Evening Report (VIP) -- September 10, 2013

September 10, 2013 09:46 AM

TRADERS EXPECT USDA TO TRIM CORN, SOYBEAN CROP ESTIMATES... Traders are evening positions ahead of USDA's September crop reports, which will be released on Thursday, Sept. 12, at 11:00 a.m. CT. Traders expect USDA to trim the size of the corn and soybean crops from last month to reflect multiple weeks of deteriorating crop condition ratings.

According to expectations compiled by Dow Jones Newswires, traders look for USDA to trim the corn yield by 0.5 bu. per acre from last month to 153.9 bu. per acre for a crop of 13.646 billion bu., down from 13.763 billion bu. last month. Traders expect USDA to trim its soybean yield forecast by 1.3 bu. per acre from last month to 41.3 bu. per acre for a crop of 3.149 billion bu., down from 3.255 billion bu. last month

Crop Production





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In the Supply & Demand Report, traders look for USDA to trim 2013-14 corn carryover by 140 million bu. from last month to 1.697 billion bu., with a minor downward adjustment expected in 2012-13 carryover to 716 million bushels. Traders expect USDA to trim 2013-14 soybean carryover by 59 million bu. from last month to 161 million bu., with old-crop carryover expected to be virtually unchanged at 124 million bushels. Meanwhile, traders look for USDA to raise its 2013-14 wheat carryover forecast by 5 million bu. from last month to 556 million bushels.

2013-14 carryover



USDA August


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2012-13 carryover





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CONSULTANT LEAVES CROP PEGS UNCHANGED... Crop consultant Dr. Michael Cordonnier has left his corn and soybean crop estimates unchanged, but his attitude towards both crops is neutral to lower after traveling across Iowa and Illinois. He pegs the corn crop at 13.4 billion bu., with a yield of 152 bu. per acre, and the soybean crop at 3.09 billion bu., with a yield of 40.5 bu. per acre.

"I still think the corn crop in Illinois will be higher yielding than the corn crop in Iowa, but the Illinois corn yield will not be as good as what we expected several weeks ago," he said. "The hot and dry weather has prematurely killed the crop, resulting in a lot of tipback and potentially lighter-than-normal kernels as well."

Additionally, Dr. Cordonnier says earlier planted soybeans are rapidly turning yellow and starting to drop their leaves. "Unfortunately, the late developing soybeans are trying to fill pods under very adverse conditions," he adds. "The number of seeds per pod and the seed size is expected to be disappointing since they are being determined under adverse conditions."


BRAZIL CUTS WHEAT CROP ON FROST... Brazil's supply estimating agency, Conab, cut its forecast of the 2013-14 wheat crop by 670,000 MT to 4.95 MMT due to damage caused by multiple frost/freeze events. In its report, Conab notes another frost impacted the wheat belt since data for today's report was collected. It states, "This frost had further coverage than the one in July, reaching areas that had not been affected previously. These additional losses will only be quantified in the next field survey."

As we reported earlier in "First Thing Today," Brazil has increased duty-free wheat imports by 400,0000 MT through the end of November, which pushes the quota to 2.7 MMT because of damage to the Brazilian crop.

Meanwhile in its final report for 2012-13 crop, Conab raised its corn crop peg from 80.3 MMT to 81.3 MMT. It left its soybean crop estimate at 81.5 MMT.


REPORT: ARGENTINA TO RAISE CORN EXPORT LIMIT FOR 2012-13... Argentina's government is expected to raise its limit on 2012-13 corn exports by about 3 MMT to 20 MMT, according to a Reuters story citing unnamed market sources. The announcement is expected on Wednesday, according to the sources. Argentina limits the amount of corn and wheat that can be exported to make sure there are ample domestic food supplies. In the August Supply & Demand Report, USDA estimated 2012-13 Argentine corn exports at 19.5 MMT.


VILSACK VENTS ABOUT CATTLE INDUSTRY... USDA Secretary Tom Vilsack continued his polarizing tenure as helm of the Agriculture Department when he unleashed frustration about some in the U.S. cattle industry. During a question-and-comment session following his speech to the National Farmers Union, Vilsack said he does not think the cattle industry-led trade group and others in the livestock business appreciate the work the Obama administration and USDA has done to open foreign markets. Asked how USDA would address concerns with how the National Cattlemen’s Beef Association (NCBA) manages the industry's checkoff program, Vilsack uncorked the following:

"I get really frustrated with the cattle industry, I really do, because we have broken down barriers in this administration. We’ve opened up markets. We have been ferocious in our effort to try to get some countries that have been resistant and reluctant to opening up markets to do so. There’s never, hardly any acknowledgment of that effort. There’s just constant criticism."

Vilsack has come under fire on several fronts, but notably USDA's final rule regarding country-of-origin labeling (COOL), which is being challenged by Canada and Mexico, who won a prior WTO case against the U.S. program. Opponents, including most in the U.S. cattle and pork industries, say USDA's final rule made a bad rule even worse. A U.S. District Court judge is expected to rule soon on one facet of the topic, while a WTO panel is expected to issue a decision early in 2014 as to whether the final USDA rule fulfills the requirements of the ruling against the United States.

Another thorny issue is Vilsack saying his department is taking another look at an audit that cleared NCBA of any improper use of checkoff dollars. He said he wants to ensure that the methodology was correct. But he said he intends to bring together a wide range of cattle industry interests to discuss the checkoff issue, which would mean NCBA’s critics would be included. "My view is that everyone should be at the table. ... It’s my table. So we are working now to get everybody scheduled to figure out a day when all these folks can come," he said. The "my table" comment is what some in the meat trade say is Vilsack's cavalier attitude toward some issues. Learn more about the issues, which include ractopamine-related beef and pork shipment bans and his support of the corn ethanol mandate in the Renewable Fuel Standard.

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