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USFR Weekly Recap - June 16-17, 2012

June 16, 2012



EPISODE # 2027
JUNE 16-17, 2012



Hello and welcome to US Farm Report, I’m John Phipps, there is an intuitive but misunderstood belief that previous events can alter the probability of future events. Not always. For example, since we have had three below-trend line corn production years, the idea of another was unprecedented, and virtually discounted. But just because we have never had four bad crops in a row doesn't seem to be improving conditions in the fields. Nor is this crop destined to come up short. We'll know more soon, and if 2012 does disappoint, I suppose we'll hear, "we've never had five bad crops in a row".Time now for the's Tyne Morgan.


Thanks John. In the corn belt and the Great Plains, farmers are getting anxious for rain. The US drought monitor shows The report indicates a lack of rain this spring and there's been a big decline in the condition of the corn crop. 66% is good and excellent. For the previous two weeks without 72% and was as high as 77%. State-by-state we saw a 10- point decline in ongoing in Indiana and an eight-point decline in Iowa. And despite those declining conditions, USDA did not make any forecast changes in its latest crop production report. In May, USDA forecasted the national average corn yield of 166 bushels to the acre and production at 14-point-seven billion bushels. The lack of rain late in the season has resulted in a smaller winter wheat crop USDA puts winter wheat production at just under 1.7 billion bushels, down 1% from the May 1st forecast. Based on crop conditions as of June 1st, the United States yield is forecast at 47.3 bushels per acre, down a third of a bushel from last month. Despite the decline, winter wheat production is still 13% higher than last year. As far as carryout...ending stocks for old-crop corn remained unchanged at 851 million bushels. USDA bumped corn use for ethanol by 50 million bushels, but then also offset corn exports with a 50 million bushel decline. As far as 2012-2013 US ending stocks, the "WASDE" report pegs stocks at 1.8 billion. As far as soybeans, the supply remains tight. USDA's latest forecast for old-crop carryout of 175 million bushels was 11% lower than the average trade estimate. And USDA's projected carryout for new-crop beans of 140 million bushels fell nearly 5% below the average trade estimate. Tuesday's reports were the first major reports to be published while the Chicago grain markets were being traded. Our reporting partners at ProFarmer newsletter say there were concerns about how the market might respond to the data. Brian says the next big test will be June 29th, when USDA releases its acreage and quarterly grain stocks reports. Those are the back to John for "crop watch".


Thanks Tyne. In western Illinois - near the quad cities - a farmer says he had the potential for his best crop in 35 years, but they are losing plants on lighter soils by the day. He's never seen farm ponds this low. We heard from a farmer in St. Mary's county Maryland. Tommy Bowles said they started cutting wheat about three weeks before normal. You'll start down a bit but all the looks good. In the Northeast, said he's seen a tenth of an inch of rain since April 30th. He said with these long days the corn should be shooting up but it's just barely growing and trying to survive. When we come back, Al is in to talk markets with Gregg Hunt and Brian all gets going in just two minutes - please stay with us.


It would be impossible for us to follow in detail the progress of the Farm Bill through Congress, but events this week may offer a hint as to the outcome. First, like all Farm Bills it won't be pretty or simple. At over a thousand pages and counting, it is starting to rival the ridiculed size of the health reform act. I think we can also begin to see how hard it is to nail down program cuts. My inbox is flooded with emails from farm organizations urging action to prevent funding losses. As usual, some remarkably innovative accounting helps to mask the true costs of new proposals. The shift to an insurance-like scheme will create an enormous budget exposure if prices plummet for grains. As it appears right now, the cost estimates will prove woefully inaccurate, just like every other farm bill before. The standard legislative practice of sweetening the pot to get votes is a tougher sell this time, as at least some semblance of fiscal rigor is needed to appease deficit hawks. If a farm bill is passed it may well serve as a benchmark of how plausible other spending reductions will be going forward. There is also the very real possibility of a collision between house and senate leading to a stalemate that is the trademark of the current congress.But one thing seems clear to me. The action in Washington will probably have less impact on my future than action in Berlin or Beijing, shifting climate patterns, and global money flows. Let us know what you think.... Send emails to mailbag or call and leave us a voice mail.

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