Evening Report (VIP) -- October 21, 2013

October 21, 2013 10:24 AM


CORN HARVEST 39% COMPLETE... In its first weekly progress report since Sept. 30, USDA reports as of Sunday that 39% of the nation's corn crop has been harvested. This is about three percentage points below expectations and compares to 85% last year at this time and 53% on average.

Illinois has 51% harvested (61% average), Indiana 43% (52%), Iowa 35% (50%), Minnesota 19% (49%), Nebraska 32% (44%), and Ohio 31% (36% ). Until harvest crosses the halfway point nationally, there is risk of stepped up harvest-related hedge pressure.


SOYBEAN HARVEST 63% COMPLETE... As expected, USDA reports harvest has crossed the key halfway point as of Sunday, with 63% of the crop harvested. Traders expected harvest to be around 62% complete, which compares to 79% last year at 69% on average. This signals hedge-related pressure on the market should be easing.

Illinois has 68% harvested (67% average); Indiana 64% (66%); Iowa 70% (81%), Minnesota 80% (83%), Nebraska 80% (81%), and Ohio 71% (61%).


OVER HALF OF WINTER WHEAT CROP HAS EMERGED... What a difference a couple of weeks makes. USDA now reports that 53% of the winter wheat crop has emerged, which compares to 48% last year and 54% on average. Kansas has 61% emerged (60% on average), with Texas at 42% (46% average) and Oklahoma at 61% (57% average). USDA reports 79% of the crop has been planted, which is equal to the five-year average.

In its first condition ratings of the season, USDA reports 65% of the crop is rated "good" to "excellent," with 31% "fair" and just 4% "poor" to "very poor."


COTTON HARVEST SLOW GOING... As of Sunday USDA reports 21% of the nation's cotton crop was harvested, which compares to 36% last year at this time and 34% on average. Wet weather has slowed harvest progress and raises concerns about the quality of the crop. Harvest is just 15% complete in Texas (27% average), with Georgia at 16% (28% average).


COLDER TEMPS ARRIVE IN MIDWEST... The growing season ended across the Upper Midwest over the weekend, with a hard freeze expected across the Corn Belt this week. Meteorologist Gail Martell of MartellCropProjections.com says a season-ending freeze could even extend into the Mid-South.

But Martell notes that while some areas of the Midwest have seen some rain, drought is still a concern in much of Iowa, Illinois, southern Minnesota, Wisconsin and Missouri. "It would take at least 3 inches, but up to 7 inches on some farms, to completely replenish ground moisture," she says. Click here for related maps.


WEEKLY ETHANOL PRODUCTION RELEASED... The Energy Information Administration (EIA) this morning released ethanol production data for the week ending Oct. 11, which was scheduled for last week but wasn't released due to the government shutdown. The report shows ethanol production improved by 1,000 barrels per day (bpd) to 869,000 bpd and ethanol stocks increased marginally to 15.4 million barrels. The next report is scheduled to be released on Wednesday.


SENATORS QUESTION USDA'S LAST-MINUTE CUT TO MARKETING ASSISTANCE LOANS... A bipartisan group of Senators led by Senate Ag Committee Ranking Member Thad Cochran (R-Miss.) have sent a letter to USDA Secretary Tom Vilsack asking for explanation of his department's Sept. 30 announcement it would reduce all Marketing Assistance Loans (MAL) made after Oct. 1, 2013, by 5.1% and to delay loan processing to mid-October while the software is being updated. The 14-day software update slated to begin Oct. 1 was further delayed by the 16-day partial government shutdown. The letter notes the following impacts of the decision on farmers and agribusiness:

  1. Substantially reducing cash flow during harvest, which may require some to secure unanticipated loans from other, mostly costly credit sources.
  2. Result in unrecoverable income losses for many growers who have forward contracted their crops using an option-to-purchase contract.
  3. Significantly alter the terms of future contracts, to the detriment of the producer.

Further, the senators say the timing of the decision was particularly poor as it was announced as harvest was gearing up across the Sunbelt and there was no warning, leaving those involved without the option of making alternative plans to manage risk. "The decision was especially surprising since sequestration was not applied to Marketing Assistance Loans made for the 2012 crop or for the 2013 crop entered into the loan before Oct. 1," the letter notes. The senators also expressed disapproval as to the lack of details in the announcement; the news release did not specify whether loan redemption would also be impacted by sequestration.

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