Evening Report (VIP) -- December 9, 2013

December 9, 2013 09:00 AM
 

PLENTIFUL RAINS IN MATO GROSSO... Meteorologist Gail Martell of MartellCropProjections.com says Mato Grosso is in line for more rain this week, which raises concern about the spread of rust after a wet four-week period. She says vegetation maps have deteriorated, which heightens her concern about the spread of rust.

Meanwhile, she says beans in western Parana are flourishing after recent rains. The weather pattern, she says, reflects an emerging El Nino signal. Last week the U.S. Climate Prediction Center says ENSO remains in a neutral phase, but that El Nino can't be ruled out in the future.

 

 

HARSH WEATHER BLANKETS THE COUNTRY... Martell says abnormally cold temps continue to dominate the Rocky Mountains and Great Plains, with minimum temps falling to -35 to -40 in Montana over the weekend -- the coldest since 1996. Temps as low as 0 were reported as far south as the Texas Panhandle, which are stressing cattle feedlots. A thin blanket of snow now covers much of the Midwest, with snow 4 to 9 inches deep across the Northern Plains.

Martell says while temps are expected to moderate across the western U.S., bitter cold temps will linger across the Midwest. Cold temps are also expected across the heavy population centers from Washington, DC, to New York and Boston, increasing heating oil needs. Click here for related maps.

 

 

WHEAT MAY BECOME ALTERNATIVE SAFRINHA CROP IN CENTRAL BRAZIL... South American crop consultant Dr. Michael Cordonnier says after greatly expanding safrinha corn production in recent years, producers in central Brazil are looking for alternatives due to lower corn prices. He says to stimulate production of wheat, legislation has been proposed in Mato Grosso to support a wheat research fund to stimulate higher yields. A similar program was put in place many years ago to stimulate cotton production in Mato Grosso, which is now the largest cotton producing state in Brazil.

"The annual wheat production in Brazil varies from 5 MMT to 6 MMT and the annual domestic consumption is approximately 10 MMT," says Dr. Cordonnier. "Normally, the deficit is made up by importing wheat from Argentina, but the 2013-14 Argentine wheat crop has been disappointing and Brazil has turned to the U.S. to help supply its needs."

 

 

BILLIONS OF DOLLARS IN CORN PROGRAM PAYMENTS & 2014 PLANTINGS IMPACT COULD IMPACT FARM BILL... Those analysts scoring farm bill and farm program costs in the Congressional Budget Office and the Obama administration (USDA, OMB) have not yet revealed a major issue ahead -- the billions of dollars in corn-related payments likely for the 2014 crop. The "baseline" projections must assume current policy, and that policy allows farmers to enter the Average Crop Revenue Election (ACRE) program. While few producers enrolled in that program via the 2008 Farm Bill and its one-year extension for 2013, that could change if they are allowed to in 2014, with low corn prices expected during the 2014 crop season. That means the budget baseline could or would show around $5 billion or so in ACRE-related payouts, depending on ACRE participation.

Another market-significant development is that this could spur greater-than-expected plantings of corn in order to be protected under the ACRE program parameters -- thus, corn plantings may not decline as much in 2014 as most now project. This would occur even if a new farm bill is passed and Congress starts the new programs (ARC, PLC, etc.) with the 2015 crops in order to give USDA time to implement the new programs. The draw to corn plantings comes at a time when some corn and soybean grower lobbyists have stressed farm programs should be decoupled from actual plantings so they do not impact plantings or the market. But in the above scenario, that would likely be the case. Get more details.

 

 

FARM BILL FRAMEWORK POSSIBLE THIS WEEK, ACTUAL BILL EXPECTED IN EARLY 2014... A framework for a new farm bill is possible by the end of this week, but getting an actual farm bill through the legislative process, while not impossible, is a tall order -- especially for this Congress. If House leaders were to alter their current plans to recess Dec. 13, then the odds increase that a new farm bill could still occur this year. Absent that, it will be completed in January or February 2014... if a farm bill agreement is ever finalized by conference committee.

And while USDA Secretary Tom Vilsack continues to hype a move to permanent legislation and sky-high milk prices as a possibility if there is no new farm bill by Jan. 1, 2014, he is hopefully just using overstatements to goad a turtle-like Congress into action. Congress is widely expected to pass a short-term extension of key farm programs -- notably current dairy policy -- to avoid any such development and to give lawmakers "more time" (more than the years they've already had) to complete a new farm bill.

Outside of the aforementioned short-term extension previously noted, another one- or two-year extension of the 2008 Farm Bill is unlikely as there are few from either party and no farm-state lawmakers who want to see another extension. But with this Congress, one should never rule out anything.

 

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