Evening Report (VIP) -- October 25, 2013

October 25, 2013 09:28 AM


THORNY FARM BILL ISSUE: PLANTED OR BASE ACRES FOR PAYMENTS... Contacts continue to signal there are four major issues relative to ongoing new farm bill conference negotiations regarding safety net programs:

  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;
  4. And whether to use planted or based acres in calculating payments (this seems to be the thorniest issue).

A compromise plan regarding planted/base acres has been discussed, but no final decisions have been made. 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 with which the Senate goes along. Staffers have been meeting with Congressional Budget Office (CBO) staffers for weeks in scoring various and changing options.


WILL GOP LOSE HOUSE DUE TO 'SHUTDOWN SHIFT?'... Of all the election-year experts we monitor, the firm and people we watch the closest is the Cook Political Report, headed by widely respected Charlie Cook. While the firm is not predicting the Democrats next fall will garner the net gains of 17 House seats needed to wrest control from the Republicans, the recent government shutdown and flareup over a host of budget issues (including the need for another debt-limit hike) is being blamed mostly on the extreme conservatives in the GOP. Result: Cook's staff has recently altered 15 House races that, while not going to Democrats, have nonetheless changed them from a more solid GOP likelihood. While odds still favor the GOP keeping control of the House after 2014 elections, the firm's David Wasserman says, "If the GOP continues to be self-destructive ..." You get the picture.


MILC PROGRAM DEADLINE REMINDER... Dairy producers who participate in the Milk Income Loss Contract (MILC) program have until Nov. 1, 2013, to submit final production evidence and supporting documentation for the program. The documentation must be submitted for all eligible months that MILC payments are available, which include fiscal years 2009 through 2013.


BEEF EXPORTS RISE IN AUGUST, PORK STABLE... According to USDA data compiled by the U.S. Meat Export Federation (USMEF), beef exports improved in August, while pork exports held steady. Beef exports were bolstered by a resurgence of shipments to Taiwan, while key pork markets like China maintained a strong year-over-year pace.

Overall, U.S. beef exports were up 5% in terms of volume at 105,544 MT in August and rose 16% in terms of value of $563.3 million. For the first eight months of 2012, beef exports are up 1% in volume and 10% in value to 767,017 MT, valued at $4.01 billion. Total pork exports for August were down a fraction in volume at 174,281 MT, but up 1% in terms of value to $501.1 million. January through August pork exports are down 4.6% in terms of volume to 1,405,078 MT, valued by $3.98 billion, which is down 4.5% from year-ago. Click here for more.


WANT MORE THAN $9 CORN PRICES? GO TO CHINA... More than $9 a bushel is the new government support price in China for corn, far above the market prices earned by American farmers. USDA's Economic Research Service (ERS) says China's high domestic support prices for grains and other commodities have played a major role in boosting imports of much-cheaper U.S. commodities. China's farm subsidies also may have encouraged imports, ERS said, by creating more demand for inputs such as commercial seed, raising their prices and thereby boosting Chinese farmers' production costs. U.S. farm exports to China reached $26 billion in 2012, up from $5 billion in 2003. See associated charts.

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