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February 2014 Archive for PFA Pioneer Blog

RSS By: Chip Flory, Pro Farmer

This is a private blog for Pioneer.

What it takes to get down to USDA's bean export estimate.

Feb 14, 2014

Pro Farmer Extra

- From the Editors of Pro Farmer newsletter -

February 14, 2014

Today's perspective is provided by Pro Farmer Editorial Director Chip Flory

Bean market needs export cancellations to get down to USDA export estimate

Yes, you read that headline right. There are still 5 1/2 months left in the 2013-14 marketing year and total soybean export bookings are above USDA's current export estimate. That's still the case, even after USDA added 15 million bu. to its export expectations in the February Supply & Demand Report released earlier this week.

USDA sees soybean exports of 1.510 billion bu. in the 2013-14 marketing year and total export bookings are already up to 1.587 billion bushels. Actual bookings are 77 million bu. (nearly 2.1 million metric tons) above USDA's export peg. Simply put... even USDA sees China canceling some bean buys as the Brazilian bean crop makes its way to the market.

In this week's S&D Report, USDA increased estimated bean exports by 15 million bu., but increased estimated imports by 5 million bu. and cut estimated residual "use" by 10 million bu. to hold carryover at 150 million bushels. Most likely, the balance sheet for soybeans could absorb another 10-million-bu. hike in the export estimate and carryover would still be held at 150 million bushels. USDA's residual use estimate is 12 million bu. and the comments in the S&D Report certainly suggest residual use could be cut to 1 or 2 million bu. in future updates.

That's strong evidence USDA doesn't "want" to drop bean carryover below 150 million bushels. Another way of looking at it is USDA probably doesn't want to drop the stocks-to-use ratio for soybeans much below 4.5%.

As Brazilian beans move into position for export, China will cancel some bean buys. It started this week with the purchase cancellation of 272,000 MT of U.S. beans. The market's immediate reaction was negative - even though there is a long ways to go to get down to USDA's export estimate. Old-crop bean futures are working on a breakout to the upside, but a string of export cancellations by China could make it difficult to build enough upside momentum to get March futures up to the 2013 highs just over $13.75.

Follow Pro Farmer Editorial Director Chip Flory on Twitter: @ChipFlory

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Roberts criticizes PLC

Feb 07, 2014

Pro Farmer Extra

- From the Editors of Pro Farmer newsletter -

February 7, 2014

Today's perspective is provided by Pro Farmer Washington Consultant Jim Wiesemeyer, Pro Farmer Associate Editor Meghan Pedersen and Sr. Market Analyst Brian Grete:

Roberts criticizes PLC

Most are giving the new farm bill a “farmer-friendly” read, but some are displeased, including Sen. Pat Roberts (R-Kan.), former ranking member of the Senate Ag Committee. He is opposed to the Price Loss Coverage (PLC) safety net option that is based on reference (target) prices. Roberts says the measure “marches backward toward producers making decisions based off of government subsidies.”

Roberts says PLC “sets high fixed target prices and subsidies for all commodities and regions,” and that in some cases price guarantees are so high they are at or above a farmer’s cost of production. This will encourage growers to plant crops that guarantee the highest subsidy payment from the government, not the market, according to Roberts.

He says early analysis he has seen shows “target prices are high enough that rice, peanuts and barley growers will receive a subsidy payment at least 75% of any given year, likely triggering a payment four out of the next five years. Other commodities are not treated as favorably, with wheat prices likely to trigger a payment on average only 35% of the time and soybeans less than 15%.”

Besides the (likely) possibility this will result in World Trade Organization (WTO) challenges, Roberts also says the incentive PLC gives farmers to plant certain crops based on subsidies will eventually result in production surpassing global demand for certain crops, like wheat.


Roberts has long been against target prices, so his opposition now is no surprise. As for his contention that high target prices could distort planted acreage and production, the fact PLC pays on base acres, not planted acres, likely counters his argument.


Follow Pro Farmer Editor Chip Flory on Twitter: @ChipFlory

To see more of what Pro Farmer has to offer, be sure to visit

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