Cattle on Feed Report: Friendly compared to expectations... As of April 1, U.S. feedlot inventories totaled 10.860 million head, according to USDA's monthly Cattle on Feed Report. That was roughly 70,000 head less than the average pre-report guess implied traders were expecting. While Marketings last month at 4% under year-ago were slightly less than anticipated, Placements dropped a greater-than-expected 5%, pulling the On Feed number slightly lower than year-ago and the average pre-report guess.
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Avg. Trade Guess
% of year-ago levels
|On Feed|| |
A breakdown of calf movement into feedlots during March shows only lightweight placements increased at 3.7% above year-ago. Six-weight placements dropped 7.9%, 7-weight placements declined 13.1% and heavyweight placements fell 1.4% from year-ago levels last month. Placements in Kansas and Texas declined markedly from year-ago, down a combined 95,000 head from year-ago.
The report data should be supportive for deferred live cattle futures Monday as the Placements number was below the bottom end of the guess range. But nearby futures may be pressured by lower cash cattle trade in the Plains.
Forecast stays cool, but drier weather now expected in early May... The National Weather Service forecast for May 1-5 continues to show below-normal temps over the eastern two-thirds of the United States. But the precip outlook is drier than previous model runs. Normal to below-normal precip is expected during the period over the entire Corn Belt, with the driest conditions expected to be in southern areas of the region. Drier weather could prompt some producers to plant corn even though soil temps may be lower than preferred due to cool weather.
The forecast isn't overly promising for the hard red winter wheat crop as below-normal precip is expected to be seen in the Southern Plains.
IGC trims 2014-15 global total grain carryover peg... The International Grain Council trimmed its outlook for 2014-15 global total grains (wheat and coarse grains) carryover by 12 MMT from last month to 390 MMT, which is equal to the current marketing year's peg. IGC lowered 2014-15 global wheat carryover by 3 MMT from last month to 187 MMT, which is 3 MMT lower than the current marketing year. It also trimmed global corn carryover by 8 MMT from last month to 163 MMT, which is up 5 MMT from the current marketing year. IGC left its 2014-15 global soybean carryover peg unchanged at 27 MMT, which is up 1 MMT from 2013-14.
IGC trimmed its global 2014-15 corn production forecast by 11 MMT from last month to 950 MMT, which, if realized, would be down 15 MMT from 2013-14. It says corn planting delays in the U.S. raise the likelihood of more acres switching to soybeans.
Regarding the 2014-15 global wheat crop, IGC says while "there are some persistent concerns over less-than-ideal crop conditions, especially for winter wheat in the U.S., overall availability and 2014-15 wheat crop prospects remain generally good."
The corn market has bounced this week on concerns that corn planting delays in the Midwest will linger into May, but it's still too early to count on a switch in corn acres to soybeans at this time. While it's not surprising the market responded to weather concerns, IGC is using corn planting delays in the U.S. as reasoning behind an 11-MMT drop in global corn production after the crop rebounded from significant and "real" corn planting delays last year. It's just too early to plug planting delays into a balance sheet.
Corn ethanol RFS level for 2014 could be over 13.5 billion gallons... EPA’s November 2013 proposed Renewable Fuels Standard (RFS) volume requirements put the corn-based ethanol component at 13.01 billion gallons, but indications are that level in the final plan from EPA could be over 13.5 billion gallons. Recently, EPA Administrator Gina McCarthy has suggested the corn-based ethanol volume level could rise from the agency's proposed mark.
Washington Consultant Jim Wiesemeyer says his sources indicate the volume could go over 13.5 billion gallons but would be less than 14 billion gallons. The 2007 energy law mandates 14.4 billion gallons and the 2013 RFS corn-based ethanol levels was 13.8 billion gallons. Other contacts have indicated one cannot rule out an increase in the biodiesel portion of the RFS as well in the final 2014 volume requirements.
EPA has indicated the final volume decision would be released sometime in June.
Food price outlook notes PEDV... Food inflation forecasts is expected to remain steady at a 2.5% to 3.5% rise in 2014, according to USDA's Economic Research Service (ERS), but economists did note the porcine epidemic diarrhea virus (PEDV) is having an impact. PEDV "has reduced hog inventories somewhat, and pork demand is up due to record beef prices," ERS explains.
Vermont lawmakers pass GMO labeling law... Vermont's legislature passed a bill this week that would mandate labels for foods made with genetically modified organisms (GMO) as having been produced with "genetic engineering." The state's governor tweeted that he plans to sign the bill. The measure would also make it illegal for foods containing GMOs to be labeled "all natural" or "natural." The law will take effect July 1, 2016.
Vermont would be the first state to require such labeling. Connecticut and Maine have passed GMO labeling bills, but their implementation hinged on other states passing similar laws. The Vermont bill included a legal defense fund in anticipation of the many challenges that are expected. Reuters points out that food companies may respond to the labeling law by stopping sales to grocery stores in the state, with limited impact to their bottom line. The population of Vermont is small at around 626,000 people, according to the latest census data.
Nevertheless, this along with labeling efforts in at least 20 other states signal this issue is not likely to fade anytime soon. Also signaling heightened attention to this issue is a bill proposed by federal lawmakers that would enact a voluntary GMO labeling plan guided by the Food and Drug Administration (FDA) that would override state laws. Get more details.
Crops Analysis (VIP) -- April 25, 2014
Cattle Outlook: Fewer Cattle on Feed Than Last Year