Evening Report (VIP) -- December 12, 2013

December 12, 2013 08:57 AM
 

HOUSE PASSES ONE-MONTH FARM BILL EXTENSION... The House passed a short-term extension of the of the 2008 Farm Bill by voice vote this afternoon. This measure will extend the farm bill through Jan. 31, 2014, giving lawmakers more time to work on a final, multiyear reauthorization of the farm bill and warding off a reversion to "permanent law," that would eventually translate to higher milk prices. But the measure faces tough opposition from key lawmakers in the Senate, some of whom say this removes urgency to get a farm bill done and that the immediate impact on milk prices if the farm bill expires is overstated.

 

SENATORS INTRODUCE BILL TO ELIMINATE CORN ETHANOL MANDATE... A group of senators introduced a bipartisan bill to eliminate the corn ethanol mandate within the Renewable Fuel Standard (RFS) today, which added pressure to the corn market. The bill, introduced by Dianne Feinstein (D-Calif.) and Tom Coburn (R-Okla.) along with eight co-sponsors, argues that current law raises the cost of food and animal feed in addition to damaging the environment. It will likely face stiff opposition.

Sen. Barbara Boxer (D-Calif.), chairwoman of the Senate Environment and Public Works (EPW) Committee, said she sees no need for legislation related to the RFS, at the conclusion of the first hearing on the standard since the Environmental Protection Agency proposed lowering its targets yesterday. Opposition from the chairwoman of the EPW represents a major hurdle for any congressional efforts to scale back the RFS.

 

DROUGHT MONITOR REFLECTS LITTLE CHANGE... According to the National Drought Monitor, drought covers 55.49% of the contiguous U.S., which is virtually unchanged from last week's 55.45%. The monitor still shows a large footprint of drought across the Central and Southern Plains, as well as the central Corn Belt. Click here for related maps.

 

TIGHTER CATTLE SUPPLIES COMING IN 2014... As we've been pointing out for quite some time, the 10-year cattle cycle high, which historically comes in a year that ends with a "3" -- therefore due in 2013 -- has likely been pushed into 2014 due to drought and other factors. Pro Farmer's Julianne Johnston provides more details on AgDay TV. Click here.

 

MARTELL: EL NINO-LIKE SIGNALS CONTINUE... El Nino-like symptoms in the Pacific Ocean could have an impact on South American crops with possible ripple effects in the U.S. Central Plains in Midwest this winter, according to meteorologist Gail Martell, MartellCropProjections.com.

An El Nino signal has emerged in the eastern equatorial Pacific Sea, she tells us, causing broad scale changes in the winds, air pressure and rainfall patterns. Sea temperatures have warmed up strongly east of the International Dateline, not only the sea surface but also the deep layer 150 meters down.

Martell says the recent pattern does not necessary meet all the criteria to call the recent pattern an El Nino. But recent weather patterns in South America and the U.S. currently reflect El Nino-like impact. "The El Nino signal is not a full blown case," she says. "The Climate Prediction Center is not convinced El Nino will develop, instead calling for ENSO-neutral conditions to prevail in the coming weeks. We would argue that signs of the El Nino have developed causing typical El Nino effects."

"For example," she continues, "the bitter cold in the U.S. heartland is a symptom of a weak El Nino. Likewise, the very dry conditions developing in the central Plains and Midwest currently mimic the weak El Nino."

So what's the impact? "The El Nino causes fundamental changes in the weather outside the United States," she explains. "Abnormally heavy rains develop near the International Dateline and drought in the Indonesian Basin and eastern Australia. This is due to a large-scale shift in the winds and air pressure patterns over the broad Pacific Ocean."

"Argentina is especially sensitive to the ENSO signal becoming wet with El Nino, but suffering drought with La Nina," she continues. "Farmers this year are having trouble getting their spring crops all planted due to recurring heavy rainfall. Showers began increasing in October. This was followed by more heavy rain in November. Just 55% of corn and soybeans were planted in early December. Typically the corn seeding would be 80% finished. The persistent wetness is expected to cause a large scale shift away from corn into soybeans."

And Brazil? "In Mato Grosso, the El Nino signal is also very wet. Relentless rains have occurred the past few days providing an ideal environment for fungus disease. It was reported earlier this week that rust was becoming widespread. Excessive wetness is a common occurrence with El Nino," she adds.

"It is important to remember that a full-fledged El Nino is not necessarily expected," she cautions. "For its part the Climate Prediction Center predicts ENSO-neutral conditions. However, as we've noted, an El Nino signal is still in effect. This may perpetuate the generous rainfall in South America. Argentina crops excel with the El Nino due to the ample summer rainfall it produces. Record production in corn and soybeans occurred in Argentina during the last El Nino in 2009-10."

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