Evening Report (VIP) -- November 21, 2013

November 21, 2013 09:13 AM
 

CATTLE ON FEED REPORT TO SHOW UPTICK IN PLACEMENTS... Traders look for USDA's Cattle on Feed Report to show producers were encouraged to place cattle into feedlots at a more aggressive pace thanks to cheaper corn prices and prospects for strong cash fed prices throughout 2014. A stronger-than-year-ago Marketings pace is also expected due to lofty cash prices.

Report expectations

Avg. Trade Guess

Range

% of year-ago levels

On Feed

94.2

92.0-95.5

Placements

110.0

99.1-118.1

Marketings

101.5

99.6-103.2

 

Traders look for On Feed at 94.2%, Placements at 110% and Marketings at 101.5% of year-ago levels. The report will be released Friday at 2:00 p.m. CT.

 

FARM BILL CONFERENCE TALKS HIT A SNAG, OR TWO, OR THREE... As most farm bill veterans expected, conference negotiations today hit a major snag, with House Agriculture Committee and farm bill conference Chairman Frank Lucas (R-Okla.) saying it would be "very challenging" now for him to meet the Republican leadership’s schedule of having a final agreement back on the House floor by Dec. 13. Lucas and the other three farm bill "principals" have been seeking a framework of a deal before the Thanksgiving recess this week. "Anything is possible but it is very challenging," Lucas said. He said a "fair assessment" is that he had not made the progress he had hoped for this week.

That progress, sources inform, is getting Senate Ag Chairwoman Debbie Stabenow (D-Mich.) to move off what many contacts signal is an entrenched position, not only on food stamp funding and policy, but also on lingering and thorny Title I farmer safety net issues. Some sources speculate that Stabenow may feel she has a better chance of getting more of what she wants if a new farm bill is rolled into a bigger package of budget issues via a continuing resolution. Stabenow today said she was "disappointed" there was no agreement. She reiterated the Senate would refuse to pass another extension of the 2008 Farm Bill that would include direct payments.

The current farm bill process follows historical pattern. There could still be an agreement announced regarding a framework accord as there usually needs to be a period of pessimism near the end zone in order to get into it. But that was before the current dysfunctional Congress came into play. Read more.

 

 

SOME DIRECT PAYMENTS COULD STILL BE IN PLAY FOR 2014 CROPS... Observers are beginning to say it is hard to see how USDA can implement the new commodity programs and crop insurance products for the 2014 crop. Additionally, there is talk about the need to provide some kind of transition subsidies. The easy approach to that would be a farmer-pleasing extension of direct payments – perhaps at a reduced rate. The House-passed farm bill would already for two years continue direct payments at a reduced rate for cotton growers while USDA develops a new revenue insurance program, called STAX. The Senate bill (S 954) does not provide for the transition assistance.

Unclear is how any extension of direct payments would impact scoring and budget savings from whatever comes from any final new farm bill language. And there is the opposition from conservative lawmakers, especially in the Senate, regarding any such direct payment extension.

Asked whether he would support another year of direct payments, USDA Secretary Tom Vilsack did not answer directly. "We will look for other avenues of assistance and help, if for some reason we can’t get it done in a timely way," he said.

Elected lawmakers' inability to do their work will result in billions of dollars in taxpayer costs if direct payments are continued. Washington Consultant Jim Wiesemeyer alerted this was a possibility months ago. But most farm-state lawmakers and even Congressional Budget Office analysts dismissed it at the time.

 

EXTENDED FORECASTS PROVIDE LITTLE HOPE OF DROUGHT RELIEF... The National Weather Service's Climate Prediction Center (CPC) outlooks for December through February provide little guidance for precip and temps across the Corn Belt. The extended outlook calls for "equal chances" of normal, below- or above-normal temps and precip during the one- and three-month periods across the Corn Belt. But for the Southern Plains, the three-month outlook for above-normal temps for the southern half of Texas and below-normal precip for western Texas raises concerns about the well-entrenched drought area.

As a result of recent weather and the extended forecast, the CPC says drought will persist across much of the central Corn Belt, as well as in key HRW wheat areas of the Central and Southern Plains. The good news is winter wheat will enter dormancy in much better shape than last year, but this forecast signals drought will not improve through the winter months -- raising spring moisture needs. Click here for related maps.

 

 

DROUGHT MONITOR SHOWS EXPANDING DROUGHT ACROSS THE SOUTH... According to the National Drought Monitor, drought covers 58.79% of the contiguous U.S., which is up from 56.02% last week, but down sharply from 73.77% a year ago. Improvements across the Midwest were offset by widening drought across the southern half of the country.

In the High Plains the monitor notes the frontal system that swept across the central U.S. last weekend dropped half an inch of moisture across parts of the Northern Plains, but the southern areas were dry. This resulted in a 49.72% to 55.31% jump in drought coverage for the region over the past week. Meanwhile another dry week in the South led to expansion of drought in Texas and Oklahoma. As a result, 61.74% of the region is now covered in some form of drought, compared to 61% last week. See the map.

 

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