Evening Report (VIP) -- October 1, 2012

October 1, 2012 09:43 AM

CORN HARVEST CROSSES HALFWAY MARK... USDA reports as of Sunday that 54% of the nation's corn crop was harvested compared to 39% last week and 20% on average. Harvest remains on record pace. Traders expected harvest to be 55% complete. With over half of the crop now out of the fields, traders expect hedge pressure to ease as basis levels firm due to the overall tightness of this year's crop.

Illinois has 71% harvested (33% on average), Indiana is at 35% (22% on average), Iowa is at 56% (8% on average), Minnesota is at 53% (5% on average), Nebraska is at 53% (10% on average) and Ohio is at 14% (11% on average).



SOYBEAN HARVEST 41% COMPLETE... Soybean harvest advanced by 19 percentage points from last week, with 41% now out of the fields as of Sunday, according USDA. This compares to 19% on average and is about three percentage points more advanced than traders expected. Another open week of weather is expected across much of the Corn Belt, which should allow harvest to push past the halfway point this week. Until that happens, harvest-related hedge pressure is expected to maintain a downside bias on futures.

Illinois has 22% harvested (21% on average), Indiana is at 18% (22% on average), Iowa is at 54% (21% on average), Minnesota is at 76% (23% on average), Nebraska is at 48% (16% on average) and Ohio is at 14% (17% on average).



WINTER WHEAT PLANTING 40% COMPLETE... USDA reports as of Sunday that 40% of the nation's winter wheat crop was planted compared to 25% last week and 43% on average. Kansas has 40% planted (37% on average), Oklahoma is at 35% (40% on average) and Texas is at 43% (38% on average). Planting is just getting underway in the eastern Corn Belt, with Illinois at 9% (10% on average), Indiana at 8% (10% on average) and Ohio at 7% (12% on average).

USDA reports 12% of the winter wheat crop has emerged compared to 16% on average. Kansas is at 10% (12% on average), Oklahoma is at 14% (14% on average) and Texas is at 11% (13% on average).



COTTON HARVEST 14% COMPLETE... USDA reports 14% of the nation's cotton crop was harvested as of Sunday, which is just four percentage points more advanced than last week and compares to 15% on average. Leading the way is Louisiana at 60% complete (41% on average), followed by Mississippi at 25% (28% on average). Texas has 15% harvested (18% on average).



WEAKENING EL NINO CAUSES SHARP WEATHER CHANGES... Meteorologist Gail Martell of MartellCropProjections.com says strong changes in the global weather pattern the last 10 to 14 days may be due to a weakening El Nino signal. She says the global weather pattern looks more like La Nina-style influences are intact.

Martell notes that Australia has received beneficial rain recently for its wheat crop, while Argentina has turned drier and cooler and southern Brazil has been mostly dry. "Though we cannot prove it, the weakening El Nino signal may also be responsible for heavy soaking rains recently in southeastern Europe, Ukraine and southern Russia," says Martell.

Meanwhile, Martell says the weather pattern for the U.S. has been mixed. "A sharply colder weather forecast in 4-7 day outlook is symptomatic of a La Nina signal. However, heavy soaking rains last week in the Southern Great Plains came from a strong subtropical jet stream that is consistent with El Nino," she notes. Click here for related maps.



BRAZIL'S SEPTEMBER CORN EXPORTS RECORD LARGE... According to Brazil's Trade Ministry, the country exported a record amount of corn in September for the second straight month. Brazil exported 3.15 million metric tons (MMT) of corn last month, surpassing August's record of 2.76 MMT. Through the first nine months of the 2012 calendar year, Brazil has exported around 9.4 MMT of corn.



2008 FARM BILL EXPIRES WITH LIMITED IMPACTS... The 2008 Farm Bill expired Sept. 30, a week after both chambers had hit the exits for the campaign trail without passing an extension. A number of organizations, including the National Corn Growers Association, American Farm Bureau Federation and the National Soybean Association, issued statements that pointed out that while the expiry of the farm bill has "little or no effect" on most important programs, there are some notable exceptions. One of these is that the Milk Income Loss Contract (MILC) expired. This program compensated dairy producers when prices fell below certain levels. Get more details on what programs will be affected by the farm bill lapse.

Congress is not expected to take up the farm bill or pass any extension until they return following the elections for the lame-duck session (at earliest). The Senate has passed its version of the farm bill, which is a one-size-fits-all approach that favors Midwestern growers. It will likely garner an even higher price tag with an updated Congressional Budget Office (CBO) baseline in March, which explains the hurry-up push for passage among certain organizations and farm-state lawmakers. The more equitable and budget-friendly House farm bill has been passed by the Ag Committee, but most feel the votes are not there for full House passage.

Washington Consultant Jim Wiesemeyer has acknowledged there would be some glitches with the expiry of the farm bill, but says it will be several months before the lack of action on a new farm bill will have serious consequences. He also points out that during the last major farm bill debate, Congress did not begin several extensions of the 2002 Farm Bill until late December 2007. Thus, there is plenty of time to reach a farm bill agreement.

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