Evening Report (VIP) -- Advice -- April 4, 2014

April 4, 2014 09:49 AM
 

Fed cattle producers: Exit 1st-qtr. hedges… With the first quarter complete, we advised fed cattle producers this morning to lift the portion of hedges in April live cattle futures covering 1st-qtr. marketings. Our exit was $143.60 for a 60-cent profit. Also, the April $136 put options that we purchased for $1.325 against 1st- and 2nd-qtr. marketings expired worthless today. Maintain 50% 2nd-qtr. hedges in April live cattle futures at $144.20.

 

March jobs growth about as expected... Non-farm payrolls rose 192,000 in March, which was just shy of expectations for 200,000 jobs added, according to the U.S. Bureau of Labor Statistics. The unemployment rate held steady at 6.7%. The report notes that employment grew in the following sectors: professional and business services, health care, and in mining and logging. The report also included a combined 37,000 upside revision to payrolls for January and February. Average monthly job growth over the past year now stands at 183,000 per month. Get more details.

 

China temporarily restricts U.S. hog imports... China has put "temporary restrictions" on imports of U.S. hogs (not pork) China uses to develop genetic breeding programs until the two countries agree on a testing protocol for porcine epidemic diarrhea virus (PEDV). Tony Clayton, president of the Livestock Exporters Association, told Bloomberg he is hopeful U.S. hog exports to China can resume "fairly quickly." China was the lead importer of U.S. live hogs in 2013, accounting for around 40% of U.S. export business. Still, that only amounted to 13,653 head.

 

Appeals court to rehear request to halt COOL implementation... A U.S. appeals court today vacated (annulled) a ruling last week that denied a request for a preliminary injunction to block the implementation of USDA's final country of origin labeling (COOL) rule by the American Meat Institute (AMI) and other trade associations. The U.S. Court of Appeals for the District of Columbia Circuit will rehear the case en banc, or by the full court, in May. AMI argues that COOL violates the constitution "by compelling speech in the form of costly and detailed labels on meat products that do not directly advance a government interest." The group also says the rule exceeds the scope of the statutory mandate. Meanwhile, the World Trade Organization is expected to officially decide whether the new rule violates international trade law in July.

 

No breakthrough in U.S.-Japan trade talks... No breakthroughs were achieved in bilateral talks between Japan and the U.S. on autos and non-tariff measures following three days of negotiations in Washington, Japan's Ambassador to the Trans-Pacific Partnership (TPP) Takeo Mori said April 2. He said the negotiations would resume in Tokyo next week. Mori would not say when or if U.S. Trade Representative Michael Froman would join the negotiations in Tokyo. Mori also said President Barack Obama's upcoming visit to Tokyo is not a deadline for the negotiations but it represents an opportunity. Obama will visit Japan April 23-25.

 

Slow biotech acceptance an area of frustration... Lawmakers expressed frustration with the pace of approvals of new biotech crop varieties at a recent hearing. Kevin Shea, administrator of USDA's Animal and Plant Health Inspection Service (APHIS), says the agency has streamlined its review process and trimmed a backlog of 22 applications to 16. But Shea also said his agency can move only so quickly because the decisions must be defendable in court. Asked about the date when APHIS could assure the backlog was cleared, Shea said the agency could process reviews more quickly once the pending applications are reduced to 12-13 cases. APHIS could reach that point a year from now, he said.

 

Keystone proponents eye May as final approval announcement... Senate Republican supporters of the Keystone XL pipeline are looking to the upcoming end of the 90-day public comment period on whether the project is in the national interest as they weigh trying to force a vote on the topic. The three legislative options remain a nonbinding resolution decreeing congressional sentiment that Keystone is in the national interest; a bill establishing a timeline for a decision; or a bill outright approving the presidential permit needed to cross the U.S.-Canada border.

Sen. John Hoeven (R-N.D.) conceded that Majority Leader Harry Reid (D-Nev.) was unlikely to allow votes on any of the energy-related amendments to the jobless aid extension before the Senate, including one that would approve Keystone XL and expedite LNG exports to Ukraine, Japan and NATO members.

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