HARVEST UNDERWAY IN MATO GROSSO... South American crop consultant Dr. Michael Cordonnier says harvest of the first early-maturing soybeans started last week in central Mato Grosso, Brazil, which will be followed by a second crop of corn or cotton. Farmers report yields similar to last year, as the early crop was impacted by dry weather in October. He expects yields to improve as harvest progresses.
CONSULTANT LEAVES BRAZILIAN CROP ESTIMATES UNCHANGED... South American crop consultant Dr. Michael Cordonnier left his Brazilian soybean crop estimate unchanged at 80 MMT. He says the estimate could move higher if central and northeast areas of the country receive needed rains. But he warns if these areas remain drier than normal, the estimate could slip.
Dr. Cordonnier says the corn crop in Brazil varies widely in maturity and since slightly more than half of the crop will be planted after the soybeans are harvested, a lot is riding on the safrinha crop."Until we get a better idea concerning the weather pattern in central and northeast Brazil as well as the safrinha corn acreage and yield, I feel we should be cautious concerning the Brazilian corn crop. Therefore, the Brazilian corn estimate was left unchanged this week at 70.0 MMT," he says.
LARGER-THAN-NORMAL PERCENTAGE OF ARGENTINE CROP TO BE PLANTED IN JANUARY... Dr. Cordonnier says 82% of Argentina's intended soybean acres are planted and about 76% of the corn crop has been planted. That leaves about 3.9 million hectares of soybeans and 850,000 hectares of corn to be planted in January -- raising yield risks due to the late planting date.
Dr. Cordonnier left his Argentine soybean crop estimate unchanged at 54 MMT, but says he has adopted a neutral to negative bias toward the crop. "Most of the soybeans remaining to be planted in central and southern Argentina will be double cropped after wheat or barley, but most of the soybeans remaining to be planted in northern Argentina will be full-season soybeans, just planted later than normal," he says.
Dr. Cordonnier also left his Argentine corn crop estimate unchanged at 22.5 MMT, but says he doesn't expect all the intended acres to be planted at this late date. "It’s also going to be very hard for this late-planted corn to achieve a normal yield potential," he says.
DROUGHT TAKING HOLD IN MATO GROSSO... Meteorologist Gail Martell of MartellCropProjections.com says exceptionally dry conditions in December are unusual for Mato Grosso -- Brazil's leading soybean production state. Typically, December is the wettest month of the summer, but dryness and hot temps are a threat to the crops.
Martell says the extended forecast calls for dryness to extend in early January in Mato Grosso, but for generous rains in the southern Brazil states of Parana, Rio Grande do Sul and Mato Grosso do Sul. "The weather is not all bad for soybeans as the southern three states make up 38% of Brazil soybeans," she notes.
Dr. Cordonnier also takes note of the recent dry pattern, saying, "The recent weather in the state (Mato Grosso) has been drier than normal, which is aiding in the harvest activity, but potentially harmful for soybeans now filling pods. Some areas of the state have gone 20 days or more without rain. The harvest pace in Mato Grosso should continue to pick up over the next few weeks if the weather cooperates with harvest activities."
FISCAL CLIFF PACKAGE COVERAGE... President Barack Obama has resumed his vacation in Hawaii, but he is expected to sign off on the fiscal cliff package the Senate and House passed yesterday, as he has voiced support of the bill. We covered the main points as they pertain to Pro Farmer Members in "First Thing Today." But for more extensive coverage of the tax and spending provisions along with details of the package relative to the farm bill, see Washington Consultant Jim Wiesemeyer's Inside Washington Today column at www.profarmer.com.
While the measure extended Bush-era tax brackets for those individuals with income under $400,000 and for families with income below $450,000, the measure will lead to less take-home pay for most Americans as it ends the two-percentage-point payroll tax cut. Thus, the employee portion of the social security tax will rise from 4.2% to 6.2%. This translates to an increase of nearly $200 per month for an individual earning the 2013 maximum cap of $113,700 or more.
PF MIDWEEK MARKETING GAME PLAN UPDATE...
CORN: Hedgers are 100% sold in the cash market, with cash-only marketers 75% priced on 2012-crop. Get current with advised 2012-crop cash sales. With December 2013 corn futures violating support around the $6.00 level, be prepared to begin 2013-crop marketings with a light forward contract sale and/or hedge.
BEANS: Hedgers are 100% sold in the cash market, with cash-only marketers 75% priced on 2012-crop. Hedgers and cash-only marketers should get current with advised cash sales. Be prepared to start 2013-crop marketings if November 2013 futures violate support at the November lows as doing so would open sharp downside risk.
WHEAT: Hedgers and cash-only marketers have 75% of 2012-crop sold in the cash market. Get current with advised sales, but given crop struggles in the Plains and other areas around the world, we don't want to get too aggressive with cash sales at this time.
COTTON: Hedgers and cash-only marketers have 50% of expected 2012-crop production sold in the cash market. With futures moving back to the upper end of the broad, sideways trading range, it's recommended you get current with advised sales. The likelihood of a sharp drop in cotton acres next year is keeping us from advising 2013-crop sales at this time.
CATTLE: Fed cattle producers should continue to carry all risk in the cash market as supply fundamentals are bullish and demand is solid. Feeder cattle buyers and sellers carry all risk in the cash market for now, although feeder cattle buyer should be prepared to hedge a portion of needs as technicals have improved.
HOGS: Hog producers should continue to carry risk in the cash market. But we are watching for signs of a top as nearby futures are at prices that have historically capped buying interest.
FEED: Carry all corn-for-feed and meal risk in the cash market for now. Consider extending your feed needs in the cash market in response to recent price pressure on corn and meal futures. We'll wait on solid signs futures have bottomed before aggressively extending coverage.