Evening Report | June 11, 2021
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Your Pro Farmer newsletter is now available!... Hot, dry weather is expected to stick around for the Corn Belt, fueling market volatility and adding to concerns about tight carryover supplies of corn and soybeans. USDA updated its balance sheets on Thursday, and you’ll find plenty of report coverage in this week’s newsletter. Meanwhile, the livestock sector is getting increasing scrutiny from Washington. Also of note, Biden’s EPA is revisiting water protections and the Renewable Fuels Standard, unnerving farmers. Find more on these topics and many others in this week’s newsletter. Access it here.
IHS Markit pares U.S. corn planted acreage outlook… Private analytics firm IHS Markit (formerly Informa Economics) trimmed its 2021 U.S. corn planted acreage estimate by 310,000, dropping it to 96.54 million acres. That’s still above most private forecasts and well above USDA’s March planting intentions estimate of 91.14 million acres.
U.S. soybean plantings will likely total 89.07 million acres, according to IHS Markit. That’s up 580,000 acres from its mid-May forecast and nearly 1.47 million acres above USDA’s planting intentions forecast of 87.60 million acres.
The firm expects spring wheat plantings (excluding durum) to come in around 11.51 million acres, a 100,000-acre dip from its forecast last month and 230,000 acres under USDA’s March estimate. Durum wheat seedings will likely come in around 1.53 million acres, little changed from its May forecast and in line with USDA’s March forecast.
Cotton plantings will likely total 11.66 million acres in 2021, IHS predicts, a 20,000-acre retreat from its May forecast and under USDA’s 12.04-million-acre projection at the end of March.
USDA will update its planted acreage estimates in the June 30 Acreage Report.
SovEcon raises grain crop estimates for Black Sea region… SovEcon raised its Russian wheat crop estimate by 1.5 MMT to 82.4 MMT, citing improved precipitation during May for the winter wheat crop in the South, as well a quick spring wheat planting campaign and better moisture for spring wheat in the Urals and Siberia. Last year’s Russian wheat crop totaled 85.9 MMT.
SovEcon also raised its 2021 corn crop estimate for Ukraine to 36.8 MMT, a 200,000-MT increase from its previous forecast, citing good crop conditions. But the firm warns, “Late seeding and the recent dryness in northern regions could be an issue for the corn crop.” This would be a notable boost from 2020, when Ukraine produced a 30.3 MMT corn crop.
Ukraine’s wheat crop will likely total 28.9 MMT, according to SovEcon, up 300,000 MT from its previous forecast. Again, the firm says crop conditions have improved, especially in the South. Last year, Ukraine produced a 24.9 MMT wheat crop.
USDA fully funds QLA payments, approves 40% second half WHIP+ payment for 2019… More than $1 billion in payments will be released over the next several weeks, starting June 15 for agricultural producers with approved applications for the Quality Loss Adjustment (QLA) Program and for producers who have already received payments through the Wildfire and Hurricane Indemnity Program Plus (WHIP+). These USDA programs provide disaster assistance to producers who suffered losses to 2018 and 2019 natural disasters. Producers will receive 100% of the calculated assistance under QLA, based on applications submitted between Jan. 6 and April 9, 2021.
Producers who applied for and have received their first WHIP+ payment for 2019 can expect to receive the second payment beginning in mid-June for eligible crop losses. Due to budget constraints, producers received an initial WHIP+ payment for 2019 crop losses equal to 50% of the calculated payment. (Producers with 2018 crop losses have already been compensated at 100%.) This second payment will be equal to 40% of the calculated payment for a total 90% WHIP+ program payment. This second round of WHIP+ payments are expected to exceed $700 million. A third round of payments may be issued if sufficient funds become available.
Of note, all producers receiving QLA Program and WHIP+ payments are required to purchase federal crop insurance or Noninsured Crop Disaster Assistance Program (NAP) coverage for the next two available crop years at the 60% coverage level or higher.
Also, for each crop year (2018, 2019 and 2020) the maximum amount that a person or legal entity may receive, directly or indirectly, is $125,000. Payments made to a joint operation (including a general partnership or joint venture) will not exceed $125,000, multiplied by the number of persons and legal entities that comprise the ownership of the joint operation. A person or legal entity is ineligible for QLA payment if the person’s or legal entity’s average Adjusted Gross Income exceeds $900,000, unless at least 75% is derived from farming, ranching or forestry-related activities.
Biden’s China policy is emerging — and it looks a lot like Trump’s... Recent moves on Chinese apps and an investment blacklist build on former President Donald Trump’s actions, though by different means. The White House sees its China policy as resting on three pillars: strengthening the U.S. economy and democracy, rebuilding ties with allies that frayed under former President Donald Trump, and defining areas of confrontation and cooperation with China, the Wall Street Journal reports.
USDA requiring CRP offers be resubmitted… USDA earlier this year announced it had reviewed the Conservation Reserve Program (CRP) and put in place higher rental payments, new incentives and more focus on climate change. As a result, USDA has deleted all previous offers submitted under the continuous and general CRP signups. Offers can be resubmitted starting June 14 with a deadline of July 23 for the general signup and Aug. 6 for the continuous signup. Those submitting previous offers will get a letter advising them of the new details. For offers on new acres only under the continuous signup, contracts start the first of the month after the month that the offer has been approved.
USDA said there will be a one-time 10% “inflationary” adjustment for the life of the CRP contract, which will be factored into Soil Rental Rates (SRRs).
As for the Climate-Smart Practice Incentive effort, USDA said the incentives will be 10% for woody biomass, 5% for grass and legumes and 3% for grass cover types.
USDA also said that State Acres for Wildlife Enhancement (SAFE) practices are being moved from the general CRP signup to the continuous signup.
USDA to beef up Packers & Stockyards Act… Amid growing angst about the disconnect between the wholesale product market and producers’ bottom line, USDA will begin work on three proposed rules to support enforcement of the Packers and Stockyards (P&S) Act. USDA intends to take three actions related to rulemaking in the months ahead. First, the department plans to propose a new rule that will provide greater clarity to strengthen enforcement of unfair and deceptive practices, undue preferences and unjust prejudices. Second, USDA will propose a new poultry grower tournament system rule, with the current inactive proposal to be withdrawn. Third, USDA will re-propose a rule to clarify that parties do not need to demonstrate harm to competition in order to bring an action under section 202 (a) and 202 (b) of the P&S Act.
The North American Meat Institute (Meat Institute) today provided the following statement on USDA’s P&S Act proposals: “In the past, these sorts of proposals have been opposed by many livestock producers and Congress. In fact, the concepts embodied in these proposals have been rejected by eight federal appellate courts. They were a bad idea in 2010, they were a bad idea in 2016, and they are a bad idea in 2021. Should these proposals be implemented, they will limit producers’ ability to market their livestock the way they see fit and will lead to costly, specious lawsuits,” said Julie Anna Potts, President and CEO of the North American Meat Institute. “The Meat Institute will continue to oppose unnecessary and burdensome government intervention in livestock markets.”
Report JBS may acquire BRF… Shares for the Brazilian food processor BRF SA jumped this morning following a report that JBS SA may be interested in acquiring the company. BRF is the world’s largest poultry exporter as well as a major pork producer. JBS, the world’s largest meat processor, declined to comment on the report. Last week, Marfrig Global Foods announced it now holds a 31% stake in BRF. There have been rumors for some time about a possible merger of the companies.
BRF’s market is more heavily reliant on the Brazilian market, which has resulted in the companies being harder hit by the economic toll of the pandemic and rising feed costs. JBS has benefited from its greater exposure to the U.S. market where meat demand has held strong in the midst of the pandemic.
