Evening Report (VIP) -- April 14, 2014

April 14, 2014 10:26 AM

Winter wheat condition declines... USDA reports as of Sunday that 34% of the winter wheat crop was rated "good" to "excellent," which is down one percentage point from last week and compares to 36% a year-ago. USDA rates 32% of the crop in "poor" to "very poor" shape, which is a three-percentage-point gain from last week and compares to 31% a year ago.

Winter Wheat
very poor
This week
Last week

USDA reports 5% of the winter wheat crop was headed as of Sunday, which compares to 4% a year ago. None of the crop in Kansas has headed (3% on average), while Oklahoma is at 4% (21% on average) and Texas is at 16% (28% on average). This signals a very small percentage of the crop is at risk from tonight's forecast freeze event.


Very little Midwest corn planted... USDA reports as of Sunday that 3% of the nation's corn crop was planted, which compares to 2% last year and 6% on average. Illinois has 1% planted (10% on average), with 9% planted in Missouri (16%) and 1% in Nebraska (1%). Elsewhere across the Midwest, producers have not yet turned a wheel.


Spring wheat planting 6% complete... USDA reports as of Sunday that 6% of the nation's spring wheat crop was seeded, which compares to 5% last year at this time. USDA reports Idaho has 56% seeded (31% on average); Montana is at 3% (8%); South Dakota is at 6% (22%); and Washington is at 46% (42%). No planting has been reported in Minnesota and North Dakota.


Cotton planting 8% complete... USDA reports that as of Sunday 8% of the nation's cotton crop was planted, which is a two percentage point gain from last week and equal to last year's pace. This compares to a five-year average of 9%.


Martell: December through March precip in Southern Plains 'low'... Meteorologist Gail Martell of MartellCropProjections.com says rainfall in Kansas, Oklahoma and Texas from December through March was the lowest in more than 60 years, with the area recording an average of 1.9 inches of precip. "The drought this season is worse than 2010-11 when hard red winter wheat production was down 23% from the previous three-year average," she says.

Martell says the forecast calls for heavy precipitation this week over much of the Midwest, which will slow the start of early planting. "Kansas is also expecting heavy rain in excess of 0.75 inch over much of the central state. Rainfall would be less in most of Oklahoma and Texas, though some meaningful rain is possible," she notes.

Martell says weather models also predict a hard freeze tonight for Kansas, Oklahoma and western Texas. Click here for more forecast details and related maps.


USDA publishes rule for resurrected disaster programs... USDA published in the Federal Register the details on the Livestock Indemnity Program (LIP), Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program (ELAP), Livestock Forage Disaster Program (LFP) and Tree Assistance Program (TAP). The major change made to the programs was an increase in the payment limit from $100,000 to $125,000 per person. There now is also a three-year average adjusted gross income limit of $900,000 for disaster programs.

Producers would have until Aug. 1, 2014, to file for claims under the ELAP program for FY 2011, 2012 and 2013. For FY 2014, loss claims must be filed by Nov. 1, 2014. For LIP, for losses that occurred on or after Oct. 1, 2011, and before Jan. 1, 2015, producers must request aid and provide support documentation to Farm Service Agency no later than Jan. 30, 2015. For 2015 and subsequent calendar year losses, producers must provide a notice of loss to FSA by the earlier of 30 calendar days of when the loss of livestock is apparent to the participant, or 30 calendar days after the end of the calendar year in which the loss of livestock occurred.

Also under LIP, because there was no advance notice that losses suffered after Oct. 1, 2011, would be covered by the program as its authority expired Sept. 30, 2011, livestock producers may provide proof of death and inventories that may not be verifiable but that are reliable and reasonable documentation.


Why pork producers are seeking aid under ELAP over LIP... Some have asked why pork producers dealing with the porcine epidemic diarrhea virus (PEDV) are pursuing help under the ELAP program and not LIP. The answer is that LIP covers weather-related losses or losses due to species reintroduced by the government. It does cover disease losses, but only if those disease losses are linked to weather. While PEDV is said to be worse when temperatures are colder, that apparently is not enough to allow for help under LIP. Aid would appear to be available under ELAP, but spending under the program cannot exceed $20 million. If benefits sought by producers exceed that level, payments would be prorated.


CBO ag projections: PLC payouts to exceed ARC through 2024... Projected payouts under the Price Loss Coverage (PLC) farm program option are forecast to total $15.915 billion over Fiscal 2016 through 2024, while Ag Risk Coverage (ARC) county payments are to total $6.299 billion and individual ARC payments are forecast to total $4.365 billion, according to the Congressional Budget Office (CBO).

The CBO projections assume 40.6% of corn base acres will be enrolled in the ARC program options, 49.1% of soybean base acres and 27.5% of wheat base acres will be enrolled. Those percentages are also calculated off of updated base acres. For more details on USDA's program projections as well as SNAP, click here.


CBO: High and rising debt could have 'serious negative consequences'... The Congressional Budget Office (CBO) estimates that if current tax and spending laws do not change, the budget deficit in fiscal year (FY) 2014 will be $492 billion, or 2.8% of gross domestic product (GDP). This is down $23 billion from CBO's February estimate "mostly because the agency now anticipates lower outlays for discretionary programs and net interest payments." This figure is down nearly 30% from FY 2013.

However, CBO warns that if current laws don't change, the period of shrinking deficits will soon end. "Between 2015 and 2024, annual budget shortfalls are projected to rise substantially—from a low of $469 billion in 2015 to about $1 trillion from 2022 through 2024—mainly because of the aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt," CBO explains.

Also concerning, CBO's baseline projects federal debt held by the public will reach 78% of GDP by 2024. This compares to 72% in 2013 and an average of 39% the past four decades. "As recently as the end of 2007, federal debt equaled just 35% of GDP," CBO details. CBO says such high and rising debt would have "serious negative consequences."

Relative to the 2014 Farm Bill, CBO estimates the new law would reduce mandatory spending by $17 billion over the 2014-2023 period. However, the cost was estimated relative to CBO's May 2013 baseline rather than its February 2014 baseline. Get more details.

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