CONSULTANT TRIMS ARGENTINE SOYBEAN CROP AGAIN... After lowering his Argentine soybean crop estimate by 1 MMT last week, South American crop consultant Dr. Michael Cordonnier trimmed it another 1 MMT this week to 51 MMT due to continued hot and dry weather. "I continue to feel the dry weather will impact the later planted soybeans more because the crop is still small and trying to get established," he says, adding there is further downside risk to the crop if the adverse weather pattern continues.
Dr. Cordonnier left his Brazilian soybean crop estimate unchanged at 81 MMT, though he notes that wet conditions in Mato Grosso are leading to concerns about lower yields and reduced seed quality. He notes, "My estimate is lower than most, but some recent estimates have started to come down as a result of the wet weather in Mato Grosso and there could still be some downward risk to my estimate as well."
Dr. Cordonnier trimmed his Paraguay soybean crop estimate by 250,000 MT to 8.75 MMT due to dry weather during January. Overall, Dr. Cordonnier projects total South American soybean production at 144.95 MMT, which is down 1.25 MMT from last week, but still 25.7% higher than last year.
CONSULTANT LEAVES SOUTH AMERICAN CORN CROP ESTIMATES UNCHANGED... Dr. Cordonnier left his estimates of the Brazilian and Argentine corn crops unchanged from last week at 70 MMT and 22.5 MMT, respectively. He says full-season corn that is currently being harvested in southern Brazil is doing quite well, but there are concerns about when producers will plant the safrinha crop. "I think we need to remain conservative in our Brazilian corn estimate because more than half of Brazil's corn crop will be safrinha production and they have just barely begun planting that crop," he says.
STATS CANADA GRAIN STOCKS TIGHTER THAN YEAR-AGO.... Statistics Canada this morning reported that stocks of most grains at the end of December were tighter than last year, with canola stocks the lowest since 2006 at 7.371 MMT. Wheat stocks of 20.690 MMT also came in lower than traders anticipated and represented a 0.7% decline from last year at this time, with barley stocks of 3.830 MMT coming in well below expectations and down 4.1% from year-ago. Total soybean stocks of 2.4 MMT were 6.7% lower than year-ago, but corn stocks at 10.4 MMT posted a 9.8% rise from last year. Click here for more.
RUSSIA TO END GRAIN IMPORT DUTY, NOW SEEKS APPROVAL FROM NEIGHBORING COUNTRIES... New details have surfaced since we reported in "First Thing Today" that Russia has decided to lift its 5% duty on grain imports until mid-summer due to the tight domestic supply situation. We have learned that it will take about two months to cut through the red tape for approval, as Russia is required to seek approval from Belarus and Kazakhstan due to a customs union created in 2010. Therefore, expectations are the duty will be lifted from early April through July.
Russia is already importing duty-free grain mainly from Kazakhstan. Russia is expected to import around 800,000 MT of grain in January-July 2013, which would be up from 500,000 MT in the July-December 2012 period.
Also today, Brazil said it will exempt 1 MMT of wheat from outside of the Mercosur trade block (Argentina, Brazil, Paraguay, Uruguay, Venezuela and Bolivia) from import duties between April and July.
As we have stated before, significant U.S. wheat exports to Russia are unlikely, but as other countries ship wheat to Russia, it increases the likelihood that fresh demand for U.S. wheat will surface. The U.S. is likely to get some of the Brazilian wheat demand.
RUSSIA INSPECTING U.S. CHICKEN FOR RACTOPAMINE... Russia's veterinary agency said it is carrying out a probe of U.S. chicken to see if it contains any residue of the growth stimulant ractopamine. The agency known an Rosselkhoznadzor also said it plans to temporarily halt imports of U.S. turkey due to ractopamine starting Feb. 11. In January, the agency announced plans to temporarily halt imports of U.S. pork and beef starting Feb. 11, if the situation with the use of ractopamine isn't worked out.
ECONOMIST: CATTLE INVENTORY REPORT IMPLICATIONS... University of Missouri ag economist Ron Plain says based on USDA's Cattle Inventory Report, January 2014 inventory will be roughly 1.5% smaller than 2013 and lower inventories points to higher prices. "It appears that 2013 fed cattle prices will average close to $130 per cwt. on a live basis with 2014 prices higher still," he says.
"Both fed cattle prices and cull cow prices in 2012 were record high for the third consecutive year and will likely be still higher in 2013 and 2014. The strengthening income picture for cow-calf operations should slow beef cow slaughter and ultimately lead to herd expansion," adds Plain.
CBO: LOOMING POLICY DECISIONS CLOUD BUDGET OUTLOOK... The Congressional Budget Office (CBO) released its Budget and Economic Outlook: Fiscal Years 2013 to 2023 today. It anticipates slow economic growth this year as improvement in economic drivers will be offset by budget changes slated to occur. After this year, CBO projects economic growth will pick up, however, which could lead to a rise in inflation and interest rates and a decline in the unemployment rate, though it is expected to remain above 7.5% through 2014.
CBO says that if the laws currently in place regarding federal taxes and spending don't change (including the March 1 sequestration cuts), the budget deficit will shrink to $845 billion (5.3% of GDP), which would be its lowest levels since 2008. This is due in large part to the higher tax rates approved by Congress in January, though this does little to improve the long-term budget outlook. CBO continues that its baseline projections indicate deficits will shrink to 2.4% of GDP by 2015. After that time, CBO says the deficit will again rise due to "the aging population, rising health care costs, an expansion of federal subsidies for health insurance and growing interest payments on federal debt."