Evening Report (VIP) -- October 28, 2013

October 28, 2013 09:49 AM

CORN HARVEST 59% COMPLETE... USDA reports as of Sunday that corn harvest has crossed the halfway mark, which suggests harvest-related hedge pressure should begin to ease. USDA says 59% of the crop has been harvested, which compares to 91% last year and 62% on average. Traders expected harvest to be around 52% complete.

Illinois has 74% harvested (68% average); Indiana 59% (62%); Iowa 55% (60%); Minnesota 48% (61%); Nebraska 55% (equal to average); and Ohio 49% (47%). In its last crop condition ratings of the season, USDA says the portion of crop rated "good" to "excellent" improved by two percentage points to 62%, with the "poor" to "very poor" ratings down one percentage point to 13%.



SOYBEAN HARVEST MORE THAN THREE-QUARTERS COMPLETE... USDA reports that 77% of the nation's soybean crop has been harvested, which is within a percentage point of traders' expectations. This compares to 86% last year and is on pace with the five-year average.

Illinois is 85% complete with harvest (77% on average); Indiana 78% (79%); Iowa 87% (86%); Minnesota 91% (88%); Nebraska 94% (88%); and Ohio at 81% (76%).



WINTER WHEAT CONDITION DECLINES... USDA reports the condition of the winter wheat crop slipped, with 61% rated "good" to "excellent," which is down three percentage points from last week. USDA rates 4% in "poor" to "very poor" shape, which is equal to week-ago.

Winter Wheat

very poor





This week






Last week













USDA says as of Sunday that 86% of the winter wheat crop was planted, compared to 87% last year and 85% on average. Meanwhile, USDA says 65% of the crop has emerged, compared to 61% last year and 64% on average. Kansas has 74% of the crop up, compared to 72% on average. Oklahoma has 73% emerged (69%) and Texas is at 56% (54%).



COTTON HARVEST 34% COMPLETE... Cotton harvest continues to progress slowly, with 34% of the crop out of fields as of Sunday. This compares to 21% last week, 47% a year-ago and 44% on average. This suggests some harvest-related hedge pressure is still ahead for the market. Texas has 31% harvested (34% on average), with Arizona at 30% (38%).



BEHIND THE SCENES FARM BILL ACTION... The first farm bill conference session takes place Wednesday. Not much news is expected out of the first gathering because it will largely consist of opening statements from the hefty number of conferees. But behind the scenes, ag panel staffers and key lawmakers continue their attempt to reach an overall agreement on key portions of the farm program safety net, with the following four key issues:

  1. Parameters of the Price Loss (Target prices) Coverage program;
  2. Parameters of the Revenue (Ag Risk Coverage/Shallow Loss payment program);
  3. Parameters of the Supplemental Coverage Operation (SCO) program; and
  4. Whether to use planted or base acres in calculating payments.

A compromise plan regarding planted/base acres has been discussed but no final decisions have been made. House farm bill participants easily dismissed a farm group lobbyist suggestion to go with base acres on establishing program payments, but allow for a base update. That would have easily favored corn and soybean producers who have seen significant increases in planted acres in recent years. Senate negotiators, sources say, continue to push for an "all-in" approach to safety net programs whereby producers would qualify for both revenue and price loss coverage, but if a producer wanted SCO, he or she could not qualify for revenue loss coverage as well. The key for an all-in approach would be the target price levels for commodities that the Senate goes along with. An all-in approach would also mean the Senate's favored revenue plan would have to be shaved back. Read more.



FIRST BUDGET CONFERENCE SESSION WEDNESDAY... The 29-member budget conferees on Wednesday finally begin discussing a host of thorny issues in an attempt to come up with what most do not expect to occur: an agreement. Some Senate and House Democrats hope for a quick budget conference deal to prevent a deeper second round of sequester cuts and to avert another budget stalemate. But this Congress has shown they have a hard time doing anything quickly. "A deal that redid the sequester for a short period of time is something we could talk about," said Rep. Chris Van Hollen, the Maryland Democrat who serves as ranking member of the House Budget Committee. House Budget Chairman Paul Ryan (R-Wis.) suggested a deal to replace the waves of automatic spending cuts that will come under the terms of the 2011 Budget Control Act, but he also lowered expectations for a broader deficit reduction deal.

Most do not expect what has been called "a grand bargain." The GOP is willing to replace the sequester if it gets entitlement cuts, while Democrats reject such changes without tax hikes that are quickly rejected by Republicans. GOP lawmakers will not likely go along with the suggestion by some Democratic members to consider a separate sequester deal before turning to the deep divide between the two budget resolutions.

Recently passed legislation directed negotiators to develop a budget framework by Dec. 13, which would give Congress a month to finish Fiscal 2014 spending bills before government funding authority ends and new sequester cuts take effect on Jan. 15. The debt limit hike deal goes until Feb. 7.


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