KEY USDA REPORTS TOMORROW MORNING... USDA will release its first survey-based corn, soybean and cotton estimates tomorrow -- all of which are highly anticipated given the ongoing drought. Make sure you check profarmer.com shortly following the 7:30 a.m. CT release of the reports for highlights and analysis. Open outcry trade will begin at 7:20 a.m. CT tomorrow morning, so look for an immediate price reaction from traders to USDA's data. Click here for pre-report expectations.
EXTREME DROUGHT SPREADS ACROSS CORN BELT... According to the National Drought Monitor, the area of "extreme" drought expanded across the Corn Belt last week; it now covers 38.19% of the area compared to 31.80% the previous week.
The drought monitor states: "Conditions continue to improve in the eastern half of the Midwest as another week of good rains came to parts of Ohio, Indiana and Kentucky. Again, generally speaking, the drought continues to improve and is being pushed west, tightening the gradient along the way with one-category improvements noted in eastern and southern Ohio, eastern and central Kentucky and north-central Indiana. Parts of the core region of drought in this region continue to see deterioration this week marked by a slight expansion of D2/D3 in southeastern Indiana. Continuing east, both Iowa and Illinois see expansion of D3 and D3. Missouri and Arkansas continue to worsen as the heat and dryness continues its grip, leading to an expansion of D4 in northern Arkansas and southern Missouri along with a new area of D4 in extreme west-central Missouri adjoining Kansas." Click here for related maps.
BRAZIL RAISES 2012 CORN CROP ESTIMATE... Conab, the supply arm of the Brazilian government, has raised its estimate of the country's 2012 corn crop by 3.22 million metric tons (MMT) to a record 72.78 MMT. This is raising expectations USDA to revise its current estimate of the crop, which stands at 70.0 MMT. Meanwhile, Conab revised its estimate of the 2012 soybean crop marginally to 66.4 MMT.
CORDONNIER: BRAZILIAN TRUCK SHORTAGE TO WORSEN... As a followup to yesterday's item regarding the logistical gridlock issues Brazilian producers face for the 2012-13 season, South American consultant Dr. Michael Cordonnier says new regulations involving Brazilian truck drivers have heightened concerns about a shortage of trucks in the country. More than 60% of grain is transported via such vehicles from Brazil's midsection. The new regulation requires drivers to rest 11 hours each 24-hour period and half an hour for every four hours of driving time. He notes this is especially worrisome considering a December study by the National Transportation Confederation that shows Brazil is already (pre-regulation) short 40,000 professional truck and bus drivers, which the Brazilian Vegetable Oil Processors Association attributes to high freight rates.
IMPLICATIONS OF POSSIBLE 'BLUE SLIP' ISSUE... The possible "blue slip" issue we first talked about in "First Thing Today" appears to be related to some cotton language in the Senate farm bill. While Senate sources do not agree with any House-charged problem, the same sources admit that on "technical" grounds there could be a problem. In question is whether the Senate measure proposes to raise revenue, which is a no-no for a bill coming out of the Senate.
The implication of a blue slip issue would be the Senate-passed farm bill would have to be sent back to the chamber for consideration and debate to fix the problem. A veteran congressional source says a solution to the Senate's apparent problem "could be to implement the Stabenow-Peterson plan whereby the Senate takes up the House disaster bill, strikes the House provisions, and inserts the Senate farm bill without the offending provisions and requests a conference with the House. This may be the fastest – and maybe the only – way to get a bill done by Sept. 30. This blue slip issue sort of puts the ball back in the Senate’s court." Regarding this solution, several sources say Senate leadership won't want to do anything that would stall much needed ag disaster assistance when lawmakers return Sept. 10.
Just where this issue will go is murky, but it appears House GOP leaders may have found something to slow down the farm bill process -- something many believe is their real intent. Click here for more details.