Evening Report (VIP) -- November 26, 2013

November 26, 2013 09:04 AM


CONSULTANT: CORN EARWORM IN BRAZIL A COST ISSUE, NOT YIELD PROBLEM AT THIS TIME... South American consultant Dr. Michael Cordonnier says the "phytosanitary emergency" declaration for the states of Mato Grosso and Bahia last week was to facilitate the use of chemicals not registered in Brazil and not because helicoverpa (corn earworm) caterpillars are causing mass destruction. He classifies the current corn earworm issue as more of a financial strain for Brazilian producers than a yield problem at this point. He says, "There is no history of this insect in Brazil, so judging how bad it could be is a real guess. Under a worst-case scenario, I think it could be entirely possible the infestation could result in a loss of as much as 5 MMT of soybeans (5% of the total), but let me emphasize, that is only a guess. As is the case most of the time, weather during the growing season is going to be more important to the overall soybean production than the corn earworm."


CONSULTANT LEAVES BRAZILIAN CROP ESTIMATES UNCHANGED... Dr. Cordonnier says nationwide, 80% of the Brazilian soybean crop is planted, with Mato Grosso, Mato Grosso do Sul, Goias and Parana nearly complete. Most of the soybean left to plant are in Rio Grande do Sul in southern Brazil and in eastern and northeastern areas of the country. The only real "concern" areas at this time are dry pockets in Minas Gerais and Bahia, but dryness would have to persist for another week to 10 days before it would become a potential yield issue. Therefore, Dr. Cordonnier left his Brazilian soybean crop estimate at 90 MMT and has a neutral to slightly lower bias going forward.

Dr. Cordonnier also left his Brazilian corn crop estimate unchanged at 68.5 MMT. Most of the full-season corn is rated in good condition, but there's a lot of uncertainty with the safrinha (second crop) corn crop. Therefore, Dr. Cordonnier maintains a neutral bias toward the Brazilian corn crop.


ACTIVE BEAN PLANTING IN ARGENTINA LAST WEEK... Argentine soybean planting advanced 15 percentage points last week to approximately 40% complete, according to Dr. Cordonnier, as farmers took advantage of mostly dry weather. Soybean planting is now slightly ahead of last year's pace and most of the crop that has emerged is rated good to excellent, though there are reports of some soybeans being replanted due to poor stands. Dr. Cordonnier left his Argentine soybean crop estimate at 55 MMT and he has a neutral to higher bias going forward as he believes soybeans could steal some acres from corn.

Corn planting has ground to a virtual halt as producers are actively planting soybeans. As a result, Dr. Cordonnier says roughly half of this year's Argentine corn crop will be planted in December, which is the highest percentage in recent memory. Therefore, he feels some intended corn acres will be switched to soybeans. Dr. Cordonnier's Argentine corn crop estimate remains at 25 MMT and he has a neutral to lower bias.


ERS: 2013 NET FARM INCOME AT HIGHEST LEVEL SINCE 1973... USDA's Economic Research Service (ERS) today forecast net farm income at $131 billion in 2013, which would be up 15.1% from $113.8 billion in 2012 and the highest since 1973, when the figure is adjusted for inflation. Net cash income, which measures the difference between cash expenses and the combination of commodities sold during the calendar year plus other sources of farm income, is forecast at $129.7 billion. This would be a 3% decline from 2012, but the figure would still be the fourth time net cash income (after adjusting for inflation) has exceeded $100 billion since 1973. Both of these forecasts are up sharply from ERS's August forecasts. Get more details.


SUBSTANTIAL PROGRESS MADE IN TPP NEGOTIATIONS... Negotiators for the Trans Pacific Partnership (TPP) nations said that meetings last week resulted in "significant progress" toward forging a deal that they hope to have wrapped up by year's end. In a press release, the U.S. Trade Representative's (USTR) office said negotiators resolved a "substantial number of outstanding issues," which included those related to "intellectual property, cross-border trade in services, temporary entry, environment, market access, state-owned enterprises, investment, financial services, sanitary and phytosanitary issues, government procurement, labor, e-commerce, legal issues, technical barriers to trade and rules of origin." Discussions among the negotiators of the 12 TPP nations will continue over the next few days as they prepare for the Dec. 7-10 meetings in Singapore.


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