USDA REPORTS FAILED TO STIR MARKET BULLS... Wheat futures had the most violent reaction to this morning's USDA Supply & Demand Report, with futures falling through the day to post sharp losses in reaction to USDA's higher-than-expected carryover projection. A lack of a bullish surprise and heavy spillover from wheat kept corn and soybean futures on the defensive for most of the day. Click here for Pro Farmer's full report reaction.
CONSULTANT LEAVES BRAZILIAN CROP ESTIMATES UNCHANGED... South American crop consultant Dr. Michael Cordonnier left his Brazilian corn and soybean crop estimates unchanged from last week at 70 MMT and 80 MMT, respectively, saying he has a "neutral" bias towards both crops. In this morning's Supply & Demand Report, USDA left its Brazilian crop projections at 70 MMT for corn and 81 MMT for soybeans.
Dr. Cordonnier says the earliest-planted full-season corn in southern Brazil is in the midst of pollination. While recent rains are beneficial, he says there is still reason for some concern about the success of pollination as soil moisture hasn't been fully recharged in the region. "Since more than half of Brazil's corn production will be planted after soybean harvest, the key for the 2012-13 corn crop is going to be when the rainy season ends," he says. "If the rains start to taper off by March, then the safrinha corn yield is going to be negatively impacted. If they don't start to taper off until sometime in May, then the safrinha corn crop should be fine."
The condition of the soybean crop is very good, says Dr. Cordonnier, with the only concern being the drier-than-normal conditions in southern Brazil. "Since the crop is still mostly vegetative, drier conditions at this point could easily be compensated for by improved conditions later in the growing season," he says.
ARGENTINE CROP ESTIMATES ALSO UNCHANGED... Dr. Cordonnier also left his Argentine corn and soybean crop estimates unchanged from last week at 22.5 MMT and 56 MMT, respectively. In this morning's Supply & Demand Report, USDA kept its Argentine soybean crop projection unchanged at 55 MMT, but lowered its corn forecast by 500,000 MT to 27.5 MMT amid expectations for reduced plantings due to heavy flooding in some areas.
Dr. Cordonnier says Argentine corn planting is about 55% complete, and the concern now is if all the intended corn acres will be seeded before the planting window closes in mid-December for central and southern areas and in late-December for northern areas.
"If the wet weather continues to delay the corn planting, it is entirely possible the soybean acreage may end up being larger than originally anticipated," says Dr. Cordonnier. "There has been some speculation the wet weather may result in some soybeans not being planted this growing season. It is probably premature to assume that since the planting window for soybeans won't close until early to mid-January."
USDA RAISES BEEF PRODUCTION FORECAST SLIGHTLY, TRIMS PORK... In this morning's Supply & Demand Report, USDA raised its 2012 and 2013 beef production projections slightly, but still sees supplies tightening by nearly 5% in the year ahead. Heavier-than-year-ago carcass weights were largely behind the increased production forecasts. USDA raised its 2013 average cash steer price by a dollar on both ends to a range of $124 to $134.
Meanwhile, USDA lowered its 2012 and 2013 pork production projections slightly from last month based on slaughter data and expects supplies to tighten by 1.7% in 2013. USDA raised its 2013 average cash hog price by a dollar on the bottom end to a range of $63 to $67.
CROP INSURANCE INDEMNITIES HIT $8 BILLION FOR 2012 CROPS... Indemnities have reached $8 billion under the crop insurance program for 2012 crops, according to data from the Risk Management Agency (RMA), with corn closing in on $5 billion and soybeans approaching $1 billion as of Dec. 10. The loss ratio for corn is at 1.10 (making it the first major crop to see payouts above premiums for 2012 crops) while the loss ratio for soybeans is now at 0.42. See the full story online for more details.
Projections are that final payouts for 2012 crops will top the 2011 record of $10.8 billion by a wide margin. USDA Chief Economist Joe Glauber has said the indemnities are likely to climb to $15 billion to $16 billion for 2012 crops, with some in the crop insurance industry and elsewhere expecting a figure closer to $20 billion.