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USFR Weekly Recap - JUNE 28-29, 2014

June 28, 2014

 

Today on USFR
JUNE 30, 2014
 
HEADLINES:
U.S. FARM REPORT BROUGHT TO YOU BY THE ALL-NEW CHEVY SILVERADO.  2014 NORTH AMERICAN TRUCK OF THE YEAR…TODAY ON U-S FARM REPORT...THE BIG JUNE STOCKS REPORT COMES OUT MONDAY - WE HAVE A PREVIEW RUMORS OF A BLOCKBUSTER MONSANTO MERGER OVERSHADOW THEIR EARNINGS REPORT CANADIAN TRUCKERS OBJECT TO INCREASED FEES FOR AG PRODUCTS TO ENTER THE U-S
JOHN OPEN: U.S. FARM REPORT - BROUGHT TO YOU BY THE ALL-NEW CHEVY SILVERADO.  2014 NORTH AMERICAN TRUCK OF THE YEAR… TODAY ON U-S FARM REPORT...THE BIG JUNE STOCKS REPORT COMES OUT MONDAY - WE HAVE A PREVIEW RUMORS OF A BLOCKBUSTER MONSANTO MERGER OVERSHADOW THEIR EARNINGS REPORT CANADIAN TRUCKERS OBJECT TO INCREASED FEES FOR AG PRODUCTS TO ENTER THE U-S USDA REPORT REVIEW:
THANKS, JOHN. FARMERS AND GRAIN TRADERS ARE ANXIOUSLY AWAITING USDA'S LATEST STOCKS REPORT, SET TO BE RELEASED MONDAY. THE AGENCY WILL ALSO REVEAL INSIGHT ON PLANTED ACRES.
MONSANTO EARNINGS…MONSANTO COMPANY POSTED ITS THIRD-QUARTER EARNINGS THIS WEEK, SHOWING A DROP OF 6 PERCENT.THE COMPANY CITES HIGHER COSTS AS THE REASON.  BUT LEADERS SAY THEY STILL EXPECT TO DOUBLE PROFITS OVER THE NEXT FIVE YEARS. MONSANTO'S EARNINGS REPORT CAME OUT A DAY AFTER BLOOMBERG PUBLISHED A STORY ABOUT MONSANTO POSSIBLY BUYING ITS COMPETITOR, SYNGENTA. BLOOMBERG SAID THE TALKS DIDN'T GO ANYWHERE, BUT THE INTEREST WAS OVER MONSANTO BEING BASED IN SWITZERLAND, TO DODGE HIGH CORPORATE TAX RATES IN THE U-S.

CHINA AUSTRILIA DEAL:

A MAJOR TRADE DEAL BETWEEN AUSTRALIA AND CHINA COULD HAPPEN BY THE END OF THE YEAR.

THAT'S ACCORDING TO OFFICALS WHO MET THIS WEEK. WHILE SHORT ON SPECIFICS, CHINA AND AUSTRALIA HAVE AGREED TO CREATE AN INVESTMENT COOPERATION FRAMEWORK TO INCREASE TRADE AND INVESTMENT OPPORTUNITIES BETWEEN THE TWO COUNTRIES. MANY CRITICS SAY WHILE THE TALKS DO MEAN PROGRESS, THEY'VE SEEN VERY FEW SIGNS OF ANY REAL BREAKTHROUGHS BEING MADE.

CHINA RESERVES:
CHINA SAYS IT WANTS TO RAMP UP IT'S… DOMESTIC GRAIN RESERVES.  ACCORDING TO REUTERS, OFFICIALS PLAN TO INCREASE RESERVES MY 25 MILLION TONNES THIS YEAR. THAT WOULD BE ENOUGH TO SUPPLY AT LEAST SIX MONTHS OF DEMAND. OFFICIALS SAY THEY ALSO PLAN TO ADD 50 MILION TONNES OF ADDITIONAL STORAGE OVER THE NEXT TWO YEARS. CANADIAN TRUCK FEES:  CANADIAN TRUCKERS WANT TO PUT THE BRAKES ON A PROPOSED FEE HIKE BY USDA.  THE AG DEPARTMENT WANTS TO DOUBLE THE ANNUAL FEES PAID BY CANADIAN TRUCKERS THAT HAUL GOODS ACROSS THE BORDER. THE YEARLY FEE WOULD JUMP FROM ONE-HUNDRED FIVE DOLLARS PER TRUCK TO THREE-HUNDRED-AND-20 DOLLARS AND WOULD APPLY TO CANADIAN TRUCKS THAT HAUL AGRICULTURE AND FOOD SHIPMENTS WHICH MUST BE CLEARED BY THE USDA.

 ROUND TABLE #1:

 WELCOME BACK TO U.S. FARM REPORT. WELL, WE'RE TRYING SOMETHING NEW THIS WEEK.

USUALLY THE MARKETING ROUND TABLE ALL WE FOCUS ON IS MARKETS, BUT THIS WEEK WEATHER HAS A LOT TO DO WITH MARKETS. WE HAVE TWO WEATHER EXPERTS IN HOUSE TODAY TO TALK ABOUT ALL THINGS WEATHER. WE HAVE OUR OWN METEOROLOGIST, MIKE HOFFMAN, AS WELL AS USDA METEOROLOGIST, BRAD RIPPEY. THANK YOU BOTH SO MUCH FOR BEING HERE.LET'S DIVE RIGHT INTO THINGS.YOU KNOW, THIS YEAR'S ALREADY BEEN AN INTERESTING YEAR. WHEN WE LOOK AT GDU ACCUMULATION IT'S BEEN KIND OF COOLER THAN NORMAL IN A LOT OF AREAS. I'M HEARING COOLER THAN NORMAL FORECAST. LET'S START WITH YOU, MIKE. WHERE DO YOU THINK WE'RE HEADED WITH THIS GDU ACCUMULATION?  I THINK WE'RE GOING TO CONTINUE TO BE PROBABLY BELOW IN MOST OF THE CORN BELT. BRAD AND I JUST MET EACH OTHER YESTERDAY, BUT WE KIND OF AGREE ON WHAT'S COMING FOR THE SUMMER AND THAT IS IN GENERAL A LITTLE BIT COOLER THAN NORMAL AND THE AREAS THAT HAVE BEEN WET PROBABLY CONTINUING TO BE WETTER THAN NORMAL. BRAD, I'VE ALSO HEARD ALREADY EARLY FROST RUMORS AND THINGS LIKE THAT. ARE YOU IN AGREEMENT WITH THAT OR DO YOU JUST THINK COOLER THAN NORMAL? IT'S A CONCERN, BUT, YOU KNOW, TALKING ABOUT THE FROST ISSUE, WE'LL GET TO THAT IN A SECOND. BUT IT'S REALLY THE FAR, UPPER MIDWEST IS WHERE WE'VE GONE THE FURTHEST BEHIND ON OUR GROWING DEGREE DAYS THAT'S WHERE THE PLANTING HAS BEEN LATEST. I'M THINKING THE DAKOTAS UP TO THE UPPER MISSISSIPPI VALLEY. WITH EL NINO ON THE HORIZON THERE MAY BE A SLIGHTLY INCREASED RISK OF A COOL PERIOD, LATE SUMMER, AUGUST, SEPTEMBER, AND THAT'S WHERE WE START THINKING ABOUT THE EARLY FROST CONCERNS.

BUT IT'S NOT A LOCK. IT'S JUST SOMETHING WE HAVE IN THE BACK OF OUR MIND AS A CONCERN AS WE HEAD TO THE END OF SUMMER. MIKE, WE'VE HEARD ABOUT EL NINO. WE'VE BEEN TALKING ABOUT IT.

WE'VE HEARD MAYBE IT'S HERE, MAYBE IT'S NOT. WHERE DO WE SET RIGHT NOW? IT'S SITTING RIGHT NEAR THE EDGE OF WHERE THEY WOULD EVEN CALL IT AN EL NINO IF IT CONTINUED FOR THREE MONTHS.

WE DO BELIEVE IT'S PROBABLY COMING ON, IT'S MOST LIKELY, BUT AT THIS POINT IT IS JUST KIND OF HOVERING THERE. THE AUSTRALIAN WEATHER SERVICE IS FEELING LIKE IT'S GOING TO BE DELAYED UNTIL SEPTEMBER NOW, WHICH WOULD PUSH THINGS BACK A LITTLE BIT, BUT EVEN SO THE ONCOME OR THE EL NINO COMING ON HAS ALREADY AFFECTED OUR WEATHER AND PASSED EL NINOS YOU SEE A COOLER THAN NORMAL, WETTER THAN NORMAL MIDDLE OF THE COUNTRY AND WE'RE ALREADY SEEING THAT.SO YOU THINK WE'RE NOT GOING TO HAVE A STRONG EL NINO. WE'VE TALKED ABOUT THAT.WELL, I DO NOT BELIEVE THAT. THERE ARE SOME PEOPLE WHO HAVE PROCLAIMED THAT, BUT AGAIN, IT'S KIND OF LIKE IT'S GOING TO HAVE A BIG FROST IN OCTOBER, EARLY OCTOBER OR SOMETHING. THOSE ARE JUST PRONOUNCEMENTS FROM SOME PEOPLE. I THINK IN GENERAL THE MAJORITY OF US ARE LEANING TOWARD A MODERATE OR EVEN A WEAK EL NINO.  BRAD, WHERE DO YOU STAND ON EL NINO?  STRONG EL NINOS ONLY COME ALONG ONLY ABOUT ONCE A GENERATION. 1982 83, 1997 98 ARE THE ONLY TWO IN MY LIFETIME. SO WHEN YOU THINK ABOUT THAT, THE LIKELIHOOD OF A STRONG EVENT IS PRETTY REMOTE, SO I'M IN THE WEAK TO MODERATE CAMP AT THAT POINT? SO IF WE HAVE A WEAK TO MODERATE EL NINO, HOW DOES IT IMPACT DIFFERENT AREAS OF COUNTRY? WHO BENEFITS FROM RAINS? WHO MAYBE DOESN'T BENEFIT FROM THE RAIN? WHAT ARE WE LOOKING AT? MIKE, WE'LL START WITH YOU.  IT PROBABLY DEPENDS ON HOW ON HOW OR WHETHER IT DOES GO TO MODERATE OR NOT. IN THE GREAT LAKES, AT LEAST WHERE WE'RE LOCATED HERE, WE WILL SOMETIMES HAVE A COLDER THAN NORMAL WINNER DURING A WEAK EL NINO. A STRONG ONE, THE WHOLE MIDWEST IS TYPICALLY WARMER THAN NORMAL, SO I'M KIND OF LEANING TOWARD A NEAR OR SLIGHTLY COOLER THAN NORMAL WINTER COMING UP.

AND THAT CAN CHANGE IN DIFFERENT PARTS OF THE COUNTRY, DIFFERENT PARTS OF THE CORN BELT, AND A BIG AREA OF WARM WATER IN THE NORTHEAST PACIFIC MAY AFFECT IT TOO. YOU HAD MENTIONED YESTERDAY DURING OUR TALK WITH SOME OF THE FARMERS THAT IF WE HAVE A WEAK EL NINO, IT MAY NOT MAKE THAT MUCH DIFFERENCE IF THE WARM WATER'S STILL IN THE NORTHEAST PACIFIC BECAUSE THAT'S WHAT GAVE US A COLD WINTER LAST YEAR. YEAH, THE STRONGER THE EL NINO THE MORE I CAN LOOK LIKE A SOOTHSAYER, THE WEAKER THE EVENT, ANYTHING GOES.INTERESTING. WELL, YOU KNOW, HOW LONG DOES IT LAST? SO WE TALK ABOUT EL NINO, THE ONCOMING, WE MAY NOT BENEFIT FROM IT THIS GROWING SEASON, BUT COULD WE NEXT GROWING SEASON? HOW LONG WILL IT TYPICALLY STAY? THE TYPICAL EL NINO LASTS FROM ONSET SUMMER OR AUTUMN INTO THE NEXT SPRING, SO IT'S LESS THAN A YEAR. AND MOST OF THE U.S. IMPACTS ARE CONFINED TO THE COLD SEASON, SO IT'S A FALL, WINTER SPRING IMPACT ON U.S. WEATHER PATTERNS FOR THE MOST PART. CALIFORNIA? WELL, CALIFORNIA, I THINK, IS PROBABLY HOPING FOR A STRONG EL NINO.I MEAN, THE STRONGER THE EL NINO, THE BETTER CHANCE THEY HAVE OF GETTING WAY ABOVE NORMAL MOISTURE. WITH A WEAK EL NINO, I'M NOT SURE IT'S GOING TO HELP THEM A WHOLE LOT. REALLY, SO THEY'VE BEEN BANKING ON RELIEF, BUT NOT MUCH RELIEF POSSIBLY?I THINK THERE COULD BE SOME, BUT THEY NEED A LOT OF RELIEF AND THEY MAY NOT GET ENOUGH FOR THAT. AFTER THREE YEARS OF DROUGHT IN CALIFORNIA, THEY WOULD LIKE TO SEE A STRONG EVENT. THEY MIGHT EVEN TRADE OFF SOME OF THAT MOISTURE FOR THE PROBLEMS THAT OCCUR WITH THAT WITH THE COSTAL WAVES AND THE FLOODING. WELL THERE’S A LOT  OR TALK ABOUT WITH THE DROUGHT AND SO WHEN WE COME UP WE NEED TO STILL HIT ON TEXAS.

WE'LL TALK A LITTLE BIT MORE ABOUT CALIFORNIA,   SO MUCH MORE TO COVER. PLEASE STAY WITH US BECAUSE WE'LL HAVE ALL OF THAT WHEN WE RETURN ON U.S. FARM REPORT.

ROUND TABLE #2:
WELCOME BACK TO U.S. FARM REPORT. WELL, RIGHT BEFORE THE BREAK WE WERE TALKING ABOUT CALIFORNIA. BRAD IS ACTUALLY ONE OF THE AUTHORS OF THE U.S. DROUGHT MONITOR.

SO WHEN WE LOOK AT CALIFORNIA, ANY RELIEF IN SIGHT FOR THAT STATE?  CERTAINLY NOT IN THE SHORT TERM THE CALIFORNIA WET SEASON RUNS FROM LATE AUTUMN THROUGH THE SPRING, SO THERE'S NOTHING ON THE HORIZON FOR CALIFORNIA ALL THE WAY THROUGH THE SUMMER. THEY'VE GOT TO GET BY ON WHAT FELL, WHICH IS ONLY ABOUT HALF OF NORMAL. AND THEY'VE HAD THREE SUB PAR YEARS, SO CALIFORNIA'S KIND OF LOCKED INTO DROUGHT UNTIL AT LEAST NOVEMBER, DECEMBER, OR BEYOND. WHEN WE LOOK AT AREAS LIKE TEXAS, THEY'VE BEEN LOCKED INTO DROUGHT TOO.

MIKE, WHEN YOU LOOK AT YOUR 90-DAY FORECAST WHAT ARE YOU THINKING FOR AREAS OF THE SOUTHWEST THAT NEED IT AS WELL?  I THINK THEY'RE PROBABLY GOING TO GET AT LEAST NORMAL AND MAYBE A LITTLE BIT ABOVE NORMAL IN SOME AREAS. THE MONSOON SHOULD SET IN, BUT ALSO JUST THE PATTERN WE'VE SEEN RECENTLY. WE'VE AT LEAST BEEN GETTING SOME MOISTURE INTO THAT AND SOME SYSTEMS COMING THROUGH TO GIVE THEM SOME RAIN IN WEST TEXAS, EASTERN NEW MEXICO.

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