Evening Report (VIP) -- November 12, 2013

November 12, 2013 09:31 AM
 

WINTER WHEAT CONDITION IMPROVES SLIGHTLY... Winter wheat rated "good" increased 2 percentage points from week-ago, while crop rated "very poor" and "fair" declined 1 percentage point each. The slight improvement should be no surprise to the market with recent beneficial precip in hard red winter wheat country.

Winter Wheat

very poor

poor

fair

good

excellent

This week

1

4

30

55

10

Last week

2

4

31

53

10

Year-ago

5

17

42

32

4

USDA says 84% of the winter wheat crop has now emerged, up from 78% last week. That compares to a 78% emergence pace last year at this time and a five-year average pace of 80% emerged. Nearly all of the winter wheat crop is planted with southern states still planting soft red winter wheat and California growers still working to get the crop seeded. USDA says 95% of the U.S. winter wheat crop is planted, up from 91% last week and ahead of the year-ago pace of 94% and the five-year average pace of 93% planted as of Nov. 10.

 

CORN HARVEST 84% COMPLETE... As of Nov. 10, U.S. farmers have harvested 84% of the corn crop, according to USDA's Weekly Crop Progress Report. Growers in North Carolina are the first to wrap-up corn harvest, as is typically the case. Illinois has 93% of the crop harvested, Indiana 85%, Iowa 88%, Minnesota 87%, Nebraska 81% and Ohio has 77% of the corn crop harvested. All of those states are ahead of the five-year average harvest pace.

The U.S. harvest pace of 84% done is up from last week's 73% pace and in line with expectations. It compares to last year's record pace of 97% complete on Nov. 10 and the five-year average pace of 79%.

 

SOYBEAN HARVEST 91% DONE... As of Nov. 10, 91% of the U.S. soybean harvest was complete, up from 86% last week but below expectations for harvest to reach 94% complete. That compares to the year-ago pace of 95% and is just behind the five-year average pace of 92% complete on Nov. 10. Louisiana and Nebraska are the first to wrap-up the 2013 bean harvest. Illinois has 97% of the crop out of the field, Indiana 93%, Iowa 98%, and Minnesota has harvested 98% of the bean crop. The harvest pace in all of the major soybean states is within a percentage point or two of the five-year average pace.

 

COTTON HARVEST STILL BEHIND THE AVERAGE PACE... Cotton harvest stands at 56% complete as of Nov. 10, according to USDA's Weekly Crop Progress Report. That's up from last week's 43%, but it is well behind last year's 73% pace and even behind the five-year average harvest pace of 66% done by Nov. 10.

 

CONSULTANT: USDA TOO HIGH ON ITS ARGENTINE CORN PEG... Crop consultant Dr. Michael Cordonnier says based on its other crop estimates, USDA is too high on its South American corn estimates. Last week USDA trimmed its Brazilian corn crop estimate by 2 MMT to 70.0 MMT and left its Argentine corn peg unchanged at 26 MMT. These estimates are above Dr. Cordonnier's current corn pegs of 68.5 MMT for Brazil and 25 MMT for Argentina.

Dr. Cordonnier notes a big unknown for South American corn production this year is acreage for the full-season crop and the safrinha crop. In Argentina, he says only 40% of the full-season crop has been planted, which raises the risk of acreage shifts to soybeans. In Brazil, he believes there will be less safrinha corn acreage due to competition with soybeans.

2013-14

Dr. Cordonnier

USDA September

USDA November

in million metric tons

Brazil corn

68.5

72.0

70.0

Argentine corn

25.0

26.0

26.0

Brazil beans

90.0

88.0

88.0

Argentine beans

55.0

53.5

53.5

Dr. Cordonnier also left his South American soybean crop estimates unchanged at 90 MMT for Brazil and 55 MMT for Argentina. Both of these estimates are above USDA's unrevised November crop pegs of 88 MMT for Brazil and 53.5 MMT for Argentina. Regarding Brazilian production, he says, "At this lofty production level I have a neutral bias going forward. I have already plugged in a hefty increase in soybean acreage, a significant amount of safrinha soybeans (maybe as much as one million hectares), as well as good weather and good yields, so there are a lot of positives already in this estimate."

 

LEADING INDICATORS POINT TO GROWTH IN MOST OECD COUNTRIES... Leading indicators signal improvement in economic growth is likely for most major countries of the Organisation for Economic Growth and Development (OECD) and possibly China, according to OECD's composite leading indicators (CLI). The CLI is "designed to anticipate turning points in economic activity relative to trend," OECD explains.

The CLIs point to above-trend economic growth in Japan, building growth momentum in the UK and euro-zone and a positive change in momentum for Canada. The U.S. is expected to see growth around the trend. In the emerging economies, the CLI indicates a positive momentum change is likely in China, while Russia is expected to see growth in line with the trend. Brazil and India continue to indicate below-trend growth is likely.

 

CORN & BIOFUEL STAKEHOLDERS CALL AP OUT ON FAULTY ETHANOL CRITICISM... The Associated Press (AP) prematurely released a report criticizing ethanol last week that triggered strong criticism and backlash from the corn and the biofuels industry. The AP then republished the story today, allowing Pro Farmer and other stakeholders to examine these claims, many of which are indeed inaccurate or an oversimplification of a situation. One example is AP's claim that "Five million acres of land set aside for conservation—more than Yellowstone, Everglades and Yosemite National Parks combined—have vanished on Obama's watch."

The 2008 Farm Bill lowered the cap on the Conservation Reserve Program (CRP) from 39.2 million acres to 32 million acres starting in 2010. Therefore, the number of acres enrolled in CRP declined from 33.7 million in 2009 to 31.3 million acres in 2010, 31.1 million acres in 2011 and 29.5 million acres in 2012. The new farm bill is expected to reduce the CRP cap even further to either 24 million acres or 25 million acres.

In addition, the CRP program is designed for land to return to ag production as warranted by market conditions. Further, to look only at CRP acres is simplistic. There are many conservation programs, many of which have also seen enrollment limits changes in recent years. Get more fact checks of the AP story and reactions to it here.

 

BOTTOM-LINE ASSESSMENTS ON TOP-LEVEL FARM BILL ISSUES... Washington Consultant Jim Wiesemeyer asked a longtime farm bill observer and insider to respond to several specific farm bill conference issues, including its timeline, food stamps solutions, the farmer safety net, dairy policy, crop insurance linkage, country-of-origin labeling, permanent legislation and more. The source is hopeful the farm bill will be completed this year or early next year, but says "it boils down to whether Democrats want a bill and that means they need to accept some reasonable reforms and cuts to food stamps." The source also notes that odds have increased for crop insurance linkage to conservation compliance as well as an all-in approach to the farmer safety net. Get more "colorful" insight from the source.

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