Evening Report (VIP) -- September 19, 2013

September 19, 2013 10:14 AM
 

CATTLE ON FEED EXPECTED TO REVEAL SHARP DROP IN SUPPLIES... Traders expect tomorrow afternoon's USDA Cattle on Feed Report to reveal a sharp drop in feedlot supplies compared to year-ago. Traders look for the report to show On Feed at 93.46%, Placements at 91.6% and Marketings at 95.46% of year-ago levels.

The range of guesses on Placements is the widest at 86.5% to 101.9% of year-ago. Most analysts expect the figure to come in below year-ago levels due to the overall tightness of calf supplies.

Report expectations

Avg. Trade Guess

Range

% of year-ago levels

On Feed

93.46

92.7-96.0

Placements

91.6

86.5-101.9

Marketings

95.46

93.5-100.0

 

AERIAL TRIP REVEALS CROP STRESS... Pro Farmer Editor Chip Flory took to the sky this week to get a bird's-eye view of several key crop districts in Iowa. He flew from Waterloo, Iowa, diagonally toward Mason City, turned north to Albert Lea, Minnesota, then traveled east to Rochester before heading back to Waterloo. Flory said the most evident thing was the stress on the crops. Click here to view video clips of his trip.

 

64% OF NATION COVERED BY DROUGHT... This morning's National Drought Monitor revealed drought covers 64% of the contiguous U.S., which is up slightly from last week. Slight drought expansion was seen across the Midwest, with just 43% of the area now free of drought, which compares to 48% last week. Rains this week across the Corn Belt should help to trim the drought area back slightly in next week's update -- or at least result in a category change.

Meanwhile, drought spread slightly across the South, with 84% of the region covered by some form of drought, which compares to 81% last week. The monitor notes that drought now covers 57% of Kansas, which compares to 63% last week and 100% a year-ago. Click here for related maps.

 

EXTENDED OUTLOOK: DROUGHT AREA TO REMAIN INTACT... The National Weather Service's Climate Prediction Center (CPC) outlook for October calls for above-normal temps and below-normal precip across Nebraska and Kansas, but calls for equal chances of normal, below- or above-normal precip elsewhere across the Plains and Midwest. Little weather guidance was given for October through December.

As a result of the extended outlooks and current climatology, the CPC expects the current drought area to remain intact. The forecast for drought persistence across much of the HRW Wheat Belt is a concern for the establishment of the newly planted crop, although recent rains have provided soils with a temporary boost to help with germination. Click here for related images.

 

USDA IG REPORT: PREVENTED PLANTING POLICIES GO TOO FAR... U.S. farm subsidies are getting a renewed focus in Washington, with the latest review coming from USDA's inspector general (IG) who released a report that said the prevented planting coverage provided through the federal crop insurance system pays farmers too much and discourages them from planting second crops, because of the impact that would have on their yield history for the purpose of calculating future premiums. Prevented plantings are not counted against a farm’s Actual Production History (APH) unless a second crop is seeded. The prevented planting payment for the first crop also is reduced.

The Risk Management Agency (RMA) recently commissioned a study of the prevented-planting coverage to determine whether the payments are excessive. Any necessary changes would be effective in 2015. The agency has asked USDA's general counsel for a formal legal opinion on the APH issue. To read the report and to view its recommendations along with RMA's responses, click here.

 

ASA EFFORT AGAINST HOUSE FARM BILL'S PLC PERPLEXES SOME... The bewildering farm bill developments continue, with the latest event being an attempt by the American Soybean Association (ASA) to eliminate the Price Loss Coverage (PLC) option included in the House farm bill and supported by bipartisan leaders of the House Ag Committee – Chairman Frank Lucas (R-Okla.) and Ranking Member Collin Peterson (D-Minn.).

A letter by ASA President Danny Murphy to the directors of the association notes that ASA "has consistently argued against tying high and fixed reference (target) prices to current-year planting, as the House PLC program would do, because it could distort planting decisions, production, prices, and trade in years when market prices fall below support levels. Re-coupling target prices to current year plantings also would make U.S. farm programs more vulnerable to WTO challenges. We support the Senate bill which includes an Adverse Market Program that continues decoupled reference prices and bases support levels on a rolling Olympic average of prices in the previous five years." For this reason, Murphy says he is urging the directors to share this information with other farm and commodity organizations and "weigh in with your Members of Congress to oppose the House PLC program and to support the Senate farm bill."

Meanwhile, one farm bill analyst said ASA's support of the Senate's Adverse Market Program is perplexing since some analysis shows it would not have paid out anything to farmers over the past 80 years. Get more details about this development.

 

HOUSE CANCELS RECESS SCHEDULED FOR NEXT WEEK... House Majority Leader Eric Cantor (R-Va.) announced yesterday the chamber will cancel its recess scheduled for next week, with lawmakers now expected to return Sept. 25. His announcement noted the House will remain in session through the week and possibly the weekend until a continuing resolution to prevent a government shutdown on Oct. 1 is worked out. Cantor last week warned this may occur.

 

INCREASE IN PACE OF FARMLAND VALUES IN IOWA SLOWS... The value of Iowa farmland barely increased the past six months, confirming what LandOwner Editor Mike Walsten has been telling subscribers the past several months. According to a semiannual survey of farm real estate professionals conducted by the Iowa Chapter of REALTORS Land Institute, the value of an acre of Iowa farmland rose a scant 1.2% between March 1 and Sept. 1. Combining that increase with the 9.4% gain reported in March for the previous six months, the value of an acre of Iowa farmland rose 10.6% from Sept. 1, 2012 to Sept. 1, 2013. Click here for more details.

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