Evening Report (VIP) -- March 19, 2013

March 19, 2013 09:53 AM

VILSACK: AROUND 350,000 FARMERS TO LOSE PORTION OF PAYMENTS... Around 350,000 farmers will lose a portion of some payments they received earlier from USDA, Ag Secretary Tom Vilsack said today. The reductions total about $151 million primarily in three programs: Milk Income Loss Contract (MILC), Supplemental Revenue Assistance (SURE) and Noninsured Disaster Assistance Program (NAP). Because most of those farmers also receive annual direct payments from USDA, the cut will be taken out of the checks they are due to receive this fall, Vilsack said today following an address at the Agribusiness Club.

The furloughing of meat inspectors due to the across-the-board sequester cuts was another topic Vilsack addressed. He noted the pending amendment by Rep. Roy Blunt (R-Mo.) via the Senate's version of the FY 2013 continuing resolution bill to shift $55 million within USDA's budget to avoid the meat inspector furloughs. "The fact that we have several senators who are offering an amendment to provide us the resources or the flexibility to be able to respond to the food inspector issue is an acknowledgment now that we indeed do not have any options under sequester. My hope is that gets done. If it does not, come mid-July we will furlough meat inspectors," Vilsack said.



CONSULTANT RAISES BRAZILIAN CORN ESTIMATE... South American crop consultant Dr. Michael Cordonnier raised his estimate of Brazil's corn crop by 2 MMT to 74 MMT due to strong start to the safrinha corn crop. After traveling across Mato Grosso earlier this month, Dr. Cordonnier says he was impressed by the amount of second-crop corn that was planted and that plant populations are good and the crop is off go a very good start.

"The safrinha corn crop still has a long way to go and it could be impacted by dry weather in Mato Grosso and cold weather in Parana, but for now the crop is off to a good start," says Dr. Cordonnier. "I may have to reverse course and lower my Brazilian corn estimate sometime in the future if the rainy season ends prematurely, but for now, the crop is off to a good start and the rains keep falling," he says.

Dr. Cordonnier left his Brazilian soybean crop estimate unchanged at 82 MMT, saying harvest is 55% to 60% complete nationwide.



CONSULTANT HAS NEGATIVE BIAS TOWARD ARGENTINE SOYBEAN CROP... Dr. Cordonnier says cold temps and patchy frost over the weekend in southern Buenos Aires, Argentina, impacted around 900,000 hectares of double-crop soybeans. "My concern for the late-planted soybeans is the forecast is calling for below-normal temperatures for the next ten days at least," he says. "I think the crop escaped major damage this time around, but with a below-normal temperature forecast, the crop may not be as lucky next time. Therefore, the Argentine soybean estimate was left unchanged at 50.0 MMT, but I have a negative outlook toward the crop."

Meanwhile, Dr. Cordonnier left his Argentine corn estimate unchanged at 24 MMT. He believes the corn crop escaped any major damage from the weekend cold event and since he is already on the low end for his estimate, he will wait for damage assessments.



EXTENSIVE SHIPPING DELAYS IN BRAZIL CONTINUE... Dr. Cordonnier reports at the end of last week, there were already 89 vessels waiting in the harbor at the Port of Paranagua and another 20 were expected to arrive early this week. Of those, 70 are waiting to load soybeans or soymeal. At the Port of Santos, there were 81 vessels waiting to load and half of them were waiting for soybeans or soymeal.

"The vessels that have already arrived or confirmed to arrive at the two ports represent a total of 9.1 MMT of grain or at least 10% of Brazil's total soybean production," says Dr. Cordonnier. "Just to fill the current lineup of vessels, the Port of Paranagua will need to unload 148,000 semi-trucks. The three public berths at Paranagua can load 65,000 MT of soybeans per day and just to load the vessels that have already arrived; it would take 40-50 days if there were no delays due to wet weather."

Dr. Cordonnier adds, "The lack of storage space at the ports and the limited loading capacity are the biggest causes of congestion all throughout the transportation chain in Brazil. Brazil will produce 185 MMT of grain (the total of 16 different types of grain), but it only has storage space for 121 MMT. The farmers in Brazil are years ahead in grain production compared to the infrastructure needed to efficiency handle the ever increasing production."



2012 CROP INSURANCE INDEMNITIES HIT $15.9 BILLION... Payouts to farmers for 2012 crops have reached $15.9 billion as of March 18, up about $150 million from the prior week, pushing the loss ratio to 1.44 for the federal crop insurance program, according to Risk Management Agency (RMA) data. Pro Farmer Washington consultant Jim Wiesemeyer report the loss ratio is the largest since 1993 when it reached 2.19. But that was for payouts on 83.725 million net acres insured and indemnities of $1.665 billion.

"The rate of increase is slowing as more and more data are finalized from states. A year ago, indemnities were still rising, reaching about 95% of the eventual "final" level of $10.853 billion. If the pattern tracks the same on a percentage basis for 2012 crops, that would suggest final indemnities of over $16.6 billion for 2012 crops," says Jim. Click here for commodity-by-commodity tallies.



CELEBRATE AG WEEK WITH YOUR ENTHUSIASM FOR AGRICULTURE!... Pro Farmer News Editor Julianne Johnston shares her thoughts about passing the passion for ag to the next generation and beyond. She says, "I believe that what we do today will impact agriculture for the next generation and beyond. What do you want agriculture to look like 100 years from now? What are you doing to shape that vision? What we do today through educational efforts makes our industry stronger." Click here for more.


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