Evening Report (VIP) -- December 26, 2012

December 26, 2012 09:06 AM

CONSULTANT LOWERS ARGENTINE SOYBEAN CROP ESTIMATE... South American crop consultant Dr. Michael Cordonnier has lowered his Argentine soybean crop estimate by 1 MMT to 54 MMT and says he has a neutral to lower bias toward the crop. He says while soybean planting increased by 10 percentage points last week to about three-quarters complete, there are still about 5 million hectares that remain unplanted.

"The concern for the Argentine soybean crop is how late the crop is being planted. The double-crop soybeans are generally planted during December, but this year a significant portion of the full-season soybeans are being planted at the same time as the double-crop soybeans," says Dr. Cordonnier. " With only five days left in December, we can now say that at least several million hectares of soybeans will be planted in January and the yield potential for these late-planted soybeans is probably going to be lower than if they were planted two months earlier."

Meanwhile, Dr. Cordonnier left his Argentine corn estimate unchanged at 22.5 MMT, saying about 70% of the crop is planted, leaving around one million hectares unplanted. He says corn planted in central and southern Argentina during January runs the risk of lower yield potential, but says he has previously lowered his crop estimate due to this concern.

CONSULTANT LEAVES BRAZIL CROP ESTIMATES UNCHANGED... Dr. Cordonnier left his Brazilian corn and soybean crop estimates unchanged at 70 MMT and 80 MMT, respectively. He says while the weather in southern Brazil has been beneficial for crop development, drier conditions in east-central and northeastern Brazil are troubling.

"In the majority of the soybean producing regions of Brazil, the crop is doing quite well. The previously dry areas of southern Brazil have been receiving adequate rainfall since the beginning of December. In Mato Grosso, most of the soybeans are developing well and the first fields will start to be harvested in about two weeks," says Dr. Cordonnier, who also says his soybean crop estimate could move higher in the coming weeks if the weather improves in the dry regions.

For corn, Dr. Cordonnier says he maintains a neutral bias but says there is still uncertainty associated with the safrinha crop. "The eventual safrinha corn acreage and resulting corn yield will be determined by several factors including: when the soybean crop gets harvested, the intensity of the rainy season in February and March, when the rainy season ends in central Brazil and the trend in corn prices in February and March," he says.

PALMER DROUGHT INDEX REELECTS STILL-WIDE PRECIP DEFICITS... The latest Palmer Drought "precip-needed" map reflects the need for up to 9 inches of precip across the Plains and western Corn Belt to rid the region of drought conditions. While much of the eastern Corn Belt is drought-free, northern Illinois and northern Indiana still have more work ahead. Click here for related maps.

KEY FISCAL CLIFF DATES... Spending and tax negotiations are expected to begin again tomorrow when the Senate and President Obama return. House members have not yet been given their traditional 48-hours notice to return. Click here for more details on negotiations. Following are some key dates relative to the fiscal cliff:

  • Jan. 1, 2013: New provisions take effect including higher payroll taxes, income taxes and investment taxes.
  • Jan. 2: $110 billion in spending cuts scheduled to begin, hitting domestic and military spending.
  • Late February, early March: The U.S. is expected to reach its congressionally mandated borrowing limit of about $16.4 trillion.
  • March 27: A deal to fund the federal government expires.
  • April to mid-August 2013: If Congress crafts a two-step deal to avert the fiscal cliff, this could be the deadline for tackling part two, including any unresolved tax and entitlement issues.
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