Evening Report (VIP) -- January 17, 2013

January 17, 2013 09:11 AM

SOME DROUGHT IMPROVEMENT EXPECTED ACROSS IOWA... The National Weather Service's Climate Prediction Center (CPC) forecasts above-normal precip across eastern Iowa, Illinois and Indiana through April, which is expected to lead to further drought improvement across the area, although widespread drought relief isn't expected across the Corn Belt.

Meanwhile, the drought's hold is expected to continue from the southern half of South Dakota southward throughout Texas, leading to concerns about impacts on crops and livestock. Click here for more, including related maps.


DROUGHT MONITOR REFLECTS SLIGHT IMPROVEMENT ACROSS TEXAS... According to the National Drought Monitor, a four-percentage-point improvement was seen to drought conditions across Texas last week, but there's still a long ways to go toward total drought relief as 90.52% of the state is still covered by some form of drought. Some slight improvement was also seen across the Midwest, as 30.19% of the region is now drought-free, a two-percentage-point improvement from last week. See related maps.


IGC TRIMS GLOBAL TOTAL GRAINS CARRYOVER... The International Grains Council (IGC) has trimmed its projection for 2012-13 total global grains carryover by 2 MMT from last month to 322 MMT (367 MMT in 2011-12). The group raised its global wheat carryover peg by 1 MMT to 174 MMT (196 MMT in 2011-12) and trimmed its global corn carryover projection by 3 MMT to 113 MMT (133 MMT in 2011-12). IGC raised its global 2012-13 soybean carryover peg by 1 MMT to 29 MMT (23 MMT in 2012-13).

IGC raised its global wheat production projection by 2 MMT from last month to 656 MMT, but this is still down from 696 MMT last season. Regarding 2013-14 wheat prospects for a crop that went into dormancy in very tough shape, it states, "Analysis shows little correlation between reported end-November crop conditions and final yields, but as the rating for the current crop is at an historical low, it is uncharted territory." However, it says elsewhere, prospects are generally more promising and global output is tentatively projected up 4% year over year for 2013-14, with a 2% increase in area.

IGC raised its global corn production projection by 5 MMT from last month to 845 MMT due to upward revisions for China, the U.S. and Argentina, but this is still down from 877 MMT last season.


CARGILL TO IDLE TEXAS PLANT AMID TIGHT SUPPLIES... Cargill today announced it will idle its Plainview, Texas, beef processing facility effective at the close of business, Friday, Feb.1, 2013, resulting primarily from the tight cattle supply brought about by years of drought in Texas and Southern Plains. Cargill says its remaining beef cattle processing plants in the region, at Friona, Texas; Dodge City, Kan. and Fort Morgan, Colo., will receive cattle that were previously destined for processing at Plainview. The company's regional beef facilities at Fresno, Calif.; Milwaukee, Wis.; and Wyalusing, Pa., as well as its beef plant in Schuyler, Neb., and two beef plants in Canada, are unaffected.

Live cattle futures traded sharply lower on the news, although this should be a short-term market event as it's a reminder of the tightening supply situation. Click here for more.


TIGHT SUPPLIES SHOULD LEAD TO HIGHER FARMLAND VALUES IN 2013... That's the outlook from Farmers National Company, headquartered in Omaha, Nebraska. The firm anticipated a record year for farmland values in 2012, but says gains have exceeded their expectations. LandOwner Editor Mike Walsten has more available at this link.

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