CME GROUP DECLARES FORCE MAJEURE ON ILLINOIS RIVER... CME Group today declared force majeure at most grain loading terminals along the Illinois River as flooding has halted loading of barges. Under exchange rules, if barges cannot be loaded at a majority of shipping terminals, shipments may be delayed until the situation is resolved.
MIDWEST DROUGHT SHRINKS, BUT LARGE OVERALL DROUGHT FOOTPRINT REMAINS... The National Drought Monitor shows 60.21% of the contiguous U.S. is still covered by some form of drought, which is down from 61.67% last week. Some of the drought improvement came in the Corn Belt, although all of Nebraska is still covered by some form of drought.
Meanwhile, drought intensified over the central High Plains, although heavy rain and wet snow provided some relief to eastern portions of the region. Further south, beneficial rains from eastern Texas into the southeastern Plains contrasted with increased dryness from the upper Rio Grande Valley into the southern High Plains. Click here for related maps.
IGC SEES LARGER GLOBAL TOTAL GRAIN STOCKS IN YEAR AHEAD... The International Grains Council (IGC) raised its projection for 2013-14 global corn carryover by 7 MMT from last month to 143 MMT (117 MMT in 2012-13). The group trimmed its 2013-14 global wheat carryover projection by 1 MMT to 181 MMT (179 MMT 2012-13). Meanwhile, IGC pegs 2013-14 global soybean carryover at 25 MMT, down 1 MMT from last month, but 2 MMT higher than the current marketing year.
IGC's 2013-14 total grains carryover projection of 361 MMT is up 31 MMT from 2012-13. IGC forecasts world use of total grains at 1.817 billion MT, up 58 MMT from this season.
USDA ANNOUNCES CORN SALES TO CHINA AND UNKNOWN... This morning USDA announced China purchased 300,000 MT of U.S. corn for 2013-14 and that an unknown destination purchased 240,000 MT of new-crop corn. Traders suspect the unknown destination is also China. These sales -- even though they are for the upcoming marketing year -- should remind traders that given the prospect for a recovery in crop size from last year and the likelihood of lower prices in the 2013-14 marketing year, demand will start to come back. Traders have been cautious about a demand recovery for the upcoming marketing year.
ERS LOWERS ITS FOOD PRICE INFLATION FORECAST FOR 2013... USDA's Economic Research Service (ERS) lowered its inflation forecast for both all-food and foot-at-home (grocery store) prices in 2013 to a 2.5% to 3.5% increase, which compares to its March forecast for a 3% to 4% increase. This means that prices are likely to increase this year more so than in 2012 when food prices were mostly flat, but overall inflation is now expected to be near the historical average for both indexes.
ERS details that it expects inflation to remain strong -- especially for the first half of 2013 -- for most animal-based food products due to high feed prices. But it expects normal or below-normal inflation levels for categories not directly affected by the 2012 drought. Learn more.
LUCAS PROVIDES DETAILS ABOUT LIKELY MARKUP FARM BILL... As reported in "First Thing Today," House Ag Committee Chairman Frank Lucas (R-Okla.) says his panel will target 10-year savings of $38 billion when it begins marking up the farm bill the panel approved in 2012 on May 15. Regarding the sensitive issue of food stamps/Supplemental Nutrition Assistance Program (SNAP), Lucas says the savings level on nutrition programs in the new farm bill will be around $20 billion, compared to $16.5 billion in 2012 legislation.
Once the bill reaches the House floor, Lucas says he expects that crop insurance will be targeted for additional reductions. "It won’t be assaulted in the Ag Committee itself, because the membership understand how the program works and why it’s important," he explains. Controversial floor amendments for reforming crop insurance are expected from opponents of the program, but veteran contacts do not see those opponents winning.
Representative Collin Peterson (D-Minn.) will likely push dairy supply management language be limited to three years in an attempt at dairy policy compromise, according to Washington Consultant Jim Wiesemeyer. Sources say Lucas may go along with that approach. The coming House farm bill markup draft will likely show the proposed dairy title costing money, rather than saving money as indicated by last year's scoring.
FARM BILL END ZONE TARGET OF SEPTEMBER... The Senate Ag Committee will likely hold its markup session about a week before the tentative May 15 timeline in the House. The Senate savings number will likely be $23 billion, meaning a unified number must come later, and that could occur in upcoming debt limit hike talks that could go into September because tax receipts have been larger than previously expected. House GOP leaders want the farm bill off the floor by the July Fourth recess. If so, that means staff could work on conference issues, with a hoped for farm bill conclusion before the one-year extension of most of the 2008 Farm Bill expires at the end of September. Sources say the goal is for both the Senate and House (both at the Committee level and on floor debate) to hold their markups and votes as close together as possible, so as to build momentum. House GOP leaders do not want much time to lapse between panel markup and floor debate.