Consultant trims Brazilian bean crop estimate... Pro Farmer South American Crop Consultant Dr. Michael Cordonnier trimmed his estimate of the Brazilian bean crop by 500,000 MT to 89.5 MMT due to hot and dry conditions across southern and eastern regions of the country. Of most concern is Rio Grande do Sul, where 80% of the crop is filling pods and flowering. Yesterday, USDA raised its Brazilian bean peg by 1 MMT to 90 MMT.
Dr. Cordonnier says he was torn between keeping the Brazilian soybean estimate unchanged and lowering it 1 MMT, so he "split the difference," but says he has a lower bias going forward.
Meanwhile, harvest in Mato Grosso is 22% complete and yields continue to be above expectations. "Mato Grosso is the largest producer, so good yields in that state will partially compensate for lower yields elsewhere," he says. "But if eastern and southern Brazil remain dry for another week, the Brazilian soybean estimate will likely decline even further."
Consultant leaves Brazilian corn and Argentine crop pegs unchanged... Dr. Cordonnier left his Brazilian corn crop estimate unchanged from last week at 68.5 MMT, which compares to USDA's current forecast of 70 MMT. He says earlier-planted corn pollinated and started to fill before the onset of hot and dry conditions, although later-planted corn that has been pollinating and filling grain is a concern.
Dr. Cordonnier left his Argentine corn and soybean crop estimates unchanged at 22.5 MMT and 53.5 MMT, respectively. He has a neutral bias toward the crops as recent rains have helped stabilize yield potential. USDA currently pegs the Argentine corn crop at 24 MMT (down 1 MMT from January) and the soybean crop at 54 MMT (down 500,000 MT from January).
Aussie scientists: Some warming in Pacific likely... The Australian Bureau of Meteorology says the current state of ENSO is "neutral," but some warming of the Pacific is "likely" in the coming months. The group states, "Most international climate models surveyed by the Bureau suggest the tropical Pacific Ocean will warm through the austral (Southern Hemisphere) autumn and winter. Some, but not all, models indicate central Pacific Ocean temperatures may approach El Nino levels by early winter (our summer)... Neither neutral nor El Nino states can be discounted for the second half of 2014."
ERS expects major decline in net farm income in 2014... USDA's Economic Research Service (ERS) today said it expects net farm income to decline 26.6% from 2013 to $95.8 billion in 2014. While this is a hefty year-over-year drop, net farm income is still expected to come in $8 billion above the previous 10-year average. Also of note, after adjusting for inflation, 2013 net farm income at $130.5 billion is expected to be the highest since 1973, whereas 2014's net farm income is expected to be the seventh highest.
ERS forecasts net cash income at $101.9 billion in 2014, which would be 22% below 2013. ERS notes that the projected decline in net cash income is less than that for net farm income "primarily because it reflects the sale of more than $6 billion in carryover stocks from 2013. Net farm income reflects only the earnings from production that occurred in the current year." Other highlights include:
- The projected $3.9-billion (1.1%) decrease in total production expenses in 2014 would be only the second time expenses declined in the last 10 years.
- Livestock receipts are expected to increase 0.7% in 2014, largely due to a 7% increase in dairy receipts.
- Crop receipts are expected to decrease more than 12% in 2014, with an almost $11-billion decline in corn receipts and a decline in soybean receipts of more than $6 billion.
- The elimination of direct payments under the 2014 Farm Bill and uncertainty regarding enrollment and payments during calendar-year 2014 result in a projected 45% decline in government payments.
- Farm equity is projected to reach another nominal record, despite the substantial slowdown in asset growth and the expectation of higher debt levels.
- Farm financial risk indicators are expected to continue at historically low levels.
Get more details and charts here.
EIA: Propane prices most impacted by cold temps... Cold weather contributed to record withdrawals from natural gas in storage as temperatures east of the Rockies averaged 16% below year-ago with temps in southern regions 20% below year-ago for the October to January timeframe. Propane prices have reflected the most notable impact, according to the Energy Information Administration (EIA). Midwest LP prices rose from an average of $2.08 per gallon on Dec. 2, 2013, to $4.20 per gallon on Jan. 27, 2014. This month's Short-term Energy Outlook also includes downward revisions to projected WTI and Brent crude oil pricing, and it forecasts a 27-cent increase from last month's projection for natural gas spot prices at the Henry Hub in 2014 at $4.17/MMBtu. Learn more.
OSHA withdraws grain safety guidance... OSHA yanked from its website a 2011 memorandum that directed its inspectors to check farm grain facilities for compliance with worker safety measures. Farm groups and farm-state lawmakers argued successfully that the inspections violated a long-standing appropriations ban against OSHA enforcement activities on small farms. A provision in the FY 2014 omnibus spending package reiterated the ban and required OSHA to consult with USDA on the issue. OSHA, in a letter to the House Education and the Workforce Committee, said it will issue new guidance after consulting with USDA. OSHA officials then held a preliminary call with USDA on Jan. 31 to discuss the new guidance. OSHA again noted that field personnel have been instructed to consult with headquarters before deciding whether farms are exempt from safety requirements.
Fed's Yellen signals policy continuity... Interest rate policy and a need for great "continuity" in Fed policy moving ahead were the key points in testimony prepared for Fed Chairwoman Janet Yellen to deliver to the House Financial Services Committee today.
"If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective," Yellen's testimony said, "the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings." However, she noted that purchases are not on a preset course and the committee's decision regarding their pace will remain tied to its labor market and inflation outlooks as well as "the likely efficacy and costs of such purchases." Yellen reiterated that the Fed's watchpoint on the unemployment rate will remain at 6.5% relative to its interest rate policy. Read more perspective on Yellen's testimony.