Evening Report (VIP) -- September 6, 2013

September 6, 2013 09:40 AM

INFORMA EXPECTS HIGHER CORN YIELD EST. FROM USDA NEXT WEEK... Informa Economics reportedly expects USDA in its September Crop Production Report to peg the national average corn yield at 157.2 bu. per acre for a crop of 14.013 billion bushels, down 127 million bu. from the firm's forecast last month. In August, USDA estimated a national average corn yield of 154.4 bu. per acre for a 13.763-billion-bu. crop.

The firm also reportedly expects USDA to lower its national average soybean yield estimate next week by 0.2 bu. to 42.4 bu. per acre for a 3.239-billion-bu. crop, which would be a 16-million-bu. cut from USDA's August production estimate. This is also 27 million bu. below Informa's August projection.

But when Informa Economics incorporates its analysis of the FSA-reported certified acreage data, the firm reportedly expects corn planted acreage to decline by 1.957 million from USDA's current estimate, which would result in a 13.7-billion-bu. crop. The firm reportedly expects soybean planted acreage to decline by 739,000 acres, for a 3.2-billion-bu. soybean crop. Informa Economics reportedly expects all wheat planted acreage in 2013 to fall 632,000 acres from USDA's current estimate, which the firm reportedly says projects to a 2.08-billion bu. crop; in August, USDA pegged all wheat production at 2.11 billion bushels.

USDA will likely peg the cotton crop at 13.504 million bales on a national average yield of 843 lbs. per acre, according to Informa Economics. This is down 406,000 bales from the firm's August projection. Last month, USDA estimated a national average yield of 813 lbs. per acre for a 13.053 million-bale crop.


JOBS DATA COULD TAP BRAKES ON EASING PLANS... The U.S. Labor Department today reported that 169,000 non-farm payrolls were added in August, which was below expectations for 180,000 jobs added and the average monthly gain of 184,000 jobs for the past 12 months. The unemployment rate ticked down to 7.3%, as more Americans stopped looking for work. The civilian labor force participation rate fell to 63.2%, the lowest level since 1978. The Labor Department also revised its June non-farm payrolls number from 188,000 jobs added to 172,000, and it lowered its July figure by 58,000 to 104,000 jobs added.

This could make the Federal Reserve less willing to start unwinding its bond-buying program. Fed policymakers will meet Sept. 17-18 to evaluate economic conditions.


CANADIAN WHEAT AND CANOLA STOCKS TIGHTER THAN EXPECTED... Statistics Canada this morning pegged canola stocks as of July 31 at 608,100 MT, which was the lowest level in 15 years and well below expectations for 730,000 MT. Wheat stocks of 5.1 MMT were the lowest in five years and slightly below expectations.

Pro Farmer Canada editor Mike Jubinville reminds that this morning's report serves simply as a snapshot of the past and sets carryin for the new marketing year. "It sheds only minor influence to price determination in the current grain market as there currently are several more important market-moving variables at work (such as) weather in the U.S. and big crops here."

Specifically for canola, Jubinville says, "Any year-end stock estimate under 1 MMT is considered tight. But with a record-large 2013 canola crop now coming on line (16 MMT?), the small carryin from last year is no longer a big issue. The market focus at this time of year is entirely on the upcoming crop and as long as it is as big as it's purported to be, last year's numbers will be seen as old news."


USDA GRAPHIC DETAILS 2013 CROP INSURANCE PAYOUTS... U.S. crop insurance indemnities have reached $2.927 billion as of Sept. 3. A USDA graphic on this data that reflects the geographic concentration of payouts shows that most are centered in the Southern Plains, where drought conditions have negatively affected wheat, in particular, along with parts of the Northern Plains and northern Iowa and southern Minnesota, where Prevented Planting claims are likely the reason for the payouts. See the map.


SUGAR PROGRAM: THE SAFETY NET OF FORFEITURES... Yesterday, we reported that the U.S. sugar processors forfeited to USDA some 85,000 tons of sugar that was pledged as collateral for loans rather than repay the loans. These loans represented about $35 million worth of sugar. This marks the first time since the 2003 crop year that sugar processors have forfeited sugar to the government rather than repaying their loans. It also shows that USDA started too late and was not aggressive enough in efforts to thwart forfeitures, according to Washington Consultant Jim Wiesemeyer. Also, USDA waited about two months longer than they should have to begin the sugar-for-ethanol program he continues. When Jim asked a USDA contact about this, the source said, "The rules weren't written in time." But USDA had since the 2008 Farm Bill to write and announce those rules. "We didn't think they would be needed," was the response from USDA. That errant assumption is costing taxpayers millions of dollars now, and likely millions more later.

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