CONSULTANT LOWERS BRAZILIAN BEAN CROP... South American crop consultant Dr. Michael Cordonnier lowered his estimate of Brazil's bean crop by 500,000 MT to 81.5 MMT due to disappointing yields of early maturing soybeans in Rio Grande do Sul and poor seed quality in northeast Brazil due to heavy late-season rains. But Dr. Cordonnier reminds that even with this slight reduction, "it's going to be a record crop as evidenced by the congestion all throughout the transportation chain in Brazil."
Dr. Cordonnier left his Brazilian corn estimate unchanged at 74 MMT and says any revisions will depend on when the rainy season in Mato Grosso ends or if cold temps move into Parana before the crop matures. He says planting of the safrinha crop in Mato Grosso is complete, with 88% in vegetative development and pollination just beginning.
ARGENTINE CROP ESTIMATES UNCHANGED... Dr. Cordonnier left his Argentine corn estimate unchanged at 24 MMT and his bean estimate at 50 MMT. He says soybean harvest is about 7% complete, with activity picking up in the north-central portion of the growing region. He reports early yields are better than expected, although he expects yields to taper off as later-planted soybeans were nipped by the March freeze event.
Dr. Cordonnier says about 20% of Argentine's corn crop has been harvested, which is up from 4% the previous week. He says corn yields will be highly variable this year, as the late-planted crop was impacted by persistent dryness and full-season yields will be much better.
MATO GROSSO PRODUCERS BECOMING MORE FINANCIALLY INDEPENDENT... Brazilian consulting firm Agroconsult says soybean producers in Mato Grosso financed 40% of their production costs with their own funds for the 2012-13 season -- sharp growth from only 5% in 2007-08. Dr. Cordonnier says this comes as welcome news to the grain companies that financed over half of the costs in 2007-08.
"The farmers themselves also disliked burrowing money from the grain companies because it limited their options when it came time to sell their crops," says Dr. Cordonnier. "Part of the agreement between the grain companies and the farmers was that the loans would be paid back in grain at the time of harvest. With the farmer committed to delivering his grain to the company to pay off his loan, it limited his ability to shop around for the best prices for his grain."
Dr. Cordonnier also points out that farmers are using their own resources to improve their production technologies by going from 50% GMO soybeans in 2007-08 to 88% GMO soybeans in 2012-13. They have also invested heavily in new and more efficient equipment.
ECONOMIST SAYS TIGHT SUPPLY OF MEATS WILL KEEP HOG PRICES NEAR YEAR-AGO... University of Missouri ag economist Ron Plain says based on last week's Quarterly Hogs & Pigs Report, daily hog slaughter in the second quarter of 2013 should be about 1.7% higher than year-ago, leading to his prediction for Iowa-Minnesota hog prices to average $87 on a carcass basis, up slightly from $85.45 the second quarter of 2012. For the third quarter of 2013, he expects daily hog slaughter to be up 1.1% from year-ago with hogs averaging $86 on a carcass weight basis, up from $83.15 in the third quarter of 2012.
In the fourth quarter, Plain is forecasting daily hog slaughter to be up a marginal 0.3% from year-ago and carcass prices to average $78 , down from from $79.93 the same quarter of 2012. "We anticipate a tight supply of competing meats in 2013 will allow for hog prices close to year-ago despite a slight increase in hog slaughter," he says.
EPA PLANS TO REQUIRE CLEANER GAS... Another sign of a more aggressive environmental stance in President Obama's second term comes amid plans for tough new standards to cut pollution from cars, despite complaints from refiners who say the proposal could raise the cost of producing gasoline. The plan would reduce the amount of sulfur in gasoline to an average of 10 parts per million (ppm), down from the current standard of 30 ppm. A public comment period will follow. The proposal has been ready for about 15 months but was delayed until after the presidential election.
The American Petroleum Institute, which represents refiners, says the standards would cost $10 billion in up-front capital expenditures and an additional $2.4 billion in annual compliance costs. The standards would ultimately raise the price of producing gasoline by up to nine cents per gallon, the institute says, and that extra cost would likely be passed on to consumers.
EPA disputes that assessment, saying the rule would add less than a penny per gallon to the cost of gasoline while delivering an environmental benefit akin to taking 33 million cars off the road, according to a senior administration official.