters (SPE) in Geelong, which processes plantation pine thinnings and sawmill residues for export, HVP also contributes to Australia’s export performance in expanding overseas markets
According to the company’s website, it also has an extensive firefighting commitment to the sector.
HVP fire crews are part of the Victorian Country Fire Authority, registered as CFA Forest Industry Brigades.
“As active members of the CFA, our fire crews are trained in wildfire control and work alongside other CFA volunteers on the fire frontline,” the company’s website said.
The company’s firefighting effort includes 235 trained firefighters, 40 support staff, 18 fire tankers, 32 smaller fire fighting appliances, 28 bulldozers available, six graders available, four fire towers, one aerial fire surveillance plane and two first attack helicopters.
Hancock Timber Resource Group is a global timberland investment management organisation based in Boston, Massachusetts, that manages more than two million hectares of timberland in Australia, New Zealand, Canada, Brazil and the United States.
Source: http://www.borderwatch.com.au/archives/9278
Investing in Timber: Perceptions vs. Realities
As investors have grappled with uncertain markets in recent years, interest in timberland investing has grown dramatically.
Despite its impressive growth and performance, however, timberland remains a somewhat misunderstood investment opportunity. We have covered some of the most common misperceptions about the asset class in the source article.
Let me add two additional ones:
Myth: Plantation forests (those consisting of trees of the same age and species) yield higher returns than forests that are managed in a more natural mixed age/mixed species state.
Reality: Plantation forests typically produce faster growth rates and higher volumes of timber, but these characteristics alone do not translate into higher returns. Timberland investments are usually valued on a discounted cash flow (DCF) basis. This tends to level return expectations across different forest types and investment locations. Local timber and land market conditions have also a considerable impact on LT investment returns. For instance, a forest stocked with trees of varying ages and species may have a component of high quality hardwoods that are in demand for the production of premium furniture. This timber is likely to sell at a higher unit cost than timber grown in a plantation forest that is being managed to produce lower-valued pulpwood. In addition, bare land values are often considerably higher for the natural, mixed age/mixed species forest because of alternative land use pressures, such as conservation, recreation and rural home development.
Myth: The capture of higher and better use (HBU) land values almost always entails conversion of a forest for purposes of development.
Reality: A forest’s value is determined by the context in which it exists. Forests in proximity to growing metropolitan areas often see their underlying land values eclipse their values as timber production assets. In addition, population and commercial expansion tends to be accompanied by increased public pressure to protect lands for conservation and recreation. For timberland investors, it is essential to determine the “HBU” of a forest asset and to structure one’s management approach accordingly. In some cases, it may entail selling some land for development. In others, it may entail working with public agencies or private conservation groups. Regardless of the prevailing “HBU” scenario confronting an investor, the goal is to respond to land-use market demands in a socially and environmentally responsible fashion and to create additional value in the process.
Timberland is an exciting investment sector.but above all requires a timberland manager with proven knowhow, disciplined investment process and genuinely transparent with interests that are aligned with those of the investors.
Source: http://www.glgroup.com/News/Investing-in-Timberland---Perceptions-vs.-Realities-54203.html
Despite its impressive growth and performance, however, timberland remains a somewhat misunderstood investment opportunity. We have covered some of the most common misperceptions about the asset class in the source article.
Let me add two additional ones:
Myth: Plantation forests (those consisting of trees of the same age and species) yield higher returns than forests that are managed in a more natural mixed age/mixed species state.
Reality: Plantation forests typically produce faster growth rates and higher volumes of timber, but these characteristics alone do not translate into higher returns. Timberland investments are usually valued on a discounted cash flow (DCF) basis. This tends to level return expectations across different forest types and investment locations. Local timber and land market conditions have also a considerable impact on LT investment returns. For instance, a forest stocked with trees of varying ages and species may have a component of high quality hardwoods that are in demand for the production of premium furniture. This timber is likely to sell at a higher unit cost than timber grown in a plantation forest that is being managed to produce lower-valued pulpwood. In addition, bare land values are often considerably higher for the natural, mixed age/mixed species forest because of alternative land use pressures, such as conservation, recreation and rural home development.
Myth: The capture of higher and better use (HBU) land values almost always entails conversion of a forest for purposes of development.
Reality: A forest’s value is determined by the context in which it exists. Forests in proximity to growing metropolitan areas often see their underlying land values eclipse their values as timber production assets. In addition, population and commercial expansion tends to be accompanied by increased public pressure to protect lands for conservation and recreation. For timberland investors, it is essential to determine the “HBU” of a forest asset and to structure one’s management approach accordingly. In some cases, it may entail selling some land for development. In others, it may entail working with public agencies or private conservation groups. Regardless of the prevailing “HBU” scenario confronting an investor, the goal is to respond to land-use market demands in a socially and environmentally responsible fashion and to create additional value in the process.
Timberland is an exciting investment sector.but above all requires a timberland manager with proven knowhow, disciplined investment process and genuinely transparent with interests that are aligned with those of the investors.
Source: http://www.glgroup.com/News/Investing-in-Timberland---Perceptions-vs.-Realities-54203.html
Trees Offer Solid Investment Returns
Investors seeking the great prize of uncorrelated returns plus the inflation protection supposedly promised by commodities have recently had to develop nerves of steel.
Those who favour the sector continue to insist that, in the long term, prices are driven by real demand for raw materials from emerging markets, rather than speculation on price rises. However, in the shorter term, volatility looks set to stay.
Pension funds, which understandably have weaker stomachs for the roller-coaster ride, are seeking alternatives. One is timberland, which, like other commodities, is seen to offer protection against inflation.
As an added bonus for pension funds looking to take into account environmental, social and governance factors, timberland offers “explicit opportunities” as a sustainable investment, according to Mercer, the investment consultant.
Although, it also cautioned, in a report published this year, that where investments are in emerging markets, there may be higher environmental and social risks.
Timberland has been an investible asset class in the US since the mid-1980s, according to Mason Browne, director of operations, global timber acquisitions at Four Winds Capital Management, which manages the UK-listed Phaunos Timber Fund.
Phaunos, named after a classical forest god, became fully invested last year, having been formed in September 2006. It raised £59m ($96m) from institutions in its initial public offering before listing on the Alternative Investment Market in December that year.
The company, which reports in dollars, moved to the LSE main market in June 2008 and recently reported net asset value of $594m on December 31 2010, up from $575m the year before. It has announced its first dividend of 2 cents a share.
Unlike Phaunos, which Mr Browne explains has a global investment strategy and is attempting to gain exposure to emerging markets, the majority of timberland investment companies are US-based and invested in US timber.
This constitutes one of the risks in the sector – heavy exposure to the US dollar and housing market. Opportunities outside the US are limited but growing.
The UN Food and Agriculture Organisation estimates that global trade in timber is worth more than $200bn, about 1 per cent of world GDP.
“There is a huge correlation between GDP and wood consumption,” says Mr Browne.
Timberland offers some protection against fluctuations in demand, he explains. “It doesn’t trade at the spot price of lumber. It also offers a low correlation with other asset classes and a high correlation with inflation.”
The main thing investors have to bear in mind is that timber is an illiquid asset class.
Short term investors and timberland do not go together, says Simon Fox, principal at Mercer’s alternatives boutique.
He says the sector tends to require investment periods of 10-15 years. Mercer tracks about 65 timberland investment managers, most of them in the US, although it finds the global opportunities most compelling – particularly the growth of demand from China and timberland’s growing significance as a “carbon-neutral” fuel source.
“By owning the forest, you are earning that return from the growth of trees and any rise in the price of timber,” says Mr Fox.
The main risk is pricing, which means investors should ensure there is strong investment management.
Timberland also carries physical risks, from fires, hurricanes and even insect blight. Currency risk and taxation should also be taken into account.
However, there are also advantages.
“With timberland, you can control when you take it to market,” says Mr Fox.
“Unlike an agricultural commodity, which has to be harvested, with timber you can leave it on the stump.”
Eva Greger, managing director of GMO Renewable Resources, which has more than $3bn in timber assets, agrees.
“Timber provides a steady yield. The value of that yield is tied to commodity prices and the timing of the yield can be managed – you can cut the trees sooner or let them grow older,” she explains.
She says the asset class appeals to investors with longer time horizons, such as pension plans, who are seeking to hedge inflation risk by holding physical assets.
She says it also appeals to investors with an interest in sustainability and the positive environmental benefits of growing trees.
The NCREIF timber index has shown returns of just under 7 per cent over the past decade.
“But it includes only US timberland, which is considered low risk and has a commensurately low expected return. Our returns have been higher,” says Ms Greger, saying that GMO’s investments in countries such as New Zealand, Australia and Uruguay have paid off.
Source: http://www.ft.com/cms/s/0/b74cc33a-8d7a-11e0-bf0b-00144feab49a,s01=1.html
Those who favour the sector continue to insist that, in the long term, prices are driven by real demand for raw materials from emerging markets, rather than speculation on price rises. However, in the shorter term, volatility looks set to stay.
Pension funds, which understandably have weaker stomachs for the roller-coaster ride, are seeking alternatives. One is timberland, which, like other commodities, is seen to offer protection against inflation.
As an added bonus for pension funds looking to take into account environmental, social and governance factors, timberland offers “explicit opportunities” as a sustainable investment, according to Mercer, the investment consultant.
Although, it also cautioned, in a report published this year, that where investments are in emerging markets, there may be higher environmental and social risks.
Timberland has been an investible asset class in the US since the mid-1980s, according to Mason Browne, director of operations, global timber acquisitions at Four Winds Capital Management, which manages the UK-listed Phaunos Timber Fund.
Phaunos, named after a classical forest god, became fully invested last year, having been formed in September 2006. It raised £59m ($96m) from institutions in its initial public offering before listing on the Alternative Investment Market in December that year.
The company, which reports in dollars, moved to the LSE main market in June 2008 and recently reported net asset value of $594m on December 31 2010, up from $575m the year before. It has announced its first dividend of 2 cents a share.
Unlike Phaunos, which Mr Browne explains has a global investment strategy and is attempting to gain exposure to emerging markets, the majority of timberland investment companies are US-based and invested in US timber.
This constitutes one of the risks in the sector – heavy exposure to the US dollar and housing market. Opportunities outside the US are limited but growing.
The UN Food and Agriculture Organisation estimates that global trade in timber is worth more than $200bn, about 1 per cent of world GDP.
“There is a huge correlation between GDP and wood consumption,” says Mr Browne.
Timberland offers some protection against fluctuations in demand, he explains. “It doesn’t trade at the spot price of lumber. It also offers a low correlation with other asset classes and a high correlation with inflation.”
The main thing investors have to bear in mind is that timber is an illiquid asset class.
Short term investors and timberland do not go together, says Simon Fox, principal at Mercer’s alternatives boutique.
He says the sector tends to require investment periods of 10-15 years. Mercer tracks about 65 timberland investment managers, most of them in the US, although it finds the global opportunities most compelling – particularly the growth of demand from China and timberland’s growing significance as a “carbon-neutral” fuel source.
“By owning the forest, you are earning that return from the growth of trees and any rise in the price of timber,” says Mr Fox.
The main risk is pricing, which means investors should ensure there is strong investment management.
Timberland also carries physical risks, from fires, hurricanes and even insect blight. Currency risk and taxation should also be taken into account.
However, there are also advantages.
“With timberland, you can control when you take it to market,” says Mr Fox.
“Unlike an agricultural commodity, which has to be harvested, with timber you can leave it on the stump.”
Eva Greger, managing director of GMO Renewable Resources, which has more than $3bn in timber assets, agrees.
“Timber provides a steady yield. The value of that yield is tied to commodity prices and the timing of the yield can be managed – you can cut the trees sooner or let them grow older,” she explains.
She says the asset class appeals to investors with longer time horizons, such as pension plans, who are seeking to hedge inflation risk by holding physical assets.
She says it also appeals to investors with an interest in sustainability and the positive environmental benefits of growing trees.
The NCREIF timber index has shown returns of just under 7 per cent over the past decade.
“But it includes only US timberland, which is considered low risk and has a commensurately low expected return. Our returns have been higher,” says Ms Greger, saying that GMO’s investments in countries such as New Zealand, Australia and Uruguay have paid off.
Source: http://www.ft.com/cms/s/0/b74cc33a-8d7a-11e0-bf0b-00144feab49a,s01=1.html
India to be third largest investment destination for renewable energy investment this year: KPMG
NEW DELHI: India is the third most favoured destination globally for investments in the renewable energy sector and will also be a major source of new entrants into the sector, behind the US and China, according to a survey released on Wednesday by global consulting firm KPMG.
The top five targeted countries for renewable energy investment are the US, selected by 53 percent of respondents, China (38 per cent), India (35 per cent) Germany (34 per cent) and the UK (33 per cent)," according to KPMG's annual survey of global renewable energy mergers and acquisitions titled Green Power 2011.
"Some 78 per cent of all survey respondents expect new players to come from China, followed by North America (59 per cent), India (42 per cent) and Western Europe (41 per cent)," it added.
The Indian renewable energy market has become increasingly dynamic in recent years as a result of strong natural resources, greater accommodation to international investments and a variety of government incentives.
"In India, we see increasing trends towards sustained M&A activity in the renewable space, specifically wind, small hydro, and solar sub-segments going forward. With clear thrust on this space, and a supportive policy and regulatory environment, we see this activity picking up slowly but steadily," said Richard Rekhy , Head of Advisory, KPMG in India.
"The deal sizes, however, may be smaller (as compared to global benchmarks) to start with," he added.
The government is providing an array of incentives to firms in the renewable energy sector including setting of renewable energy generating standards for utilities, creating a structure for trading renewable energy certificates.
On the tax incentives front, the government has allowed project developers to take 80 per cent accelerated depreciation on assets deployed in renewable energy generation and given a ten year tax holiday to the sector and concessional duties for imports.
In the Indian renewable energy sector, solar and wind energy will be the driving force for overseas investments and acquisitions. The Indian wind market has experienced rapid growth in recent months.
"Some $586 million of project financing flowed into Indian onshore wind farms in the first quarter of 2011, only 37 per cent below the $934 million that was allocated to the sector throughout 2010," said the survey.
Although a majority of the respondents picked the US as a favoured market for solar energy, about a third said they would seek deals in other countries like India.
One of the reasons why the Indian solar sector is increasingly attractive to acquirers is the plethora of incentives that have been announced to support the sector's development.
"With India it is a combination of factors. There is a portfolio standard on a state by state basis. Developers have the ability to get power purchase agreements due to utility obligations. Then there are the Generation Based Incentive (GBI) and tax depreciation incentives," said Siobhan Smyth, head of renewables at HSBC.
"You are looking at 15-20 per cent returns depending on the state you look at and the type of assets you are buying."
Source: http://economictimes.indiatimes.com/news/news-by-industry/energy/india-to-be-third-largest-investment-destination-for-renewables-this-year-kpmg/articleshow/8773190.cms
The top five targeted countries for renewable energy investment are the US, selected by 53 percent of respondents, China (38 per cent), India (35 per cent) Germany (34 per cent) and the UK (33 per cent)," according to KPMG's annual survey of global renewable energy mergers and acquisitions titled Green Power 2011.
"Some 78 per cent of all survey respondents expect new players to come from China, followed by North America (59 per cent), India (42 per cent) and Western Europe (41 per cent)," it added.
The Indian renewable energy market has become increasingly dynamic in recent years as a result of strong natural resources, greater accommodation to international investments and a variety of government incentives.
"In India, we see increasing trends towards sustained M&A activity in the renewable space, specifically wind, small hydro, and solar sub-segments going forward. With clear thrust on this space, and a supportive policy and regulatory environment, we see this activity picking up slowly but steadily," said Richard Rekhy , Head of Advisory, KPMG in India.
"The deal sizes, however, may be smaller (as compared to global benchmarks) to start with," he added.
The government is providing an array of incentives to firms in the renewable energy sector including setting of renewable energy generating standards for utilities, creating a structure for trading renewable energy certificates.
On the tax incentives front, the government has allowed project developers to take 80 per cent accelerated depreciation on assets deployed in renewable energy generation and given a ten year tax holiday to the sector and concessional duties for imports.
In the Indian renewable energy sector, solar and wind energy will be the driving force for overseas investments and acquisitions. The Indian wind market has experienced rapid growth in recent months.
"Some $586 million of project financing flowed into Indian onshore wind farms in the first quarter of 2011, only 37 per cent below the $934 million that was allocated to the sector throughout 2010," said the survey.
Although a majority of the respondents picked the US as a favoured market for solar energy, about a third said they would seek deals in other countries like India.
One of the reasons why the Indian solar sector is increasingly attractive to acquirers is the plethora of incentives that have been announced to support the sector's development.
"With India it is a combination of factors. There is a portfolio standard on a state by state basis. Developers have the ability to get power purchase agreements due to utility obligations. Then there are the Generation Based Incentive (GBI) and tax depreciation incentives," said Siobhan Smyth, head of renewables at HSBC.
"You are looking at 15-20 per cent returns depending on the state you look at and the type of assets you are buying."
Source: http://economictimes.indiatimes.com/news/news-by-industry/energy/india-to-be-third-largest-investment-destination-for-renewables-this-year-kpmg/articleshow/8773190.cms
Western Australia Plants out 5 Million Hectares of Wheat - Great news for Farmland Investment
Australia's top grain growing state may be on for a near-record canola crop despite the oilseed, like barley's, being downgraded in sowing plans by a stampede for wheat.
Growers in Western Australia, which typically provides roughly 40% of the national wheat harvest, have planted a record 5.4m hectares with the grain, a 10% rise year on year, Australia & New Zealand Bank said.
The increase has come largely at the expense of barley and canola, although growers, encouraged by high prices, have also brought marginal land into production, lifting overall sowings by some 300,000 hectares to 8m hectares.
Barley seedings have dropped to a five-year low of 1.1m hectares, with canola area down some 17% at 1.0m hectares.
Weak prospects
Nonetheless, this figure remains higher than historical levels and - assuming a trend yield of 1.0 tonnes per hectare, which the state fell short of last year because of drought - production should reach 1.07m tonnes, ANZ said.
The current record was set in 2008-09, at 1.18m tonnes.
A big crop of the rapeseed variant would be a welcome boost given setbacks to crops elsewhere, with a wet spring holding back output in Canada, the top canola exporter.
Canada's farm ministry overnight cut by 600,000 tonnes, to 12.7m tonnes, its estimate for domestic production.
Meanwhile, hopes for the rapeseed harvest in Germany, the European Union's biggest producer, have been dented by a dearth of rain.
Oil World, the influential oilseeds analysis group, last week cut to 4.65m tonnes its forecast for the harvest, representing a fall of more than 1m tonnes from last year's result, while German co-operatives have estimated the crop at 4.4m tonnes.
The US Department of Agriculture foresees world rapeseed production, including canola, falling behind consumption in 2011-12 for a second successive season.
Into the red
The cut by Australian growers in canola seedings this year is in part down to weather, with a dry start to autumn persuading many farmers to delay sowings.
"Farmers that chose to wait for rain before sowing would have had to wait until mid-May. At that point, it was quite late to be sowing canola, and most farmers would have opted to sow wheat," ANZ said.
However, it also reflects the higher costs, in fertilizer and pesticide terms, of growing canola, which do not look this season like being rewarded with greater profits.
Gross margins were, at about Aus$120 a tonne last season, roughly 50% higher than those for wheat. However, thanks to especially high wheat prices, those figures have now converged at about Aus$300 a tonne.
With farms in some areas of Western Australia losing Aus$500,000 each last season, because of the drought, "managing cash flows and debt levels for the 2011 cropping season has been a priority", ANZ said.
Source: Agrimoney.com
Growers in Western Australia, which typically provides roughly 40% of the national wheat harvest, have planted a record 5.4m hectares with the grain, a 10% rise year on year, Australia & New Zealand Bank said.
The increase has come largely at the expense of barley and canola, although growers, encouraged by high prices, have also brought marginal land into production, lifting overall sowings by some 300,000 hectares to 8m hectares.
Barley seedings have dropped to a five-year low of 1.1m hectares, with canola area down some 17% at 1.0m hectares.
Weak prospects
Nonetheless, this figure remains higher than historical levels and - assuming a trend yield of 1.0 tonnes per hectare, which the state fell short of last year because of drought - production should reach 1.07m tonnes, ANZ said.
The current record was set in 2008-09, at 1.18m tonnes.
A big crop of the rapeseed variant would be a welcome boost given setbacks to crops elsewhere, with a wet spring holding back output in Canada, the top canola exporter.
Canada's farm ministry overnight cut by 600,000 tonnes, to 12.7m tonnes, its estimate for domestic production.
Meanwhile, hopes for the rapeseed harvest in Germany, the European Union's biggest producer, have been dented by a dearth of rain.
Oil World, the influential oilseeds analysis group, last week cut to 4.65m tonnes its forecast for the harvest, representing a fall of more than 1m tonnes from last year's result, while German co-operatives have estimated the crop at 4.4m tonnes.
The US Department of Agriculture foresees world rapeseed production, including canola, falling behind consumption in 2011-12 for a second successive season.
Into the red
The cut by Australian growers in canola seedings this year is in part down to weather, with a dry start to autumn persuading many farmers to delay sowings.
"Farmers that chose to wait for rain before sowing would have had to wait until mid-May. At that point, it was quite late to be sowing canola, and most farmers would have opted to sow wheat," ANZ said.
However, it also reflects the higher costs, in fertilizer and pesticide terms, of growing canola, which do not look this season like being rewarded with greater profits.
Gross margins were, at about Aus$120 a tonne last season, roughly 50% higher than those for wheat. However, thanks to especially high wheat prices, those figures have now converged at about Aus$300 a tonne.
With farms in some areas of Western Australia losing Aus$500,000 each last season, because of the drought, "managing cash flows and debt levels for the 2011 cropping season has been a priority", ANZ said.
Source: Agrimoney.com
BP Plans Biofuel Investments this Year
ST. GALLEN, Switzerland (MarketWatch) -- BP PLC's (BP.LN) plans to invest $1.5 billion in biofuels in 2011 but won't do so at the expense of food security in the countries where it does invest, Chief Executive Robert Dudley said Friday.
"It is our policy...We will not invest in biofuel, in corn-based ethanol, on lands used for food, it will be in the Brazilian grasslands" which are used specifically for fuel crops, Dudley told an audience at a business conference here.
BP in March bought an 83% stake in Brazilian ethanol and sugar producer Companhia Nacional de Acucar e Alcool, or CNAA, for $680 million. BP was also the first global oil major to make an acquisition in Brazil's ethanol sector, buying a 50% stake in Tropical BioEnergia SA in 2008.
This was echoed by Royal Dutch Shell PLC (RDSA.LN) Chairman Jorma Olila. Shell undertook a $12 billion tie-up with Cosan Industria e Comercio SA, the world's largest sugar and ethanol group, in February last year.
"The only investment in first generation biofuels we have okayed is in Brazil, where it will not interfere with the production of foodstuffs or affect the integrity of the rainforests," Olila said.
Source: http://www.marketwatch.com/story/bp-says-plans-to-invest-in-biofuels-this-year-2011-05-13
"It is our policy...We will not invest in biofuel, in corn-based ethanol, on lands used for food, it will be in the Brazilian grasslands" which are used specifically for fuel crops, Dudley told an audience at a business conference here.
BP in March bought an 83% stake in Brazilian ethanol and sugar producer Companhia Nacional de Acucar e Alcool, or CNAA, for $680 million. BP was also the first global oil major to make an acquisition in Brazil's ethanol sector, buying a 50% stake in Tropical BioEnergia SA in 2008.
This was echoed by Royal Dutch Shell PLC (RDSA.LN) Chairman Jorma Olila. Shell undertook a $12 billion tie-up with Cosan Industria e Comercio SA, the world's largest sugar and ethanol group, in February last year.
"The only investment in first generation biofuels we have okayed is in Brazil, where it will not interfere with the production of foodstuffs or affect the integrity of the rainforests," Olila said.
Source: http://www.marketwatch.com/story/bp-says-plans-to-invest-in-biofuels-this-year-2011-05-13
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