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Consulting Spotlight:
Biofuels Sector Analysis
WPI has been providing clients with analysis on the biofuels market for more than 20 years. Its daily analytical report, Ag Perspectives , provides major biofuel producers with regular input on market and policy developments affecting the feasibility and profitability of ethanol and biodiesel production.
The company has conducted several different types of ethanol investment studies on behalf of clients including co-product marketing, CBI pass-throughs, investor requirements and direct site investment analyses for customers interested in specific acquisitions in the biofuels market.
Contact Gary Blumenthal for more information about WPI's capabilities and services in this area.
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Hot Topics
to Watch: May 2006
Markets
Brazil's Switch to Sugar: The 800-pound gorilla in the soybean business has apparently developed a sweet tooth instead. Brazilian soybean production is going down due to rust problems and a strong real, but farmers have options and that includes producing cane for the white-hot sugar and ethanol markets. Meanwhile, there is dryness in some wheat areas of Argentina. The Mercosur region remains extremely influential in any of these markets and so we will be following the crops very carefully.
North American Wheat Dies: The old joke is that a wheat farmer sees his crop killed several times during a season as he dwells with angst over every slight that Mother Nature imposes on the crop. This year though, there really is trouble in Oz, or actually in Texas and Oklahoma . But the final numbers have a while before they tally so WPI will be keeping up its ground truth campaign to keep the market apprised and the bulls honest.
Black Sea Outlook: Planting is just getting started in Russia and Ukraine so it is too early to tell, but there does not appear to be the kind of aggressive expansion one had expected a few years ago. The price signals may just not be as strong as they once were, and there continue to be structural challenges, but it is an area that requires further review in the weeks ahead.
Policy
Ag Policy Review: The U.S. Congress is busy over the next few weeks holding hearings on the farm bill, ethanol, crop insurance, peanuts and sugar. The stage is being set for the future of U.S. agricultural policy and WPI will follow and detail the nuances of greatest importance to the sector.
Le Doha est Mort. Vive le Doha: Okay, the Doha Round is not dead but the pace of negotiations certainly does not impress anyone. Nonetheless, the global economy and world trade are expanding rapidly, so this policy failure is not as critical as it seems. Still, there are ample policy problems in agriculture and trade that cost businesses a lot of cash – so it all has to be followed closely.
Stoking Ethanol: As if $2.00/gallon margins were not good enough, discussions have begun amongst lobbyists in Washington over how the energy supply can be stoked a little more ahead of the November mid-term elections. Actually, those ethanol prices may be too good, and some talk about adjusting the subsidies so as to cut some of the windfall. All of this will greatly impact Midwest corn prices and so WPI will report regularly on these developments.
AWB in Crosshairs: The Cole inquiry in Australia is zeroing in on some conclusions regarding the AWB Limited's involvement, and that of certain government officials in the bribing of Iraq to gain wheat sales. The future of this influential trading house is on the line and deserves the rapt attention of all parties that compete in the global market.
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