GREENNESS MAPS REFLECT OUR CONCERNS WITH THE IOWA CROP... There's no doubt we're looking forward to scouting northern Iowa and southern Minnesota on the Pro Farmer Midwest Crop Tour, which begins Aug. 19. As we noted last week from an aerial view of the area, there are a lot of "holes" in the crop. The Kansas Applied Remote Sensing (KARS) GreenReport Greenness maps also echo our concerns with this area, as the greenness map reflects this is an area of "vegetative stress." Click here for more.
FORECAST INCLUDES REDUCED RAINFALL FOR CORN BELT... Meteorologist Gail Martell of MartellCropProjections.com says updated weather models call for less rain over the Midwest than previously indicated. While heavy rains are still in the forecast for the central Plains and Mid-South along an unstable front, the forecast for the Corn Belt isn't as wet. Martell says rainfall the next five days will be less than 0.50 inch for the Midwest, with some of the drier areas expected to miss out completely on the rains. However, the forecast continues to call for below-normal temps across the Corn Belt, which is a threat to late-planted crops, she says.
RED MEAT EXPORTS PICKUP IN JUNE... According to USDA data compiled by the U.S. Meat Export Federation, beef and pork exports were the best of the year in June in terms of volume and value. Pork exports of 169,098 MT were up 2.4% from May, valued at $469.7 million, which was up marginally for the month. Beef exports of 101,720 MT were up 8%, valued at $562.3 million, which was up 21% from May.
Japan was the lead destination for beef exports and Mexico remains as the lead destination for pork exports. USMEF president and CEO, Philip Seng, says Russia continues to be a challenge for red meat exports and the group continues its relationship-building process.
Year-to-date beef exports are down 1% in terms of volume at 542,560 MT, but are 6% higher in terms of value at $2.83 billion. Year-to-date pork exports are down 7% in terms of volume and value at 1.05 MMT and $2.94 billion, respectively. Click here for more details.
ETHANOL PRODUCTION IMPROVES... For the week ended Aug. 2, the Energy Information Administration reports ethanol production averaged 853,000 barrels per day (bpd), which is up 21,000 bpd from the previous week. Ethanol stocks of 16.7 million barrels grew by 263,000 barrels from the previous week to 16.72 million barrels. Gasoline demand of 388.3 million gallons daily was the third-highest weekly rate of the year.
PF MIDWEEK MARKETING GAME PLAN UPDATE...
CORN: Hedgers and cash-only marketers are 100% sold in the cash market on the 2012-crop. You should be current with that advice. For 2013-crop, hedgers and cash-only marketers have 25% of expected 2013-crop production sold via cash forward contracts for harvest delivery. Hedgers should be prepared to add light hedge coverage ahead of USDA's Aug. 12 Crop Production Report if there's a solid pre-report corrective bounce. But we don't want to chase the market lower into the report as prices have been beaten down hard and attitudes are already extremely bearish.
BEANS: Hedgers and cash-only marketers are 100% sold in the cash market for 2012-crop. With recent price action signaling a top is clearly in place for old-crop beans, you should be current with that advice. For 2013-crop, hedgers and cash-only marketers have 20% of expected 2013-crop production sold via cash forward contract for harvest delivery. Be prepared to add light hedge coverage if futures post solid corrective gains ahead of USDA's Aug. 12 Crop Production Report. But we don't want to chase the market lower. The biggest difference between corn and soybeans is that funds are still long soybeans. If funds decide to build a short position, this market is a ways from bottoming -- both in price and time.
WHEAT: Wheat futures ran out of gas trying to pull corn and soybeans higher and the market could face the next leg of price pressure. Hedgers should be ready to add hedge coverage if the corn and soybean markets continue to fade and pull wheat lower.
COTTON: All of 2012-crop has been sold in the cash market. For 2013-crop, hedgers and cash-only marketers have 50% of expected production sold via cash forward contract for harvest delivery. Hedgers also have 50% of expected production hedged in December cotton at 83.87 cents. We'll maintain this hedge coverage unless there's a shift in fundamentals that dramatically changes the price outlook.
CATTLE: Fed cattle producers should keep all risk in the cash market. The cash cattle market should start to firm seasonally once the boxed beef market puts in a low. There are also indications attitudes have improved marginally as traders are wanting to keep futures at a mild premium to the cash market. The big premium feeder cattle futures hold to the cash index is the only thing keeping us from pulling the trigger on long hedge coverage for feeder cattle buyers as we believe prices are headed higher amid tight calf supplies and falling feed prices.
HOGS: Hog producers have 50% of expected 4th-qtr. production hedged in Dec. lean hog futures at an average price of $82.12 1/2. Be prepared to use the recent price strength to heavy up 4th-qtr. coverage and to add 3rd-qtr. hedge coverage in Oct. lean hog futures and 1st-qtr. 2014 coverage in Feb. lean hog futures.
FEED: Continue to carry corn-for-feed risk in the cash market for now as attitudes are bearish and prices are sliding. The sharp break in soybean meal prices will eventually be a buying opportunity, but we will wait for a low before adding long coverage.