Evening Report (VIP) -- November 25, 2013

November 25, 2013 09:45 AM

USDA LOOKS INTO SOYBEAN EXPORT INSPECTIONS DISCREPANCY...USDA is reportedly investigating a discrepancy with its weekly soybean export inspections data released today. While USDA reported export inspections of 66.934 million bu. the week ended Nov. 21, the commutative tally jumped by 76.768 million bu. since the week prior.

In the final Crop Progress Report of the year, USDA says 62% of the U.S. winter wheat crop is rated "good" to "excellent," down one percentage point from last week. That summary, however, masks the fact "excellent" rated wheat fell two points from last week. Winter wheat rated "poor" increased one percentage point from last week. The deterioration of the crop in the week ended Nov. 24 was widely expected and should have little impact on upcoming wheat trade.

Winter Wheat

very poor





This week

2 6 30 53 9

Last week







7 19 41 29 4


WINTER WHEAT 93% EMERGED... As frigid temps slipped into winter wheat areas, USDA says about 93% of the crop had emerged. That compares to a five-year average emergence pace of 89%. The Kansas crop was 100% emerged as of Nov. 24 and much of the crop yet to emerge is in North Carolina, Missouri and California.


U.S. CORN HARVEST 95% COMPLETE... As of Nov. 24, 95% of the 2013 corn crop has been harvested, according to this afternoon's Crop Progress Report from USDA. That's up from 91% harvested as of the previous week and compares to the five-year average harvest pace of 91%.


COTTON STILL BEHIND THE AVERAGE PACE... As of Nov. 24, USDA says 78% of the U.S. cotton crop has been harvested. That's up from the previous week's 68% complete and behind the five-year average harvest pace of 83% done. Texas has 72% of the crop harvested, up 12 percentage points from the previous week. The five-year average pace for Texas is 78% harvested by Nov. 24. The slower-than-average harvest pace is limiting selling pressure on cotton futures.


NASS ENTERING ITS 'BUSY TIME' OF THE YEAR... This afternoon's Crop Progress Report included notice that today's update is the final update of the year. The next Crop Progress Report will be delivered April 7, 2014.

The report also included the following "heads up" notice to farmers: "In the first two weeks of December, NASS will survey approximately 90,000 United States producers. One of USDA's largest survey efforts, the responses will provide the final information about the 2013 U.S. row crops focusing on harvested acreage, production, and storage. In addition, hog producers will be asked about their current inventory, pig crop, and farrowing intentions for the next six months. With both data collection and data release taking place over a span of only four weeks, the results will be available beginning with the Hogs and Pigs report on Dec. 27, followed by the Annual Crop Production Summary and other reports on Jan. 10. Farmers should watch for their survey and be sure to respond. Your information matters!"


BRAZIL'S PEST PROBLEMS CATCHING MARKET ATTENTION... For several weeks, we've relayed information from Pro Farmer South American consultant Dr. Michael Cordonnier about an infestation of Helicoverpa armigera (corn earworm) in Brazil's soybean crop. Some farmers have already been forced to into multiple applications of insecticide in an attempt to control the bean-munching pest, and emergency measures have been taken in Mato Grosso (largest bean producing state in Brazil) to allow quicker approval of chemicals.

The intensity of the fight against the earworms and the scope of the infestation is finally becoming known across the market. The most optimistic of crop-watchers still anticipate a Brazilian bean crop of about 90 MMT to be harvested in early 2014, but some are starting to scale back crop expectations. At worst, the bugs will knock some bushels off of average yields. At best, attempts to limit the impact will add to production costs.


MAKING PLANS FOR A SAFRINHA BEAN CROP... Growing a winter crop of corn in Brazil has become common practice, but double-cropping soybeans during the winter months has been declining in recent years as farmers attempt to control the spread of soybean rust. This year, however, some farmers are reportedly considering a safrinha soybean crop. Acreage is expected to be relatively small, but the risks associated with a double-cropping soybeans are viewed as more manageable than the financial risks associated with a safrinha corn crop.


NEW-CROP 2014 BIDS ARE CLOSELY WATCHED... Farmers are clearly tuned-in to price action in December 2014 corn futures and November 2014 soybean futures, but even traders are paying closer attention to new-crop price action. Last week, December 2014 corn futures moved above $4.50 and have since ground-out a dime rally. November soybean futures have a low this month of $11.40.

At the respective lows, the soybean:corn price ratio stood at 2.53:1, giving soybeans a modest economic advantage over corn. At current prices, the ratio is unchanged at 2.53:1, suggesting the markets have found the price relationship that will make it most difficult for farmers to determine their crop mix for the 2014 growing season.

On a net revenue basis, new-crop soybean prices offer an average Iowa producer a profit potential of about $30 per acre. The same producer may be looking at a loss of about $20 loss per acre on 2014-crop corn. As more market watchers do the math on potential 2014-crop returns, they're starting to believe expectations of a move closer to a 50-50 corn-soybean crop mix for the growing season ahead. That should keep new-crop corn and soybean futures trending in the same direction for the near-term.

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