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Evening Report -- Advice (VIP) -- November 12, 2012

06:25AM Nov 13, 2012

ADVICE -- LIVESTOCK PRODUCERS: EXIT 4TH, 1ST QTR. MEAL HEDGES... Soybean meal futures have done a lot of technical damage since Friday. With key support levels breached and Brazilian weather improving, the market is susceptible to more heavy selling pressure near-term. As a result, livestock producers were advised this morning to exit the 50% 4th-qtr. coverage in long Dec. meal futures and the 25% 1st-qtr. coverage in March meal futures. Losses totaled $52.50 in the Dec. contract and $48.90 in the March contract.

The sharp price break will eventually create a better buying opportunity, but we'll wait for the market to signal a low has been posted before reentering long coverage.


THANK YOU TO OUR VETERANS... In honor of Veterans Day we remember a quote from Elmer Davis, Director of the United States Office of War Information during World War II: "This nation will remain the land of the free only so long as it is the home of the brave." A special thanks to the Pro Farmer Members who have served this country!


HRW WHEAT IN JEOPARDY FROM DROUGHT... Meteorologist Gail Martell of says wheat in the Southern Plains is vulnerable to damage due to very dry soil conditions. "Extremely dry weather in October explains the dismal HRW wheat crop prospects. Virtually no rain occurred last month in southern Kansas, Oklahoma and the Texas panhandle, top producing areas for HRW wheat," she adds. Click here for more.


WET CONDITIONS SPUR PLANTING IN MATO GROSSO... Martell says recent rains in Mato Grosso, Brazil, have jump started planting of soybeans after a dry October. Mato Grosso's key soybean producing region -- the Center West -- has received normal rainfall in November, following a very October that stalled soybean planting. November temperatures have moderated with daily showers to improve crop prospects in the region.

At the same time, hot and dry weather has taken hold in southern Brazil, says Martell. "No important rain has occurred in November," she says. "Rio Grande do Sul, Brazil's southernmost farm state, reported temperatures in the 90s F last week with no rain. Southwest Parana also has slipped back into a dry weather pattern in November. Typically the weekly rainfall amounts to 1 to 1.5 inches in November."

Martell says the outlook for this week calls for more of the same, as generous rainfall is expected in the tropics with dry conditions forecast for southern Brazil.


UKRAINE MAY EXPORT CORN TO CHINA SOON... Ukraine's ag minister says the country should be ready to ship corn to China by year-end after the two sides reached an agreement on sanitary and quality requirements. Ukraine plans to supply 2 MMT to 2.5 MMT of corn to China every year to pay off a $3 billion loan extended by China this summer.


GLOBAL ENERGY OUTLOOK RELEASED... The International Energy Agency released its World Energy Outlook today, stressing the need for greater global energy efficiency, but also saying the U.S. should achieve energy independence by 2035. The report states the U.S. will become a net exporter of both natural gas and crude oil by 2020 and nearly self-sufficient, in net energy terms, by 2035. The U.S. is expected to overtake Saudi Arabia in 2020 as the world's top oil producer. For more inputs-related news, click here for Pro Farmer's Inputs Monitor.


HOUSE TO VOTE ON PERMANENT TRADE RELATIONS WITH RUSSIA... The House will vote this week on legislation to establish permanent normal trade relations (PNTR) with Russia. A floor vote is expected by the end of the week, and most expect the measure to pass. The Senate is then expected to quickly clear the legislation and send it to the White House, setting it up for enactment by the end of the year.

The topic is a major priority for agribusiness, because it would allow exporters to require Russia to comply with international trade rules. Russia formally joined the World Trade Organization (WTO) in August, but U.S. businesses can't take advantage of the lowered trade barriers due to Russia’s WTO entry until Congress repeals what is known as Jackson-Vanik, a Cold War-era measure targeting communist countries that restricted Jewish emigration.


TWO-STEP PROCESS LIKELY FOR ADDRESSING THE FISCAL CLIFF... One of the major issues facing lawmakers when they return to Washington Nov. 13 is the fiscal cliff. Many expect dealing with it will be a two-step process: somehow avoid the across-the-board (sequestration) budgets cuts scheduled to take effect Jan. 2, 2013, and return in 2013 to work on a more comprehensive agreement that would include tax reform including revenue most likely coming from reduced tax deductions.

President Barack Obama invited House Speaker John Boehner (R-Ohio), House Minority Leader Nancy Pelosi (D-Calif.), Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) to the White House Nov. 16 to address fiscal cliff issues, such as the Bush-era tax cuts, $1.2 million in sequestration cuts and another hike in the debt ceiling.


FARM BILL FATE TO BE DETERMINED SOON... Some farm bill proponents have already positioned themselves to fight any extension of the 2008 Farm Bill until the new farm bill is voted on by the House. The savings resulting from the new farm bill could help provide budget offsets for some of the issues handled in the lame-duck session.


PORK EXPORTS STEADY IN SEPTEMBER, BEEF EXPORTS LOWER... According to USDA data compiled by the U.S. Meat Export Federation (USMEF), U.S. pork exports in September were steady with year-ago in terms of volume, while beef exports were well below last year. September pork exports reached 183,853 MT, slightly exceeding last year's total and beef exports of 90,538 MT were down 17% from last year. Despite sluggish volumes, however, the value of both pork and beef exports through the third quarter of 2012 remains ahead of last year's record-setting pace. Click here for more.