Evening Report (VIP) -- March 4, 2014

March 4, 2014 08:56 AM

Consultant slashes Brazilian soybean crop estimate... After trimming his Brazilian soybean crop estimate by 500,000 MT each of the past three weeks, Pro Farmer South American Crop Consultant Dr. Michael Cordonnier slashed his crop estimate another 1.5 MMT this week, to 87 MMT. He suggests further crop reductions are possible, as he has a neutral to lower bias toward crop size.

Dr. Cordonnier says dryness has not been isolated to the major soybean regions of Parana and Rio Grande do Sul. Goias, Sao Paulo, Mato Grosso do Sul and Minas Gerais were all hit hard by hot and dry weather. "Mato Grosso has been virtually the only major soybean producing state in Brazil that received abundant rainfall this growing season," he says. "The problems in Mato Grosso started just recently as heavy rains moved into the state during February when soybeans were being harvested."

Nationwide, Brazil's soybean harvest is estimated to be 42% complete, which is slightly ahead of last year. Mato Grosso is approaching 60% complete as drier weather last week allowed farmers to return to fields and resume harvest efforts.


Consultant leaves Brazilian corn peg unchanged, but... Dr. Cordonnier left his Brazilian corn crop estimate unchanged at 68.5 MMT, but says he has a neutral to slightly lower bias toward the crop. He says full-season yields in southern Brazil have been disappointing, but since the majority of the country's production is from the safrinha crop planted after soybeans are harvested, and because "I have consistently been on the low side with my Brazilian corn estimate," he left his crop peg unchanged this week.


Argentine corn crop estimate raised, soybean estimate may also move higher... Dr. Cordonnier says while early corn yields in Argentina are variable, yields of later-planted corn "may be quite good again this year due to improved soil moisture." Therefore, he has raised his Argentine soybean crop estimate by 500,000 MT to 23 MMT. He has a neutral to slightly higher bias toward the crop.

Meanwhile, Dr. Cordonnier says late-season moisture has improved soybean crop condition ratings to the point where he has a neutral to slightly higher bias toward the crop. For now, he is leaving his estimate of the country's soybean crop unchanged at 53.5 MMT.


President's FY 2015 budget again includes crop insurance cuts... President Barack Obama's Fiscal Year (FY) 2015 budget request to Congress was released today -- a full month late. While the request has virtually no chance of going anywhere, the plan is telling as to the administration's priorities for the year ahead and for drawing distinctions between the GOP and Democratic parties ahead of the November elections. The budget calls for $3.9 trillion in spending for FY 2015. This would result in a $564-billion budget deficit, which equates to roughly 3.1% of the nation's gross domestic product (GDP).

The proposal calls for $56 billion in new stimulus spending above the discretionary budget cap, $302 billion in infrastructure spending over four years as well as a number of tax breaks for lower-income workers. Obama's budget calls for this stimulus spending to be offset with increased taxes for corporations and high-income individuals. Of note, the president also proposed a $14-billion cut to farm subsidies for crop insurance over the next decade to help offset some of the cost. He proposed cuts to the program last year, too. By contrast, the farm bill passed several weeks ago increases crop insurance spending by $5.7 billion. Get more details.

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