WORLD'S FOOD ISSUES

Soybeans move higher on Chicago Board of Trade

CHICAGO (AP) - Soybean futures edged lower while grain futures were mixed. Friday in early activity on the Chicago Board of Trade. Wheat for December delivery rose ¼ cent to $3.03 US a bushel; December corn fell ¾ cent to $2.05¼ a bushel; December oats fell ½ cent to $1.44¼ a bushel; November soybeans fell ¼ cent to $5.25½ a bushel.

Monsanto reports fourth-quarter loss, boosts outlook

ST. LOUIS, Missouri - Agriculture biotechnology giant Monsanto Co. reported a narrower fourth-quarter loss Wednesday, citing slightly lower sales and softening demand for its Roundup herbicide as the company cut its workforce but raised growth estimates for the next two fiscal years. The St. Louis-based company said it lost $42 million US, or 16 cents a share, in the three months ended Aug. 31. That compared with a loss of $188 million, or 72 cents, a year ago. Monsanto said the latest fourth-quarter results include after-tax restructuring charges of $44 million - $41 million related to continuing operations and $3 million tied to discontinued operations - and a $5 million tax benefit associated with a goodwill writeoff of the global wheat business. Excluding items, Monsanto would have posted a loss of one cent a share in the latest quarter. Analysts surveyed by Thomson First Call were expecting a profit of three cents a share. Sales fell to $1.26 billion, from $1.3 billion. Monsanto boosted its growth projections for fiscal years 2005 and 2006. It said it now expects annual growth for 2005 of 10 per cent to 18 per cent from fiscal 2004 earnings per share of $1.61 per share on an ongoing basis. The company also expects 2006 earnings to rise 10 per cent from 2005. It had previously forecast growth of 10 per cent for both years from the 2004 base. Monsanto shares gained 26 cents to $36.85 US in Wednesday trading on the New York Stock Exchange. "At the beginning of this fiscal year, we set aggressive - but achievable - targets to advance our business. We've not only delivered on those targets, but we've raised and beat them," said Hugh Grant, Monsanto's chairman, president and chief executive. "The success we've had this year - especially in our seeds and traits business - sets a foundation that allows us to be more aggressive in our growth-rate expectations, and to set those expectations from a higher starting point." Monsanto's year-ago earnings included a 96-cents-per-share charge tied to its contribution to a settlement over PCB contamination in Alabama. The company also announced at the time its plans to cut costs linked to its Roundup herbicide operations, exit the European breeding and seed business for wheat and barley, and discontinue its plant-made pharmaceuticals program. Making clear that it would further focus its resources on its seeds and biotechnology traits business, Monsanto also said then it planned to cut as much as nine per cent, or about 1,200 jobs, of its global workforce by the end of this fiscal year. For the year, Monsanto earned $267 million, or 99 cents per share, on sales of $5.46 billion - nearly quadrupling the $68 million, or 26 cents per share, it earned the previous year on sales of $4.91 billion.

Where's the beef

EDMONTON, Canada - Food processing firms are crying 'where's the beef' at the same time that Canadian farms are jammed with growing herds of older cattle. The supply and demand disconnect is an example of how the mad cow crisis has contorted the marketplace, causing headaches for businesses and governments trying to help solve the problem. "It's the biggest challenge we face," said Ted Yan, vice-president of Ginger Beef Choice Ltd. The growing Calgary-based food products company has contracts with supermarket and restaurant chains throughout Western Canada and is trying to crack the Ontario market. Yan said despite the glut of older cattle, his company can't get enough of the cheaper beef it uses for its Chinese food products. It has to buy more expensive cuts to help meet its demands. "The slaughterhouses are not slaughtering enough so there is limited supply," Yan said. "Our margins are getting tighter and for us to really grow we need to expand our plant and hire more people." The dilemma is a result of the U.S. decision in May 2003 to shut its border to Canadian beef when a single case of bovine spongiform encephalopathy was found in an Alberta cow. While Washington has since allowed trade to resume in boneless cuts from animals under 30 months of age, the border remains closed to live cattle and older beef. Since Canada was exporting almost 80 per cent of those older cattle to the U.S. before BSE, the animals remain on farms and feedlots. The impasse has the beef industry and Ottawa scrambling to absorb hundreds of thousands of older cattle from beef and dairy herds into the Canadian domestic market. The industry would have to boost its slaughter rate from 8,000 animals per week to 13,000 per week to deal with all the older cattle that need to be culled this year, said Glenn Brand, director of the Beef Information Centre, a division of the Canadian Cattlemen's Association. Expanding slaughter capacity can be risky when companies must consider unknown market factors in their business plans, such as when the U.S. border might finally reopen to all Canadian beef. Canadian meat packers also face other hurdles, including not being able to use beef from younger and older animals in the same plant if they want to export to the States. "Canadian packers and producers are working hard to do a better job of meeting the needs of the processing sector. We are trying to work through these issues, but it isn't easy," Brand said. Recently, meat packing firms have announced new or expanded slaughter facilities for older cattle in Saskatchewan, Ontario and Quebec. Brand said a new federal program developed with the industry is also in the works to develop Canadian markets for beef from older cattle. "The objectives of it are to increase our market share, expand the overall size of this market, and add value long-term through product development," he said. The federal government is also poised to announce details later this month of a loan guarantee program to expand or build small-and medium-sized slaughter facilities. Under the $37.5 million Loan Loss Reserve program, Ottawa will look at helping backstop proposals with sound business plans that meet bank approval, said John Ross, assistant director of Agriculture Canada's red meat division. "These expansions are all critical," Ross said from Ottawa. "It is almost like the two markets have become segregated." Cattle producers also stand to benefit from increasing slaughter capacity. Manitoba, with about 11 per cent of Canada's beef herd, doesn't have a major beef facility. Before BSE, older cattle in the province were shipped to the United States. A group of 2,500 farmers and supporters in the province have formed the Rancher's Choice Beef Co-op in hopes of changing that. The Co-op has a $16-million proposal to buy a slaughter plant in Washington State, dismantle it, and ship it north to Dauphin, Man. The farmers are trying to raise equity and have requested $10 million from the Manitoba government for the project. Co-op spokesman David Reykdal said they are also knocking on Ottawa's door. He said they already have interest from prospective buyers for the beef the plant would produce. "We have a letter of intent to purchase most of our product already," Reykdal said from his 500-head cattle operation near Ashern, Man., northwest-John Coter