Evening Report (VIP) -- April 19, 2013

April 19, 2013 09:47 AM

CATTLE ON FEED REPORT: NEGATIVE... The combination of heavier-than-expected Placements and lighter-than-expected Marketings produced an On Feed number as of April 1 that was just over 1 percentage point greater than anticipated.

COF Report




% of year-ago levels

On Feed











In looking at the weight breakdown of calves placed into feedlots last month, all weight categories were up from year-ago. Notably, placements were up sharply in Kansas, Texas and Nebraska -- the three largest cattle states. Lightweight placements rose 5.1%, 6-weights were up 5%, 7-weights were p 8% and heavyweights were up 5.3%.

With all three categories coming in on the negative side of pre-report expectations, the data gets a negative read and is expected to weigh on cattle futures Monday.


MISSISSIPPI RIVER: FROM DROUGHT TO FLOODING CLOSURES... The U.S. Army Corps of Engineers today said that barge shipping on the Mississippi River was stopped today from central Iowa to northern Missouri. The Army Corps says flooding forced eight locks on this stretch of the river to close and that they will likely remain closed until the middle of next week. One of the locks near Marseilles, Illinois was forced to close after nine barges broke lose from a tow on Thursday, striking the dam.


DAMAGE FROM HARD FREEZE BEING ASSESSED... Meteorologist Gail Martell of MartellCropProjections.com says with very little of the HRW wheat crop heading, damage to the crop from overnight temps dipping well below freezing should be relatively minimal. "Hard red wheat conditions have worsened but only slightly in April," she says. "We may have expected worse conditions from episodic freezes. The new condition report due Monday may show a drop, reflecting freeze damage in more developmentally advanced wheat, as jointing progresses into heading. Only 1% of wheat was headed April 14, the most susceptible period for severe freeze damage."

Martell notes "unusual and persistent cold" lingers due to a complex of ridges and troughs that extend all the way back to Kamchatka Russia. "Ridges of warm air are situated between the cold troughs extending halfway around the Hemisphere... Warming in the U.S. heartland may not be in the cards until early May," she notes.

Meanwhile, poor crop conditions as the hard red winter wheat crop broke dormancy earlier this spring, drought conditions and two April freeze events reportedly encouraged Informa Economics, Inc. to lower its 2013 winter wheat crop estimate. Informa now reportedly puts the winter wheat crop at 1.581 million bu., down 51 million bu. from the firm’s previous estimate.


FLOOR PASSAGE A CHALLENGE FOR COMING HOUSE AG PANEL BILL... The Senate Ag Committee will likely hold its markup the week before an apparent House Ag Committee plan for its May 15 markup, sources indicate. Of note, veteran congressional sources alert that Senate Majority Leader Harry Reid (D-Nev.) this year may want the full House chamber to go first on the farm bill, unlike last year when the Senate had an extended floor debate and passed its farm bill, only to see the full House never consider the measure.

As for the House, the key role of any panel chairman is to make sure whatever comes out of the committee (in this case the Agriculture Committee) is able to get passed by the full House. That is harder than farm bill proponents either understand or care to admit. And that was the key reason Cantor and other GOP leaders did not schedule House floor action on the farm bill in 2012 -- the votes simply were not there due to food stamp funding level issues, among other problems with the program.

A more liberal Democratic-member House Ag Committee and the full House Democratic Caucus likely mean that only 30 to 40 House Democratic members would sign off on coming food stamp details. Taking the high end of that range, that means House Ag Panel Chair Frank Lucas (R-Okla.) and farm group lobbyists would have to garner 180 Republican votes -- no easy task because more than a few conservative Republicans want far more aggressive funding cuts and program changes in the food stamp (SNAP) program than what is likely to come out of the House Ag Committee markup vehicle.

The level of nutrition program cuts that are eventually a part of a new farm bill will likely be determined via an agreement between congressional leaders and the Obama administration. That could certainly make the May 15 markup an interesting one. Get more details.


RACTOPAMINE ISSUE STILL PERCOLATING WITH RUSSIA... Russia earlier this week limited the number of plants in Canada that they will accept meat imports from, trimming the number to 18 from a prior 60 that had previously been approved. As for the U.S. situation, Rosselkhoznadzor Chief Sergey Dankvert says he now has had correspondence from the USDA Food Safety and Inspection Service on the topic. According to reports, the two sides are discussing a potential visit to U.S. slaughter facilities by Russian inspectors starting May 13. Those visits would last two weeks, according to a statement from Dankvert, but he indicated that the visits may not result in a resumption of U.S. meat exports.

Dankvert labeled the U.S. actions a "positive development." However, he also noted that approval of the inspection timing would also have to be given by Belarus and Kazakhstan, the two countries along with Russia that formed a Customs Union. That approval could take up to two months, Dankvert indicated.

The issue will continue to linger – likely for as long as Russia wants it too. That is the sad history of similar trade-related issues with the country. Sen. Chuck Grassley (R-Iowa) recently wondered aloud whether the U.S. should file a World Trade Organization case against Russia. That's an easy decision -- yes. Also note what the Russian official indicated about Belarus and Kazakhstan. That signals we are far from the endzone on the matter. Learn more.


ACTIVE WEEK IN OUTSIDE MARKETS INFLUENCES GRAIN MARKETS.... High price volatility in outside markets like gold futures and the U.S. dollar index and its influence on the grain markets was the topic of this week's Pro Farmer Profit Briefing on AgDay TV. Click here to view the clip.

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