CONSULTANT LOWERS ARGENTINE SOYBEAN CROP ESTIMATE AGAIN... South American crop consultant Dr. Michael Cordonnier lowered his estimate of Argentina's soybean crop another 1 MMT to 50 MMT. He notes the last several rain events in Argentina have been disappointing and now the crop is in its critical reproductive phase and there's not enough moisture in the near-term forecast to recharge dry soils. Dr. Cordonnier's new estimate is in line with that of the Buenos Aires Grain Exchange.
Since his Argentine corn crop estimate is already "very low," Dr. Cordonnier left it at 22.5 MMT, but notes the late-planted corn needs additional moisture. "I might be too low for the Argentine corn crop, but I am reluctant to increase the estimate as long as the county is in the midst of a drying trend," he says. "If the rainfall would increase in Argentina over the next couple of weeks, the corn crop might end up in the range of 23 MMT to 24 MMT."
USDA currently pegs Argentine soybean crop at 53 MMT and the corn crop at 27 MMT.
CONSULTANT LEAVES BRAZILIAN CROP ESTIMATES UNCHANGED... Contrary to higher crop estimates from the Brazilian government (Conab) and USDA recently, Dr. Cordonnier said some private estimates of Brazil's soybean crop have declined due to wet conditions in Mato Grosso and dry conditions in Rio Grande do Sul. Dr. Cordonnier left his Brazilian soybean crop estimate unchanged at 81 MMT and said production in these areas could swing either way depending on rainfall over the next few weeks.
Likewise for corn, he notes while government agencies have raised their Brazilian corn estimates, he is not convinced safrinha (second season) corn acreage and yields will increase significantly. "We now know for sure the safrinha corn in Mato Grosso will be planted later than last year and that will make the crop even more highly dependent on good rains at least through May," he says. Dr. Cordonnier left his Brazilian corn crop estimate at 70 MMT and said he doesn't anticipate changing it until "we know about when the rainy season will end."
USDA currently pegs the Brazilian bean crop at 83.5 MMT and the corn crop at 72.5 MMT.
ERS: 2013 NET FARM INCOME TO REACH HIGHEST LEVEL IN FOUR DECADES... USDA's Economic Research Service (ERS) forecasts net farm income for 2013 at $128.2 billion, up nearly 14% from 2012's $112.8 billion and the highest since 1973 after adjusting for inflation. ERS expects a return to trend yields to result in record crop production levels as well as substantial crop inventories at the end of the year. "This would lead to higher net farm income since this measure goes beyond cash income to include the value of inventory change and other noncash items," ERS elaborates.
ERS forecasts net cash income (the difference between cash expenses and the combination of commodities sold during the calendar year plus other sources of farm income) at $123.5 billion for 2013, down nearly 9% from 2012. If realized, this would be just the fourth time net cash income (adjusted for inflation) has topped $100 billion since 1973.
ERS expects farm sector assets, debt and equity to increase in 2013, but as has been the trend, it expects increases in farm asset value to surpass those increases in farm debt, mainly due to farm real estate. ERS continues, "Confirming the strength of the farm sector's solvency, both the debt-to-asset ratio and debt-to-equity ratio are expected to reach historic lows." Read more.
CROP INSURANCE INDEMNITIES TOP $14 BILLION FOR 2012 CROPS... The record for U.S. crop insurance indemnities for 2012 crops rose to $14.229 billion as of Feb. 11, with corn payouts rising to over $9.2 billion, according to Risk Management Agency (RMA) data. Payouts for corn, soybeans and now cotton have all topped $1 billion, with soybeans at $1.85 billion and cotton now at $1.027 billion.
The increase in payouts has also boosted the loss ratio for the program to 1.29 -- for every dollar of premiums paid in, $1.29 in payouts has been made. For corn, the ratio has risen to 2.15 with cotton at 1.23. Corn and cotton are the only major U.S. crops where the loss ratio is over 1.
While crop insurance payouts continue to rise, the pace of the increases has slowed. At this point in 2012, payouts for 2011 crops stood at roughly 90% of the eventual indemnities. If that pattern were to hold for 2012 crops, that would suggest payouts would reach more than $15.5 billion. Learn more.
AUSTRALIAN BUREAU SEES ENSO-NEUTRAL CONDITIONS LINGERING... The Australian Bureau of Meteorology says the tropical Pacific continues to post neutral ENSO readings, which are likely to continue "well into the southern hemisphere autumn (northern hemisphere spring)." The bureau notes the Southern Oscillation Index has returned to near-zero values following recent fluctuations associated with tropical depressions near Tahiti.
This morning meteorologist Gail Martell of MartellCropProjections.com said the La Nina signal was weakening, bringing major changes in the weather forecast for the U.S. and South America. She noted that wetter conditions were developing in Argentina and an "unsettled" forecast was developing in the U.S. Southern Plains.
"There are several indicators for a weakening La Nina influence. The upper ocean layer in the eastern Pacific tropical sea has warmed up somewhat. While sea temperatures are still below normal, they are 'less cool' than before," notes Martell. "During January, the subsurface sea was virtually unchanged and significantly cooler than normal. The Pacific trade winds have recently strengthened, whereas previously they were weak because of a La Nina effect."