Evening Report (VIP) -- April 18, 2013

April 18, 2013 09:28 AM


PLACEMENTS WILL SERVE AS 'READ' FOR COF REPORT... According to the average pre-report trade guesses, traders look for Friday afternoon's Cattle on Feed Report to show On Feed at 93.9%, Placements at 99.1% and Marketings at 93.5% of year-ago levels. But the range of guesses for Placements is from 92.1% to 103.2% of year-ago. As a result, that category will serve as the "read" on the report.

But while the report will reflect a tightening supply situation, traders' focus is on demand. Once retailers begin to aggressively feature beef during the grilling season, the tight supply situation will become more of a focus and help support the cash market and futures.

Report expectations

Avg. Trade Guess


% of year-ago levels

On Feed










NWS 6-10 DAY FORECAST DRIER FOR WESTERN BELT... The National Weather Service (NWS) forecast for April 24-28 holds some promise that planting season will begin in early May. The forecast calls for below-normal precip across the western Corn Belt and most of Illinois, although below-normal temps are expected across the Plains and Midwest. Click here to view the maps.


CPC DOESN'T EXPECT REPEAT OF LAST SUMMER'S 'FLASH DROUGHT'... The Climate Prediction Center (CPC) expects further drought improvement across western Iowa, Minnesota and the eastern edge of the Plains states through the end of July. It says based on its extended weather models and climatology, a repeat of last summer's "flash drought" across the Corn Belt is not expected at this time.

"(Drought) improvement is forecast across eastern Kansas, eastern Oklahoma and northeast Texas, but prospects for drought improvement decrease farther southwest across the southern High Plains and south Texas. Some improvement is expected across the intense drought areas of the Northern/Central Plains, while improvement is more likely across the upper Mississippi Valley," it states. Click here for a related map.


EXTENDED WEATHER OUTLOOK WARM ACROSS MOST OF PLAINS AND MIDWEST... The CPC's outlook for May through July calls for above-normal temps from South Dakota southward and from Iowa eastward, which suggests some periods of extreme heat should be expected to stress crops. This is especially troubling if producers continue to have less-than-ideal planting conditions (cool and wet) this spring. A shallow-rooted crop needs timely rains through the growing season and warmer temps would increase the moisture demand for this year's crops.

The 90-day outlook also calls for below-normal precip across most of the area west of the Rocky Mountains, while chances for normal, below- and above-normal precip are equal across the remainder of the country.

Meanwhile, the outlook for May calls for above-normal temps across the Central and South Plains westward and for below-normal temps in North Dakota and northern Minnesota, with chances equal for normal, below- or above-normal temps elsewhere. Below-normal precip is expected in the Pacific Northwest and across the eastern Corn Belt. Click here to view the forecast maps.


ECONOMIC IMPACTS OF THE CHINESE BIRD FLU SITUATION... Feed demand in China's poultry industry may decline by 20% for the second quarter compared with year-ago as a result of the Chinese bird flu situation, according to the research firm Shanghai JC Intelligence Company. The firm says that sales of poultry products have declined by nearly 70% in April. The industry may not be able shake off the impact of this scare until late May or possibly even June the firm's managing director said in an interview with Bloomberg.

The Chinese government has recommended that citizens avoid contact with live animals; thus farmers are actively culling their chicken flocks. China National Grain & Oils Information Center (CNGOIC) says feed demand as the result of reduced poultry production may decline by 4.4 MMT, which includes 2 MMT of corn, should the situation extend into May.

The bird flu situation has also caused stirred concerns about the country's economic growth as it is disrupting a number of industries from factory production to restaurant sales to travel to meat production. Thus Goldman Sachs has warned of restrained domestic consumption over the short-term. A number of institutions have trimmed or are mulling a cut to their growth forecasts for China. For instance, BNP Paribas SA today cut its Chinese growth forecast for 2013 by 0.4 percentage points to 7.9% growth for the year. China's economy grew at a 7.7% growth rate for the first quarter.

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