Evening Report (VIP) -- June 14, 2013

June 14, 2013 09:33 AM

NWS 6-10 DAY FORECAST: WET FOR CENTRAL CORN BELT... The National Weather Service (NWS) forecast for June 20-24 calls for a continuation of above-normal precip across the already-soaked Central Corn Belt. The forecast also calls for above-normal temps across the bulk of the region, which will help the crop accumulate growing degree days. But below-normal temps are expected across the Dakotas. Click here for related maps. How are the crops developing in your area? Send us your crop comments, including location.



TRADERS' FOCUS IS ON THE GLOBAL PICTURE... Pro Farmer Editor Chip Flory and Senior Market Analyst Brian Grete discuss why the markets aren't responding to planting delays, and are more focused on the global supply picture, in this week's Pro Farmer Profit Briefing clip on AgDay TV. Click here.



CANTOR SUPPORTS HOUSE FARM BILL... House Majority Leader Eric Cantor (R-Va.) today confirmed plans to pass the House farm bill next week and offered a positive assessment of the legislation, saying it contained "strong reforms." The announcement came after a whip count of members came in strong enough to give the bill a strong shot of passing.

While House Minority Whip Steny Hoyer of Maryland said there was "a very significant concern" among Democrats about the bill's $20.5 billion cut to food stamps, Cantor assured him that Republicans would allow a "genuine and robust debate" on all areas of the legislation. Earlier this week House Speaker John Boehner (R-Ohio) announced his support for the bill.

The Rules Committee says House members have until 1 p.m. CT Monday to file amendments and will likely approve a rule Tuesday detailing which of those amendments will be considered.



CORN, SOYBEAN GROUPS OPPOSE HOUSE FARM BILL TARGET PRICE LEVELS... The all-for-one and one-for-all farm group lobbying of the past continues to splinter, as Midwest-oriented farm lobbyists led by corn and soybean groups have again set their negative sights on proposed target price levels in the pending House farm bill -- a development that could eventually work against those groups, according to some farm policy veterans. An amendment that Rep. Bob Gibbs (R-Ohio) may offer would slash target prices in the bill's Price Loss Coverage (PLC) program.

Some target price proponents charge that the Midwest groups have used and pressed for analysis reports from the University of Illinois in an attempt to bolster their case. A University of Illinois economist, Nick Paulson, estimates that peanut producers would get 68% more from PLC than they receive now in direct payments, assuming that commodity prices stay at forecast levels. Wheat growers would receive the same under either program, while rice, cotton and corn growers would receive less, says Paulson, who did the analysis for the Environmental Working Group.

If prices are lower than now projected, peanut growers could be receiving as much as $180 an acre, more than three times what they now receive in direct payments. As long as commodity prices stay close to the levels projected by the Congressional Budget Office, PLC payments would total $1.9 billion a year less than the amount of direct and countercyclical payments farmers now receive. But should commodity prices fall as much as 15% below the CBO baseline, the cost of PLC could shoot to $6.9 billion a year, Paulson found.

A veteran farm bill analyst says, "This is a big mistake by these groups. This is exactly why we are having trouble getting votes for final passage. These groups aren’t working the bill—they are working the amendment. We aren’t going to have a farm bill—and the revenue plan they want—if ag continues to form its firing line in a circle. These groups and their lobbyists can’t see the forest for the trees." See the full story online or more criticism from farm policy analysts as well as the statement letter signed by the American Soybean Association, National Corn Growers and others.



DISSECTING EPA VIEWS ON ETHANOL ISSUES AHEAD... U.S. renewable fuels policy remains a key focal point for a host of U.S. sectors, including agriculture and the general economy. Law requires increasing use of renewable fuels as part of the U.S. fuel supply, but the constraints facing the industry that have been present for years now appear to be coming to a head. At the center of this is the U.S. Environmental Protection Agency (EPA), the agency with the "final" call on the Renewable Fuels Standard (RFS) levels.

Director of the Office of Transportation and Air Quality Christopher Grundler testified last week to a subcommittee of the House Oversight and Government Reform Committee on the issues the agency is looking at relative to the U.S. renewable fuels situation. In his testimony, Grundler admitted that meeting the requirements in law for 2014 could be a challenge. He tried to avoid the spotlight by toeing the agency's line on most matters. But some potential signals emerged from his testimony. For one, EPA is aware of the blend wall and has put and continues to put a great deal of analysis on this matter. That analysis is revealing concern on the part of the agency the renewable fuels industry has not really yet moved beyond corn-based ethanol as the primary feedstock, even though Congress clearly was expecting this to happen.

The mention in his prepared remarks that meeting the 2014 requirements could be difficult opens the possibility to an adjustment, most likely on the cellulosic or advanced ethanol requirements. But an overall waiver of the RFS requirements certainly would not be expected at this point since the major 2012 drought did not prompt such an action.

Grundler kept the agency’s cards close to his vest as to what EPA will do. But the blend wall question and increased RFS requirements are two issues the agency will be making a decision on. Given the commitment to have a 2014 decision out yet this summer, this might suggest the agency could make some changes to the standard as opposed to just following what is laid out in terms of numerical targets under law. Get more details.


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