Evening Report (VIP) -- November 19, 2013

November 19, 2013 09:18 AM
 

 

BRAZILIAN FARMERS DELAY INPUT PURCHASES FOR SAFRINHA CORN... South American crop consultant Dr. Michael Cordonnier says the decision on how much safrinha (second crop) corn to plant and how much to invest in inputs is a tough call for Brazilian farmers, as domestic corn prices are below the cost of production and input prices have risen. As we have been reporting, acreage of the safrinha corn crop is expected to be reduced sharply and there is even talk of safrinha soybeans.

"What I think will happen is that farmers will reduce their safrinha corn acreage while at the same time reducing their investments in the crop -- plant the corn as early as possible and maybe skip planting any late corn, plant a second-tier hybrid instead of a first-tier to save on seed costs and reduce fertilizer applications to save costs," says Dr. Cordonnier. "If they invest heavily in the crop and then the yields end up being disappointing due to an early end of the rainy season, they could lose a lot of money. Another thing to remember is that they have benefited from high corn prices the last couple of years, but that is unlikely to be the case in 2014."

 

 

FIRST CASE OF SOYBEAN RUST REPORTED IN BRAZIL... Dr. Cordonnier says the first four cases of soybean rust this growing season were reported in Brazil last week in Sao Paulo on volunteer soybeans and not in commercial fields. "The severity of soybean rust in Brazil over the last three years has been relatively mild," he says, noting that Brazilian scientists and farmers have been fairly successful in learning now to keep the disease under control since its initial detection in the 2000-01 season.

 

 

CONSULTANT LEAVES SOUTH AMERICAN CROP PEGS UNCHANGED... Dr. Cordonnier says 70% of the Brazilian soybean crop has been planted, which is slightly behind the five-year average, but still impressive as producers are increasing acreage. He left his estimate of the crop unchanged at 90 MMT and has a neutral bias toward the crop.

Dr. Cordonnier also left his Brazilian corn estimate unchanged at 68.5 MMT and has a neutral bias toward the crop, but says a lot will depend on the safrinha corn acreage. Planting of full-season corn is virtually complete and the crop is in good condition.

Meanwhile, Dr. Cordonnier says around 25% of the Argentine soybean crop has been planted, which is on pace with last year. The early condition of the emerging beans is good to excellent and he left his crop peg unchanged at 55 MMT and has a neutral to higher bias going forward. "It is possible the eventual soybean acreage in Argentina will be higher than currently forecast due to switching from some late-planted corn to additional soybeans," he says.

Dr. Cordonnier continues to peg the Argentine corn crop at 25 MMT and says he has a neutral to lower bias due to potential acreage shifts to soybeans. Only about 45% of the Argentine corn crop has been planted. "With so much of the corn crop to be planted in December, there is a possibility that some of those intended acres will end up as soybeans instead," he notes.

 

 

NASS NOTIFIES OF FY 2014 REPORT CANCELLATIONS... USDA's National Ag Statistics Service (NASS) says it will suspend a number of statistical surveys in Fiscal Year (FY) 2014, which began Oct. 1, due to ongoing sequester cuts. NASS says it is not able to reinstate the programs that were stopped in March 2013. The suspended reports for FY 2014 include:

  • July Cattle Report
  • Potato Stocks Reports
  • June Rice Stocks Report
  • All Hops and Hops Stocks Estimates
  • Annual Mink Report
  • June on- and off-farm stocks for Austrian Winter Peas, Chickpeas, Dry Peas and Lentils
  • July acreage forecasts for Austrian Winter Peas, Dry Edible Peas and Lentils
  • All Catfish and Trout Reports including Catfish Feed Deliveries and Catfish Processing; however, NASS will publish the annual catfish and trout report using data collected during the census of aquaculture.
  • NASS will publish the Non-Citrus Fruit and Nut Annual Summary; however, there will be no forecasts, no preliminary summary and no monthly prices in FY 2014.
  • NASS will publish the Vegetable Annual Summary; however, there will be no forecasts or monthly prices in FY 2014.

 

NASS explains, "Before deciding upon the program suspensions, NASS reviewed its survey programs against mission- and user-based criteria as well as the timing of data collection with the goal of finding available cost savings and maintaining the strongest data in service to agriculture. The decision to suspend these reports was not made lightly, but it was nevertheless necessary, given the funding situation."

 

 

U.S. COOL REGULATIONS TO TAKE EFFECT SATURDAY... Regulations are set to come into full force Saturday that require meat processors to list details including the countries in which livestock were born, raised and slaughtered. USDA issued the rules May 23 to update previous country-of-origin labeling (COOL) regulations that the World Trade Organization (WTO) said discriminated against Canada and other trading partners. A six-month grace period on the rules is set to end Saturday. It will be curious to see if USDA Secretary Tom Vilsack extends the deadline to allow, as he said last week, "the WTO to settle this matter" and not a new U.S. farm bill.

Ron Plain, an agricultural economist with University of Missouri Extension said he expects WTO will rule against the U.S. again and the U.S. will appeal, so the can will keep being "kicked down the road." Mexico and Canada have argued that the primary purpose of COOL's record-keeping requirements is not to inform consumers but to discourage U.S. packers from handling livestock from Mexico or Canada. Joining Canada and Mexico in their complaint to the WTO are two groups representing U.S. meatpackers: the American Meat Institute and the American Association of Meat Processors.

The U.S. slaughters a large number of cattle from Mexico and Canada, as well as a large number of hogs from Canada. Plain says COOL puts packers in a bind: Segregating the meat is going to be very expensive, but if they stop slaughtering animals from Canada and Mexico, packers won't have enough to operate some plants. The issue has been dragging on for more than a decade and Plain says there doesn't appear to be an end in sight. Meanwhile, the revised rules remain in effect. "The legal appeals process to the WTO is a very long, drawn-out process," he said. "I think we are set on a course that is going to last for some time to come."

 

 

BAUCUS RELEASES INTERNATIONAL TAX REFORM DISCUSSION DRAFT... Senate Finance Committee Chairman Max Baucus (D-Mont.) today unveiled an international tax reform staff discussion draft. The proposal, which is the first in a series of discussion drafts to overhaul America’s tax code, details ideas on how to reform international tax rules to spark economic growth, create jobs, and make U.S. businesses more competitive. Additional tax reform discussion drafts will be released later this week. The staff discussion drafts are meant to spark conversation between both parties on how best to reform the tax code. Baucus also requested feedback from the American public by Jan. 17, 2014. Comments can be sent to Tax_Reform@Finance.Senate.gov. Learn more.

 

 

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