Evening Report (VIP) -- Advice -- January 9, 2014

January 9, 2014 08:56 AM

Crop producers: Advance 2013-crop corn sales, make initial 2014-crop corn and soybean sales... Corn futures are posting a downside breakout from the two-month consolidation range, signaling attitudes are becoming increasingly bearish. Ahead of tomorrow's USDA reports, hedgers are advised to make a 35% 2013-crop cash corn sale to get to 60% priced on old-crop in the cash market. Cash-only marketers are advised to make a 25% 2013-crop sale to get to 50% sold.

The technical picture and attitudes are also eroding for new-crop corn and soybean futures. Therefore, corn hedgers and cash-only marketers are advised to make a 20% cash forward contract sale on expected 2014-crop production for harvest delivery. Soybean hedgers and cash-only marketers are advised to make a 10% 2014-crop cash forward contract sale for harvest delivery.


Wheat producers: Advance 2013-crop cash sales, make initial 2014-crop sales... Wheat futures continue to fall amid plentiful global supplies and a weakening technical posture. With attitudes turning more bearish, we don't want to wait any longer to advance old-crop sales and to make initial new-crop sales. Wheat hedgers are advised to make the final 25% 2013-crop cash sale to get to 100% sold in the cash market on old-crop. Cash-only marketers are also advised to make a 25% 2013-crop sale to get to 75% priced.

Wheat hedgers and cash-only marketers are advised to make a 35% cash forward contract sale on expected 2014-crop production for harvest delivery.


NOAA: ENSO-neutral expected into summer... The National Oceanic and Atmospheric Administration (NOAA) says ENSO-neutral conditions persisted across the equatorial Pacific Ocean during December and showed very small changes during the month. Most models predict ENSO-neutral conditions continuing into the summer, although there is an increasing chance for the development of El Nino.

Crop watchers say movement toward El Nino would be a positive development for Midwest crops, as the warmer-water phenomenon is associated with increased rain chances during the growing season that would help mend the lingering central Corn Belt drought.


Drought expands in southern and western states... According to the National Drought Monitor, drought covers 53.36% of the contiguous U.S., which is up slightly from 51.76% last week, but down from 71.74% a year ago. No change was made to the drought across the Midwest, but expansion in western and southern states was noted.

The monitor notes that record-setting dryness for many locations of California and Oregon are being seen, and in the Pacific Northwest, expansion of "abnormally dry" conditions was seen last week. But for the Central Plains and Midwest, the monitor notes, "Bitter cold and snows swept across most of the Plains and Midwest this past week. Given the time of year, frozen soils and lack of impacts, no changes were made on the map this week as the dryness and drought remain freeze dried in place." Click here for related maps.


Beef exports set 'value' record for 2013, November pork exports strongest of the year... According to USDA data compiled by the U.S. Meat Export Federation (USMEF), beef exports in November set a new record in terms of value and pork exports in terms of volume were the strongest of 2013. Beef exports for the month reached 101,341 MT, valued at $524.5 million and pork exports totaled 192,657 MT, valued at $550.7 million. Click here for more details.


Do high-level Democrats want a farm bill election issue?... Farm bill conferee Rep. Jim Costa (D-Calif.) thinks farm bill negotiators should call what he labels House Speaker John Boehner's (R-Ohio) "bluff" regarding his insistence that no dairy supply language be included in the final farm bill conference report. If it is, Boehner reportedly told dairy supply language proponent Rep. Collin Peterson (D-Minn.) he would not bring up the farm bill conference report on the House floor for consideration. He reiterated his adamant opposition today and said he is "confident" the conference report won't include dairy supply management.

House Agriculture Chairman Frank Lucas (R-Okla.) is reluctant to put the dairy program to a vote in full conference committee for fear lawmakers would support including the supply management plan -- a plan that was soundly defeated in House floor action on its version of the farm bill; members of both parties easily approved a provision to delete dairy supply management language from dairy policy.

As for Costa, he says dairy insurance without supply management controls would lead to surplus production, which in turn would trigger more costly insurance payouts to farmers and higher costs to taxpayers. But skeptics doubt that Costa and especially Peterson would argue the same need for supply management regarding potentially more budget exposure for corn, soybean and other commodity taxpayer subsidies relative to proposed changes to farmer safety net programs. Acreage reduction control programs of the past were found wanting -- so much so that USDA is now prohibited from offering them.

Some sources are wondering whether some House Democratic leaders may privately be hoping that Boehner has to thwart calling up any farm bill conference report. Doing so, the reasoning goes, would give Democrats an election-year wedge issue. Learn more.


Lucas: 'Highly unlikely' farm bill finished this week... It is unlikely work on the lingering farm bill conference report will be completed this week given the ongoing dispute over dairy policy, House Ag Chairman and farm bill conference chair Frank Lucas (R-Okla.) said today. "It's always possible the sun could come up in the west but it's not likely," Lucas said when asked about a final conference report this week, later calling it "highly unlikely." Lucas told Politico that final action on a farm bill conference report is now likely to slip into late January.

The chairman also dismissed the suggestion that any deal had been reached based on Boehner's earlier comments that he was confident the controversial dairy supply management program wouldn't be included in the final report. "I would say he was just reinforcing a point of view he has," Lucas said.

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