Evening Report (VIP) -- December 7, 2012

December 7, 2012 08:49 AM
 

MINOR CHANGES EXPECTED IN DECEMBER S&D REPORT... According to the average pre-report trade guesses, traders don't anticipate any major changes coming from USDA in its December Supply & Demand Report next Tuesday. But the range of guesses -- especially for corn -- signals there is still a lot of uncertainty.

Traders look for USDA to raise corn carryover slightly from 647 million to 666 million bu. and for wheat carryover to climb from 704 million bu. to 718 million bushels. However, given the ongoing stronger-than-needed pace of soybean exports, traders look for USDA to trim soybean carryover by 5 million bu. from last month to 135 million bushels.

2012-13 carryover

Avg.

Range

USDA Nov.

2011-12

in billion bushels

Corn

0.666

0.493-0.752

0.647

0.988

Soybeans

0.135

0.123-0.145

0.140

0.169

Wheat

0.718

0.690-0.754

0.704

0.743

 

 

UNEMPLOYMENT RATE DROPS TO 7.7%... This morning's employment report from the Department of Labor showed 146,000 non-farm payrolls were added in November, which was above expectations of around 93,000. Additionally, the unemployment rate edged down from 7.9% to 7.7% -- the lowest since December 2008. Employment increased in retail trade, professional and business services, and health care.

The report included this notice about Hurricane Sandy: "Hurricane Sandy made landfall on the Northeast coast on October 29th, causing severe damage in some states. Nevertheless, our survey response rates in the affected states were within normal ranges. Our analysis suggests that Hurricane Sandy did not substantively impact the national employment and unemployment estimates for November. BLS will release the regional and state estimates on December 21."

 

 

VILSACK: AG MUST STRATEGICALLY PICK 'FIGHTS'... USDA Secretary Tom Vilsack at this week's Farm Journal Forum criticized some farm groups and others for picking fights like food stamps, regulations and animal welfare, saying such actions are alienating the rest of the country and jeopardizing farm programs. "We need a proactive message and not a reactive message," Vilsack said. Click here for more.

  • On why we don't have a farm bill: "It isn't just the differences of policy. It's the fact that rural America with a (continued) shrinking (and aging) population is becoming less and less relevant to the politics of this country."
  • On renewable fuels: "You're hearing the RFS is history. I'm here to say it's not. I believe we'll continue to see a robust commitment from this administration to the RFS."
  • On climate change: Vilsack said research is needed to mitigate the impact of climate change and repeated his interest in maximizing land use by increasing the practice of double-cropping, including helping find markets for the production from double-cropping and research in improving double-cropping enterprises.
  • On river transportation: Vilsack said President Obama is concerned about water levels on the Mississippi River, and has directed the matter be dealt with.
  • On direct payments via the farm bill: Vilsack recalled his first speech as Ag Secretary was to a cotton group and he told them direct payments were gone. "I was right the first time," he said.
  • On food stamps: Vilsack repeated what he has said before on this topic -- that most of the food stamp recipients "played by the rules"; and truly qualify for such payments, including those on social security, disability, children and those whose wages are well below what is needed. He noted benefits of food stamps go to (1) those who get them; (2) grocery stores; (3) jobs affiliated with moving food bought via food stamps; (4) packaging and processing in the food sector to provide products; and (5) part of a safety net for farmers as food is purchased by the needy. Vilsack said some people think the money cut from food stamps would go to other farm bill programs, but that is not the case. He stressed there is always a need for reform for ways to improve the program -- "until we get to zero fraud and abuse, we can always do better."
  • Regarding helping find spending cuts at USDA: Vilsack said he has told appropriators and the Office of Management and Budget (OMB) to "give us time to manage" and find savings internally. He said if across-the-board (sequestration) cuts would come via failure to reach agreement on fiscal cliff matters, it would limit USDA's flexibility to make adjustments.

 

 

TRADE BILL COULD HURT BEEF, PORK... Trade sources say Senate passage of
the measure to give Permanent Normal Trade Relations (PNTR) to Russia could negatively
impact shipments of some U.S. beef products (tongue, liver and some other products) and
pork products to the country, citing ractopamine as the reason. Russia had previously
warned that if the U.S. approved that version of the trade measure, it would harm relations and potentially prompt a response from Moscow. As of Dec. 7, Russia will require certification showing that shipments of U.S. (and Canadian) beef and pork are ractopamine-free.

The National Pork Producers Council, which didn't take a position on PNTR, says "Russia's harassment and restrictions based on non-science- based" standards have cut U.S. pork exports by 60% since 2008. "We continue to seek a bilateral agreement between the U.S. and Russia that will eliminate the restrictions and harassment and which will allow U.S. pork producers to benefit from Russia's accession to the WTO." Click here for more.

 

 

LAND OFFERINGS TO REMAIN LOW IN 2013... LandOwner Editor Mike Walsten's annual survey of Pro Farmer Members' view on the land market attracted 678 responses this year. Nearly three-quarters of respondents tell us they expect 2013 cash rents to rise, while 24% look for rents to remain the same. The anticipated amount of increase for 2013 is evenly split -- about 31% say they anticipate an increase of 10% to 15% and another 31% say they expect their rent to rise by less than 10%. Only 12% of Members expect rents to rise by 15% or more. More than half (55%) of respondents are looking to buy land in 2013; only 7.52% of respondents anticipate selling land in the year ahead. Click here for Mike's "Your Precious Land" blog.

 

 

AG EXPORT OPPORTUNITIES ARE EXCITING AND ROBUST... At the Farm Journal Forum yesterday attendees heard from Thomas C. Dorr, president and CEO of Thomas C. Dorr & Associates, whose previous experience includes time as president and CEO of U.S. Grains Council. His expertise and enthusiasm about his topic -- the election's impact on international trade and regulatory agenda for agriculture -- was apparent.

Dorr says that we -- meaning both the Obama administration and the ag community -- have yet to develop an appreciation of the growing global middle class and the "exciting, robust and imposing" food and ag export opportunities this group presents. He says there is "no way we can access these opportunities without aggressively engaging in trade and trade policy. And frankly, it's just difficult not to justify that involvement." Read more.

 

 

COMBEST: GROUPS STRUGGLE WITH TRUTH IN EFFORT TO KILL FARM BILL... "Libertarian and environmental groups are urging the House of Representatives to oppose a five-year farm bill this fall, oppose inclusion of Direct Payments in an extension of current law, and advocate for a transparent farm bill process next year. These groups are entitled to express their views, but they also owe Congress the truth," writes guest columnist Larry Combest, former House Ag Chairman who is now a principal in Combest Sell & Associates.

Combest says these groups are not telling the truth in claiming the farm bill costs $1 trillion, and he points out that what really matters in the debate over the numbers is "the Congressional Budget Office says the House farm bill would save taxpayers more than $35 billion and the Senate bill would save north of $23 billion." Get more details.

 

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