Evening Report (VIP) -- March 24, 2014

March 24, 2014 10:00 AM
 

Drought lingers in HRW wheat region... With warmer temps encouraging growth in the HRW wheat crop, producers in the region say the crop is badly in need of drought-saving rains. Meteorologist Gail Martell of MartellCropProjections.com says widespread rains are not in the forecast for this week, but some areas will benefit from rains.

"The forecast is hopeful for showers this week in the southern Great Plains, though not much moisture is anticipated in Kansas. The best rainfall would develop along Oklahoma-Texas border where up to 0.70 inch of rain is possible," says Martell. Click here for more.

 

Ukraine's grain exports remain strong... The grain market have benefited from talk unrest in the Black Sea region will eventually shift some business to a more reliable provider like the U.S., but so far Ukraine's ag ministry says its grain exports have been largely unaffected. Ukraine's total grain exports from July 1 to March 24 totaled 26.791 MMT, which is already well ahead of total grain exports of 23 MMT for the 2012-13 marketing year. Specifically, wheat exports have totaled 7.659 MMT while corn exports totaled nearly 16.726 MMT.

The ag ministry expects grain exports to total 33 MMT for 2013-14. Of note, the country has shipped 2.4 MMT of grain thus far this month, despite its conflict with Ukraine. But while shipping of the 2013-14 crop has been relatively unhindered thus far, the nation's planting of spring grains is reportedly taking a hit as credit lines tighten and Ukraine's currency is devalued.

 

Dredging slows grain movement in Argentina... Around 80 ships were held up along Argentina's Parana River near the country's main grain hub of Rosario today as a waterway just south of the port was being dredged. Sources say the waterway may be reopened yet today, confirming this is a short-term closure.

 

USDA announces modifications to FSA farm loan program... USDA Secretary Tom Vilsack today announced modifications to the Farm Service Agency (FSA) Farm Loan Program that increases opportunities for producers via the 2014 Farm Bill. The changes that will take effect immediately include the following:

  • Elimination of loan term limits for guaranteed operating loans.
  • Modification of the definition of beginning farmer, using the average farm size for the county as a qualifier instead of the median farm size.
  • Modification of the joint financing direct farm ownership interest rate to 2% less than regular direct farm ownership rate, with a floor of 2.5%. Previously, the rate was established at 5%.
  • Increase of the maximum loan amount for direct farm ownership down payments from $225,000 to $300,000.
  • Elimination of rural residency requirement for youth loans, allowing urban youth to benefit.
  • Debt forgiveness on youth loans, which will not prevent borrowers from obtaining additional loans from the federal government.
  • Increase of the guarantee amount on conservation loans from 75% to 80% and 90% for socially disadvantaged borrowers and beginning farmers.
  • Microloans will not count toward loan term limits for veterans and beginning farmers.

 

For more details, including a fact sheet, click here.

 

FSA encourages early program sign-up... USDA's Farm Service Agency (FSA) is encouraging farmers and ranchers who plan to participate in FSA programs to register in advance -- before April 15, 2014. While enrollment for the disaster programs authorized by the 2014 Farm Bill, including the Livestock Indemnity Program (LIP) and the Livestock Forage Disaster Program (LFP), officially begins by April 15, 2014, FSA's administrator expects significant interest in these programs and says early registration should "improve the sign-up process and allow us to expedite implementation of the programs." Farmers and ranchers should report farm records and business structure changes to their local FSA Service Center. For more details, click here.

 

 

Panama canal expansion holds big opportunity for U.S. ag, but forward progress is slow... Most work on the first major expansion of the Panama Canal is suspended and what little excavation activity is taking place will become more difficult when the rainy season starts in a month or so, according to the American Farm Bureau Federation (AFBF). While the project was expected to be completed this year, the new finish date is officially December 2015 and many are skeptical this target will be met. AFBF says critics chalk up the work stoppage to a lack of funding, as the $5.25 billion expansion was "seriously underbid." Europe's debt crisis added to the problems. The involved parties, however, reached an agreement to resume work last month.

Currently, the largest ships that can pass through the canal, known as Panamax ships, are able to carry up to 5,000 twenty-foot equivalent units (TEUs). The longer and wider post-Panamax ships that will be able to pass through the canal once the expansion is complete can carry 5,000 TEUs, according to AFBF. This should help the amount cargo that passes through the canal to double by 2025, the federation continues.

Completion of the Panama Canal expansion would be a major boon for American agriculture. USDA reports 17% of world grain shipments move through the Panama Canal, and of these, 90% are from the United States. Completion of new locks would lead to a 12% drop in grain transportation costs for shipping grain from the U.S. to the major Asian market, AFBF says, citing a Rabobank forecast. Obviously, this will make U.S. products more competitive.

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