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September 2012 Archive for PFA Pioneer Blog

RSS By: Chip Flory, Pro Farmer

This is a private blog for Pioneer.

Just Like Cutting 2.2 Bu. From the Corn Yield

Sep 28, 2012

Pro Farmer Extra

- From the Editors of Pro Farmer newsletter

Sept. 28, 2012

 

USDA cut 193 million bu. from estimated old-crop corn carryover when Sept. 1 corn stocks came in at 988 million bushels. In the Sept. Supply & Demand Report from USDA, carryover was estimated at 1.181 billion bu., so for the first time in years, the "September surprise" in the Grain Stocks Report was bullish for corn prices.

 

And the bullish price response is completely justified. Sept. 1 stocks of 988 million bu. is 193 million bu. below the last carryover estimate from USDA's World Ag Outlook Board (WAOB), which means beginning stocks for the 2012-13 marketing year will be 193 million bu. smaller than estimated in the Sept. S&D Report. Think about it this way: The 193-million-bu. cut to total supplies is no different than a 2.2-bu.-per-acre cut to the estimated 2012 national average corn yield (at the current harvested acreage estimate of 87.361 million acres.

 

So the Quarterly Grain Stocks Report released Friday morning was a game changer -- both fundamentally and psychologically. Most likely, the cut to beginning stocks means the 2012-13 corn carryover will be estimated at pipeline levels -- something around 650 million bushels. And that's even if USDA leaves the 2012 crop estimate unchanged from September. If the national average yield is cut - or the harvested acreage estimate is reduced - (or both), then usage cuts will be even deeper to keep estimated carryover near 650 million bushels.

 

And that should send a strong signal to the market that we simply do not have enough corn for the 2012-13 marketing year and that additional demand destruction is needed to keep corn flowing through a choked-down pipeline.

 

Follow Pro Farmer Editor Chip Flory on Twitter: @ChipFlory


To see more of what Pro Farmer has to offer, be sure to visit www.profarmer.com.

Get Ready for a September Surprise

Sep 21, 2012

Pro Farmer Extra

- From the Editors of Pro Farmer newsletter

Sept. 21, 2012

 

When USDA increased estimated 2011-12 corn carryover to 1.181 billion bu. in the Sept. 12 Supply & Demand Report, our initial reaction was the higher-than-expected ending stocks would reduce the risk of a “September Surprise” in the Quarterly Grain Stocks Report.

 

That’s because USDA’s World Ag Outlook Board (WOAB) cut 2011-12 corn feed and residual demand by 150 million bu. to reflect the use of 2012-crop corn harvested before September 1. Use of new-crop corn in the old-crop marketing year resulted in Sept. 1, 2010, corn stocks about 300 million bu. above pre-report trade expectations. A year later, Sept. 1, 2011, corn stocks were about 150 million bu. above the average pre-report trade estimate for the same reason.

 

Risk even higher in 2012 --

 

The 2012 corn crop was planted early, matured quickly and is being harvested at a record-fast pace. USDA’s Crop Progress Report (state-level data) suggests that nearly 1.2 billion bushels of corn was harvested before September 1. In 2010, USDA analysis suggests just over 600 million bu. were harvested by Sept. 1; by Sept. 1, 2011, only about 475 million bu. were harvested.

 

To recap: Just over 600 million bu. of corn harvested by Sept. 1, 2010, resulted in a September Surprise of an “extra” 300 million bu. of corn. In 2011, about 475 million bu. of corn was harvested by Sept. 1 for a 150-million-bu. September Surprise.

 

So... if nearly 1.2 billion bu. of corn were harvested by Sept. 1, 2012, it’s easy to imagine an old-crop corn estimate close to 1.4 billion bu. in the Sept. 28 Quarterly Grain Stocks Report.

 

Perspective: Obviously, this would be price-negative for old- and new-crop corn. To offset that risk, we’re looking to increase old- and new-crop sales ahead of the Grain Stocks Report.

 

Follow Pro Farmer Editor Chip Flory on Twitter: @ChipFlory


To see more of what Pro Farmer has to offer, be sure to visit www.profarmer.com.

Farm Bill Timeline

Sep 14, 2012

Pro Farmer Extra

- From the Editors of Pro Farmer newsletter

Sept. 15, 2012

 

Congress returned to work this week (for a short-stint) before soon departing to hit the campaign trail. When they arrived in Washington, farm groups were waiting for them. These groups pushed hard for the House to take up its version of the Farm Bill... and we ended the week with no more promise of new farm legislation than when the week started.

 

That's led to a lot of commentary about what's going to happen if current farm law expires. The one that always makes the headlines is the prediction of a return to 1940's farm policy, along with parity pricing. That's not going to happen.

 

What will happen is current farm law will be extended... either a three-month, six-month or one-year extension will happen.

 

In this week's Pro Farmer newsletter, we asked Pro Farmer Washington consultant Jim Wiesemeyer to look into his crystal ball and to give us his best guess of what will happen with new farm legislation and what the timeline will be. He started with this reminder:

 

"Democratic lawmakers want lapsed livestock disaster programs reinstated, but say inaction by the GOP-controlled House has stalled the process. The irony is that it was Democratic lawmakers who truncated these programs in the 2008 Farm Bill to fit budget constraints."

 

Farm bill timeline

 

"There will eventually be a new farm bill that includes a farmer choice with target prices rather than the one-size-fits-all approach of the Senate bill. House Ag Chairman Frank Lucas (R-Okla.), a farmer-choice proponent, will chair any eventual farm bill conference. Timing of when a new farm bill moves to the conference committee may be influenced by whether there is a 2008 Farm Bill extension and, if so, its duration.

 

"The House didn’t include a farm bill extension last week when it considered a continuing resolution to keep the government running. So if there is an extension, it would have to stand on its own. It should be noted: The need for an extension soon has been overstated; any glitches that occur due to the bill’s expiry at the end of September will be minimal.

 

"A three-month extension would up the odds House leaders will push for farm bill completion in 2012 — likely during the post-election, lame-duck session of Congress. A six-month extension would leave farm bill timing murky regarding 2012 or 2013 passage. A one-year extension would likely push the new farm bill end zone into 2013.

 

"The presidential election makes farm bill passage timing even more uncertain. If Republican candidate Mitt Romney wins and the Senate gets a GOP majority, many think Republican congressional leaders would want to punt the farm bill conclusion to 2013. Also under the Romney-win scenario, an outgoing President Obama wouldn’t compromise on tax and farm bill issues.

 

"If Obama wins it would up the odds for a series of compromises during the four- to six-week lame-duck session that may include the farm bill conclusion."

 

Follow Pro Farmer Editor Chip Flory on Twitter: @ChipFlory


To see more of what Pro Farmer has to offer, be sure to visit www.profarmer.com.

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