Evening Report (VIP) -- January 3, 2014

January 3, 2014 08:43 AM

SOYBEAN EXPORT COMMITMENTS TOP USDA FORECAST... Stronger-than-expected soybean sales and shipments the week ended Dec. 26 lifted the total commitment pace above USDA's current export projection a few weeks earlier than usual.

For the week ended Dec. 26, soybean sales of 943,400 MT for 2013-14 and 237,500 MT for 2014-15 topped expectations. Shipments of more than 1.5 MMT are even more impressive. Total soybean commitments are 101% of USDA’s export projection for 2013-14, compared to the five-year average of 76%. While the risk of Chinese sales cancellations is high in the coming months, it indicates there is more upside potential for USDA’s export projection.


INFORMA EXPECTS USDA TO INCREASE ITS 2013 CORN CROP PEG... Informa Economics reportedly expects USDA on Jan. 10 to peg the U.S. corn crop at 14.162 billion bu. on a national average yield of 161.6 bu. per acre. USDA in November estimated the U.S. corn crop at 13.989 billion bu. on a 160.4 bu. per acre yield. The firm expects USDA to estimate the national average soybean yield around 44 bu. per acre for a 2013 crop of 3.259 billion bushels, which would be a 1-million-bu. increase from USDA's latest estimate. All cotton production will likely come in around 13.136 million bales, which would be up 67,000 bales from USDA's December forecast, according to the firm.


2013 ETHANOL PRODUCTION NEARS 13.3 BILLION GALLONS... For the week ending Dec. 27, the Energy Information Administration (EIA) reports ethanol production averaged 913,000 barrels per day (bpd), or 38.35 million gallons daily. That is down 13,000 bpd from the week before. The four-week average for ethanol production stood at 928,000 bpd for an annualized rate of 14.23 billion gallons, up from 13.3 billion in 2012. EIA says monthly and weekly data indicate 2013 total calendar year production tallied roughly 13.27 billion gallons.


IS IT A "FARM" OR A "COMMERCIAL GRAIN HANDLER?"... The Occupational Safety and Health Administration (OSHA) can’t seem to tell the difference. OSHA doesn’t have jurisdiction over farms with 10 or fewer workers. And, evidently, OSHA didn’t like the limit on its jurisdiction, so it is reclassifying some farms as a commercial grain handler if the farm has any grain storage. Yep... one grain bin has turned you from a farm to a commercial grain handler... at least according to OSHA.

Sen. Mike Johanns (R-Neb.) recently went to the Senate to proclaim OSHA’s overreach as "absurd." He’s heading up an effort in the Senate to force OSHA to stick to the intentions of the law. In one Nebraska OSHA case, an OSHA inspector reportedly told a farm operator, "We don’t bother family farms." When the operator argued his farm is a family farm, the OSHA inspector responded, "Well, you have an employee."

Obviously, OSHA inspectors are being instructed to ignore the farm exemption (for farms with 10 or fewer employees) and to find a way to inspect all farms.

One inspection of a Nebraska farm reportedly resulted in fines of $130,000, even though OSHA acknowledged that no one had been hurt on the farm, just that the farm failed to have a written plan to handle "fugitive grain dust," something a commercial grain handling facility would be required to have.

Washington Consultant Jim Wiesemeyer says, "Congress will be very focused on this. It will cut the purse strings for OSHA if they get out of hand, which appears to already be the case."


HARVEST BEGINS IN MATO GROSSO... Crop consultant Dr. Michael Cordonnier says farmers in Mato Grosso, Brazil, have begun harvesting 90- to 100-day soybean varieties. He says harvest in the western areas of the state has begun earlier than last year, but is on track with year-ago in the central regions. Early yield reports have been positive with yields around 48 bu. per acre. Click here for more.


BUNGE SELLS STAKE IN MISSISSIPPI ETHANOL PLANT... Bunge North America Inc., which is a division of Bunge Ltd., has sold its 50% stake in a Mississippi ethanol plant to Ergon Inc., giving that company full ownership of the plant. Analysts believe this could be the first of a number of such deals in reaction to uncertainty regarding how the possible reduction to the Renewable Fuels Standard (RFS) might play out for the biofuels industry. While profits are currently high for ethanol producers thanks to a pullback in corn prices and high demand, there is uncertainty about how the industry will fare going forward. The 54-million-gallon per year ethanol plant is the only facility that produces corn-based ethanol in the state. The fact that this is not a primary corn-growing location also likely comes into place with this sale.

The reduction to the RFS is not yet a certainty; the U.S. Environmental Protection Agency is not expected to finalize its RFS proposal until spring of 2014. Also of note for the ethanol sector is that a 125-million-gallon per year plant in Rochelle, Illinois, was put up for sale by GTL Resources and Illinois River Energy. But other factors, such as a limited market for dried distiller grains (DDG), are also thought to be at play regarding this sale.


ADDITIONAL INSIGHT AS TO USDA REPORT STUDY... As reported in "First Thing Today" the examination of USDA reports will likely be completed yet this month by the University of Illinois economists who are conducting the review at the request of USDA Chief Economist Joe Glauber. The study was being worked on during most of 2013 and after a presentation of a draft was made to USDA, there were some additional issues being explored.

However, some contacts say the "additional issues" weren’t necessarily new items but rather some clarifications within the work done thus far. Expectations are the University of Illinois economists conducting the study could be the ones to release the report. Still, contacts advise there may not be a "smoking gun" that will explain why the trade expectations for some data releases from USDA have been so far off the actual data released. Questions have also arisen among industry sources regarding how much the study cost USDA -- taxpayers. Learn more.


INPUTS MONITOR: 2013 IN REVIEW... Inputs Monitor Editor Davis Michaelsen sums up 2013 as a "great year for fertilizer." He notes that ammonia was priced high through the spring but as heavy rains took their toll on the Midwest, the way forward to nutrient reduction was forged on the back of split UAN applications. "In-season sidedress was as popular as ever and now USDA, EPA and state Departments of Agriculture are looking ahead to combating nutrient runoff with more efficient N applications with the agile, versatile and mobile UAN," he notes. Click here for more.

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