USDA CONFIRMS SEVERE DROUGHT STRESS ON CROPS... The initial reaction by traders to USDA's smaller-than-expected corn estimate was sharp gains that led to an all-time high being posted on the weekly continuation chart. But futures quickly softened in reaction to the higher-than-expected 2011-12 carryover peg. Soybean futures were supported throughout the day by the lower-than-expected crop projection and the projected year-to-year drop in carryover. Click here to view the entire Pro Farmer report reaction.
NWS 6-10 DAY RELIEF FROM HOT TEMPS... The National Weather Service (NWS) forecast for August 16-20 calls for below-normal temps across the Corn Belt, with above-normal precip expected along the southern fringe of the eastern Corn Belt. Below-normal precip is expected across the Dakotas, but across the bulk of the Corn Belt normal precip is expected. While milder temps will provide some much-needed relief to crops, soybeans need more than normal rains to assure adequate pod fill. Click here to view related maps.
ARGENTINA HIKES BIODIESEL TAX, SOY EXPORT TAX UNCHANGED... The Argentine government tightened its grip on the country's energy sector by ordering a tax hike on biodiesel exports, but it denied rumors it would increase soybean export taxes, which are currently at 35%. The biodiesel tax will go from 20% to 32%, effective tomorrow.
Rumors Argentina was mulling a tax increase on soybean exports was a supportive factor for the soybean futures at times this week, but news it would not work to curb exports helped spur some profit-taking off session highs today. While Argentine Deputy Ag Minister Lorenzo Basso said the farm ministry was not developing any soy tax increase plans, there is still speculation the Economy Ministry might be planning to propose an increase on its own.
USDA RAISES 2012 TOTAL MEAT PRODUCTION PEG, BUT SEES SUPPLIES TIGHTENING IN 2013... USDA raised its projection of 2012 total red meat and poultry production by 410 million lbs. from last month, but lowered its projection of 2013 production to reflect a 2.1% year-over-year decline. USDA said, "Carcass weights are forecast higher based on recent weight trends, but higher feed prices are expected to temper the increase and carcass weights are expected to be lower in 2013 compared to 2012."
USDA reduced its 2012 beef import forecast in part on weaker second-quarter data, but also lowered its 2012 and 2013 beef export projections to reflect a slowdown in the pace and tight domestic supplies. Pork and poultry exports were also reduced for 2012 and 2013.
USDA lowered its 2012 average cash steer price projection by $4 to an average of $120.50 and trimmed its 2013 price projection by $2.50 to $127.00. Meanwhile, average cash hog prices were raised to $62.50 for 2012 and $64.50 for 2013.
BEEF AND PORK EXPORTS IN TERMS OF VALUE ABOVE YEAR-AGO... According to data compiled by the U.S. Meat Export Federation, U.S. pork and beef exports concluded the first half of 2012 at a higher value than year-ago. Total first half pork exports of 1.13 million metric tons were valued at $3.17 billion, which is up 5% in volume and 13% in value over last year's record pace. Total first half beef exports of 550,462 metric tons (MT) were valued at $2.66 billion, 4% higher in value, but down 11% in volume. June pork exports climbed 4% over last year on steady volume. And despite a 15% decline in volume, June beef exports were still slightly higher in value than a year ago, says USMEF. Click here for more.
UN CHIEF ON ADDRESSING DROUGHT SITUATION... In "First Thing Today" we reported the UN Food and Agriculture Organization director general, José Graziano da Silva, has joined the call for a temporary suspension of the ethanol mandate in the Renewable Fuel Standard via an op-ed in the Financial Times. In the story, he also addressed high food prices and advised restraint in any other government actions in response to the drought.
Graziano da Silva acknowledged the world and the UN are better able to face high food prices resulting from high grain prices than in 2007-08 thanks to the introduction of its Agriculture Market Information Systems, which promotes coordinating policy responses. He says how long the U.S. drought lasts will be key in whether the current situation evolves into a food crisis. Graziano da Silva also urged restraint on actions to address the drought situation as he says some of the steps deployed in 2007-08, such as export restrictions, made matters worse.