Evening Report (VIP) -- July 9, 2013

July 9, 2013 09:41 AM
 

NWS FORECAST: ABOVE-NORMAL HEAT OVER TWO-THIRDS OF CORN BELT... The National Weather Service (NWS) forecast for July 15-19 shows above-normal temps from the eastern halves of Iowa and Minnesota eastward. The remainder of the Corn Belt is expected to see normal temps during the period. The precip outlook is a mixed bag with above-normal rainfall expected over northern Ohio, Michigan, Wisconsin, extreme northern Iowa, Minnesota and the eastern halves of the Dakotas. A bubble of below-normal precip is expected over most of Missouri, southwest Iowa, Kansas and southern and central Nebraska. The remainder of the region is forecast to see normal precip during the period. See the maps.

 

 

HOUSE TO TAKE UP FARM PROGRAM-ONLY BILL THURSDAY IF VOTES ARE EVIDENT... This morning at a meeting of the House Republican Conference, Majority Leader Eric Cantor (R-Va.) informed the Conference that they will proceed with consideration of the farm bill covering every title except Supplemental Nutrition Assistance Program (SNAP, more commonly known as food stamps) and including amendments that were adopted as part of earlier House consideration. Importantly, the modified farm bill will also include a repeal of permanent law ('49 Act). If they have the votes, the bill will be considered under a closed rule as soon as Thursday. House Rules may post the text tonight and meet tomorrow to debate the rules for debating the measure.

Meanwhile, House Agriculture Chairman Frank Lucas (R-Okla.) said this morning that he would support splitting the farm bill -- as long as it can pass the House. "I'm willing to do what it takes to get a farm bill done," Lucas said as he exited a Republican Conference meeting. Later he said, "It's fair to say that Chairman Lucas is at a point where he has got to look outside the box, and splitting the farm bill is certainly outside the traditional box."

On Monday, according to a National Review Online story, Cantor scolded Republican chairmen in a closed-door meeting for not voting for the farm bill when it suffered a surprise defeat, 195-234, in June. Cantor has privately been pushing to separate SNAP from the farm provisions. According to the Congressional Budget Office, SNAP accounts for $743.9 billion of the estimated $972.3 billion cost of the House bill over the next 10 years.

 

 

CONSULTANT LEAVES CROP ESTIMATES UNCHANGED... Pro Farmer crop consultant Dr. Cordonnier made no changes to his corn or soybean crop forecasts this week. He says recent weather has been generally beneficial for the corn crop, but he will have some concern if there's prolonged heat and dryness as the crop moves into the pollination the last two weeks of July and the first two weeks of August. Dr. Cordonnier's attitude remains neutral to slightly positive toward the corn crop.

He is more concerned with the soybean crop than corn due to delayed development. Because soybeans are photoperiodic, late-maturing beans will have less than 60 days of potential growth before plants start maturing. Dr. Cordonnier continues to have a neutral to slightly negative bias toward the soybean crop.

 

 

JULY CROP REPORTS OUT THURSDAY... Traders are starting to ready their positions for USDA's Supply & Demand and Crop Production Reports at 11:00 a.m. CT on Thursday. Based on the average pre-report guesses, traders expect USDA to trim its old-crop corn and soybean carryover estimates slightly from June to 722 million bu. and 121 million bu., respectively. The final old-crop carryover figure for wheat will be 718 million bu., which was June 1 stocks in the Quarterly Grain Stocks Report.

2012-13 carryover

Avg.

Range

USDA
June

2011-12

in billion bushels

Corn

0.722

0.537-0.773

0.769

0.989

Soybeans

0.121

0.104-0.125

0.125

0.169

 

For the 2013-14 marketing year, traders expect USDA to trim its carryover projections for corn (to 1.874 billion bu.) and wheat (to 624 million bu.), while soybean carryover is expected to rise 5 million bu. from last month to 270 million bushels. The new-crop balance sheets will incorporate higher planted and harvested acreage for corn and soybeans from the June Acreage Report.

2013-14 carryover

Avg.

Range

USDA
June

in billion bushels

Corn

1.874

1.618-2.076

1.949

Soybeans

0.270

0.166-0.329

0.265

Wheat

0.624

0.477-0.685

0.659

 

In the Crop Production Report, USDA will issue its first survey-based estimate for the spring wheat crop and, therefore, the first estimate for all wheat production (they have been projections to this point). That figure is expected to be down slightly from the June projection to 2.057 billion bushels. Winter wheat production is guessed at 1.507 billion bu., down a scant 2 million bu. from last month. USDA's first estimate is expected to show the other spring wheat crop at 504 million bu. compared to 542 million bu. last year.

Wheat Production

Avg.

Range

June

2012

in billion bushels

All wheat

2.057

1.942-2.110

2.080

2.269

All winter

1.507

1.454-1.555

1.509

1.645

HRW

0.772

0.730-0.808

0.781

1.004

SRW

0.522

0.478-0.552

0.509

0.420

White winter

0.214

0.204-0.220

0.219

0.222

Spring wheat

0.504

0.475-0.531

NA

0.542

Durum

0.061

0.055-0.070

NA

0.082

 

 

ECONOMIST: RECORD DROP IN PORK PRODUCTION COSTS POSSIBLE... Noting improved prospects for U.S. corn and soybean production and resulting expectations for $2.00-per-bu.-lower corn prices and $130-per-ton-lower soymeal prices in the July to October futures spread, Chris Hurt says "feed cost reductions, if realized, could be of record magnitude" for pork producers. Hurt, a Purdue University economist, in a FarmDoc article notes that the estimated total costs for farrow-to-finish hog production could drop from $69 per cwt. in the second quarter to around $56 per cwt. in the fourth quarter of 2013. The potential $13 drop would be record-large. However, he acknowledges a number of unknowns exist in regards to this feed outlook, including harvested acreage, weather and the possibility of an early frost.

The more favorable crop prospects, if realized, could also lead to "some modest (herd) expansion late this summer and especially in the fall of 2013," according to Hurt, who says the expansion may be in the 1% to 3% ballpark over the next year. Taking a longer-term outlook, Hurt says that corn prices below $5.50 per bu. may stimulate expansion.

 

 

DOCKWORKERS TO STRIKE AT SOUTH AMERICA'S LARGEST PORT WEDNESDAY... Dockworkers in Brazil continue to react unfavorably to the passage of a measure to reform the country's ports. Dockworkers at the port of Santos, South America's largest port, are planning to strike for 24 hours on Wednesday. A number of other industries are planning a general strike on Thursday, June 11. Dockworkers fear the privatization of ports will result in job and benefit loss.

 

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