Pro Farmer Extra
- From the Editors of Pro Farmer newsletter -
December 20, 2013
Today's perspective is provided by Pro Farmer Sr. Market Analyst and Managing Editor Brian Grete.
Pro Farmer selects 2013 Ag Story of the Year
The Pro Farmer 2013 ag story of the year was fairly obvious. While there were many other key stories that garnered consideration, top billing goes to the ability of the 2013 corn and soybean crops to rebound after record-late plantings. This year’s planting season stretched into June for most and July for some, and left wide swaths of prevented-plant acres across usually highly fertile ground in northern Iowa and southern Minnesota. Still, this year’s growing season produced the largest corn crop and the third largest soybean crop on record. This year proved that big yields and crops can be grown in years with late plantings if weather is favorable the second half of the season and crops are given time to finish. Impacts from this year’s amazing crop recovery will be felt in the year(s) ahead.
The record corn crop this past growing season completely changed the fundamental makeup of the market. That shift in fundamentals will be felt for at least the remainder of the 2013-14 marketing year... and likely for more years to come. Instead of a supply crunch and historically high prices, corn prices are now on the decline as the demand base is rebuilt.
While the 2013 soybean crop didn’t have as dramatic or immediate of an impact on market fundamentals as the corn crop did, there is an influence. Even with the third largest soybean crop on record, carryover is projected to rise just marginally during 2013-14. Without the big soybean crop this year, the soybean market could have found itself without enough supplies to meet growing demand needs, which would have forced prices higher to slow use. Because of the big crop this year, the soybean demand base can continue to expand.
Honorable mentions for story of the year
Proposed RFS cut: On Nov. 15, the Environmental Protection Agency proposed cutting the Renewable Fuel Standard for 2014. The implied reduction to corn-based ethanol would be around 13 billion gallons, down from 14.4 billion gallons in the legislation and the mandate of 13.8 billion gallons this year. While this cuts the floor not the ceiling, fear of reduced corn-for-ethanol demand has kept corn futures under pressure.
Gov’t shutdown: The inability of Congress to reach a deal to keep the government open led to a 16-day shutdown. The shutdown caused USDA to cancel its October Crop Production and Supply & Demand Reports. Because USDA enumerators were unable to collect samples as harvest continued, some of their objective yield data was lost.
Still no farm bill: The process continues... however, the moment of the year was the June defeat of the initial House farm bill — the first time ever a farm bill was rejected on the floor.
MIR 162: China’s rejection of U.S. corn shipments since mid-November due to the presence of MIR 162 (Syngenta’s Agrisure Viptera) is a developing story. While this appears political, it’s a “wet blanket” on corn prices, making it hard for futures to put in a low.
PEDV: The discovery of porcine epidemic diarrhea virus (PEDV) sparked fear of reduced hog numbers. That hasn’t been the case so far, but some impact is expected by early in the new year.
Fed stimulus: Tapering was a buzz word in the investment world throughout 2013, with investors expecting action mid-year. The tapering will begin in January.
‘So God Made A Farmer:’ Uplifting moment of the year was the airing of Dodge’s commercial during the Super Bowl.
Follow Pro Farmer Editor Chip Flory on Twitter: @ChipFlory
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