Evening Report (VIP) -- Advice -- May 21, 2013

May 21, 2013 09:45 AM

SOYBEAN CASH-ONLY MARKETERS: TRIM OLD-CROP INVENTORIES... July soybean futures have moved into the upper end of the extended, choppy trading range, an area that has repeatedly turned back rally attempts since last fall. Combined with very strong basis, that was all the incentive we needed to trim old-crop inventories. Cash-only marketers were advised this morning to make a 15% 2012-crop sale to get to 90% sold on old-crop.

We are willing to hang on to the final 10% of old-crop bushels as gambling stocks for now, but be prepared to finish sales if July futures signal a move back into the lower end of the range.



CONSULTANT: HALF OF CORN CROP SHOULD POLLINATE THIRD WEEK OF JULY... Crop consultant Dr. Michael Cordonnier says he expects corn emergence to reach 50% sometime this week. As a result, he expects around half of the crop to pollinate during the third week of July. "It's always better to spread out your production risks by planting over a longer period of time... This year, though, the pollination period should be as concentrated as planting," he said.

"Delayed pollination until later in July carries with it greater risk of adverse weather that may adversely impact pollination," adds Dr. Cordonnier. "A week or two delay in pollination doesn't necessarily mean that the temperatures will be hotter, but it does increase the risk of drier soils."



CONSULTANT LEAVES CORN YIELD PEG UNCHANGED... Dr. Cordonnier says he's sticking with his corn yield range of 155 bu. to 156 bu. per acre, but says there is "probably more of a downside risk to the crop than there is an upside potential." For now, he's sticking with his projection of a 15% chance of a yield of 160 bu. per acre and above and a 25% chance the yield would be 150 bu. per acre or lower.

Dr. Cordonnier says continued delayed planting should result in some switching of corn to soybeans or even some acres being claimed as prevent plant, but says "the rapid planting pace exhibited last week makes me a little more optimistic the switching may be less than what was expected several weeks ago." He expects around 1 million acres intended for corn will not get planted, with around two-thirds of those acres being switched to soybeans.



WET MIDWEST FORECAST... Meteorologist Gail Martell of MartellCropProjections.com says wet and cooler conditions will slow planting progress in South Dakota, Minnesota, Iowa and Nebraska this week. "Highs in the low-to-mid 60s F would replace 70s-to-low-80s F. Moreover, showers and thunderstorms are expected to return later in the week with an approaching warm front," she says. "Up to 2 inches of rain is possible in central Iowa and Illinois, indicated on the seven-day forecast. These are the two wettest corn states currently."



RUSSIAN GRAIN CROP, EXPORT FORECASTS RAISED... Russia's Grain Union raised its forecast for the 2013 grain crop due to mostly favorable weather, especially compared to last year. The group raised its forecast by 5 MMT on the top end of its range to 90 MMT to 100 MMT. Due to the larger crop estimate, the group also raised its forecast for 2013-14 exportable surplus supplies by 5 MMT to 25 MMT. The head of the lobby, Arkady Zlochevsky, told Reuters this level of exportable supply could be realized if the country harvested at least 95 MMT of grain, including 57 MMT of wheat. Last year, Russia's grain harvest was hurt my adverse weather, resulting in a total grain crop of 71 MMT, including 38 MMT of wheat. A crop recovery has traders expecting the country to gain a larger share of the global export market in the coming year.


IOWA LAWMAKERS BOOST FARMER LIABILITY PROTECTION... Last week, Iowa lawmakers approved a bill that would provide farmers liability protection for educational tours. The bill will revise state law to include educational activities under recreational use protections, hopefully making farmers more willing to continue offering tours of their operations. Their willingness to do so had been shaken in February when the Iowa Supreme Court ruled that public educational tours were not shielded from personal injury lawsuits under the state's recreational-use law. The case involved a woman suing a northeast Iowa dairy farm after she fell through a hayloft hole while chaperoning a field trip.



MANY AMENDMENTS EXPECTED ON CROP INSURANCE, SNAP... Debate on the Senate farm bill got underway Monday, and a number of amendments covering a host of thorny issues are currently being put together. In fact, so many are expected that many now anticipate the farm bill will not be completed ahead of the Memorial Day recess, as farm bill managers hope. Following are some of the amendments offered and/or expected to be offered. (See the full story for more details.)

  • Sens. John McCain (R-Ariz.) and Diane Feinstein (D-Calif.) offered an amendment to eliminate crop insurance for tobacco farmers.
  • Sen. Kirsten Gillibrand (D-N.Y.) is proposing to cut crop insurance spending to restore the $4 billion in cuts to the bill would make to the Supplemental Nutrition Assistance Program (SNAP). Another Gillibrand amendment would require automatic reviews of large insurance claims.
  • Sen. Tom Coburn (R-Okla.) and Sen. Dick Durbin (D-Ill.) may repeat their amendment to reduce premium subsidies to farmers with adjusted gross incomes of more than $750,000. The Senate adopted the provision in 2012.
  • An amendment by Sen. Mark Begich (D-Alaska) would require USDA to release the names of insurance policyholders and the amount of benefits they receive. Payments to insurance companies also would be disclosed. Such disclosure is now limited to commodity programs.
  • An amendment filed by Sheehan would cap crop insurance premium subsidies at $50,000.
  • Sen. Pat Roberts (R-Kan.) may offer amendments to make larger cuts to the SNAP. A possible amendment might center on further changes to the heating allowance provisions that allow states to increase benefits for eligible SNAP recipients through minimal utility payments.
  • Sen. Jeff Sessions (R-Ala.) has proposed amendments that would require verification of immigration status to qualify for SNAP benefits and end a USDA partnership with Mexico for promoting U.S. nutrition assistance.
  • A proposal by Sens. Jeanne Shaheen (D-N.H.), Patrick Toomey (R-Pa.) and Mark Kirk (R-Ill.) would ease restrictions on domestic sugar production and reduce price supports.
  • A possible amendment by Sen. Jeff Merkley (D-Ore.) would repeal a policy provision in the Fiscal 2013 continuing resolution that authorizes USDA to allow farmers to continue to plant and harvest genetically modified crops under legal challenge until a court issues a final ruling. (Vilsack has said the provision is unnecessary because he already has such authority.)
  • Merkley is co-sponsoring an amendment sponsored by fellow Oregon Democrat Ron Wyden to legalize the production of industrial hemp. Senate Republican Leader Mitch McConnell of Kentucky also signed onto the amendment along with fellow Kentucky Republican Rand Paul.
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