Evening Report (VIP) -- March 13, 2014

March 13, 2014 10:10 AM

Drought expanded in Southern Plains... According to the National Drought Monitor, slight drought improvement was noted for the contiguous U.S., but drought expanded across areas of central and northern Texas and southern Oklahoma. It also reports that drought expanded slightly across Nebraska and the Midwest, with Missouri leading the way with a 3.78-percentage-point increase in the area covered by drought from the previous week to 65.34%. Click here for related maps.


New PEDV reported cases rises... The National Animal Health Laboratory Network (NAHLN) says 274 new cases of porcine epidemic diarrhea virus (PEDV) were confirmed the week ending March 12, bringing the grand total to 4,458, which signals the previous week's tally was revised higher. Arizona has two confirmed cases of PEDV, bringing the total number of states with positive PEDV cases to 27.

Iowa, the No. 1 pork-producing state in the nation, continues to lead the number of total confirmed cases at 1,521, up 165 from last week. Minnesota follows with 701 confirmed cases, up 107 from last week and North Carolina is third of the list at 486 cases, up 50 from last week.

Senators Kay Hagan (D-N.C.) and Ag Committee Chair Debbie Stabenow (D-Mich.), wrote a letter to USDA Secretary Tom Vilsack urging him to approve disaster assistance for small pork producers affected by PEDV. The 2014 Farm Bill permanently extends livestock disaster assistance programs, they note, encouraging Vilsack to utilize the program to help producers in states dealing with the virus. "Much like the rest of the livestock industry that suffered drought, fires and blizzards, these pork producers have no safety net to help compensate for their losses," they write. The senators also asked USDA to increase research for a vaccine and other interventions for addressing PEDV. No vaccine or treatment exists for the virus.


Attaché: Canadian shipping issues force some eastern mills to close... The U.S. ag attaché in Canada says some eastern Canadian mills have been forced to shut down due to the decisions by two main rail companies to focus their attention on shipping grain to western ports. The attaché says some U.S. millers that are dependent on the Canadian supply have less than a 20 days' supply of high-quality oats. Click here for more from the attaché.


FAS: Crop prospects & credit lines unaffected by unrest in Ukraine... USDA's Foreign Agriculture Service (FAS) signal crop prospects and credit lines have not been impeded by unrest in Ukraine or political tensions with Russia regarding Crimea. FAS reports, "Ukraine's winter crops and spring-sowing campaign remain generally favorable. The country’s wheat crop is already in the ground, and the availability of most inputs for spring sowing (including fuel, fertilizer, seed and credit) has not been interrupted."

Regarding Crimea, specifically, wheat is the major crop in the region with average production around 800,000 MT, roughly 5% of total Ukrainian output. Production of corn, sunseed and soybean is "minimal" in this region. "Crimea is arguably more important as a producer of meat than of grains. Poultry production is Crimea's largest industry, and the territory accounts for 6.5% percent of Ukraine's total poultry output, along with 3.1% of the beef and 2.5% of the pork," FAS explains. Learn more.


FAPRI baseline signals higher county ARC payments at first... New commodity program provisions in the Agricultural Act of 2014 indicate higher payments for the 2014 and 2015 crops under the county Ag Risk Coverage (ARC) program compared to Price Loss Coverage (PLC), but that trend reverses in later years of the bill, according to an assessment of the new farm bill’s impact contained in the updated baseline projections from the Food and Agricultural Policy Research Institute (FAPRI).

PLC participants will receive a payment when the national season-average farm prices fall below fixed reference prices. ARC payments occur when county or farm-level revenues per acre fall below 86% of a benchmark. This benchmark depends on the moving five-year Olympic averages of national prices and county or farm yields. Producers can enroll in the county-based ARC program, which pays on 85% of base area, or in the farm-based ARC, which considers all program crops on a farm and pays on 65% of base area.

Estimated national average ARC payments for corn producers exceed PLC payments in 2014-15 and 2015-16, but the opposite is true in later years, according to FAPRI. The story for soybeans is similar, though expected ARC payments exceed PLC payments for the first four years. Complicating producers’ decisions, PLC participants also have the option of buying Supplemental Coverage Option (SCO) beginning in 2015-16.

Changing market circumstances, final sign-up rules and many other factors will affect producer enrollment choices. But based in part on projected average payments, the FAPRI baseline assumes most producers of wheat, sorghum, rice, barley and peanuts will enroll in PLC, while soybeans and corn enrollment is expected to be split more evenly between ARC and PLC. Of those enrolled in ARC, three-fourths are assumed to choose the county-based option. For more charts and details, click here.


Crop insurance indemnities reach $11.331 billion... Indemnities have reached $11.331 billion under the federal crop insurance program for 2013 crops as of March 10, according to the Risk Management Agency (RMA). The payout level remains well below record payouts of $17.4 billion in 2012. Readings are now around $500 million away from projected total payouts for 2013 crops of $11.9 billion.

As for the type of policies carried by producers, Risk Protection (RP) remains the overwhelming choice with 191.384 million net acres insured, or about 65% of the total net acres insured for 2013 crops. Rainfall-linked policies are the next highest net insured acreage level at 49.57 million followed by Yield Protection (YP) at 29.456 million acres. Actual Production History (APH) policies cover 12.473 million net acres. See an associated chart.

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