Evening Report (VIP) -- December 27, 2012

December 27, 2012 09:50 AM
 

TRADERS PREPARING FOR HOGS & PIGS REPORT... Traders look for Friday afternoon's Quarterly Hogs & Pigs Report to show All Hogs & Pigs at 99.1%, Kept for Breeding at 99.3% and Kept for Marketing at 99.1% of year-ago levels. Traders expect farrowing intentions to be around one to two percentage points below year-ago levels as high feed costs have stalled expansion, but the pigs per litter category -- expected at 100.8% of year-ago -- should help to somewhat offset reductions in the breeding herd. Also key will be if USDA makes any revisions to past data since drought conditions changed some producers' plans since the last report.

Quarterly H&P Report Expectations

Avg. trade guess

Range

 

% of year-ago

All Hogs and Pigs

99.1

98.7-100.4

Kept for breeding

99.3

99.1-99.5

Kept for marketing

99.1

98.7-100.5

Sept-Nov pig crop

99.0

98.3-100.8

Sept-Nov pigs per litter

100.8

100.2-101.1

Sept-Nov farrowings

97.9

97.3-99.1

Dec-Feb farrowing int.

98.4

96.6-99.0

Mar-May farrowing int.

98.8

96.6-100.3

Hogs under 50 lbs.

98.4

97.0-100.1

Hogs 50 to 119 lbs.

99.0

98.6-99.8

Hogs 120-179

99.6

98.6-101.1

Hogs 180 and over

100.5

99.0-101.8

 

FISCAL CLIFF FEARS JOLT CONSUMER CONFIDENCE... The Conference Board reports its Consumer Confidence Index sank more than six points to 65.1 in December, which was much lower than investors expected. The drop was largely a result of consumers' unease about the pending fiscal cliff. This was the largest one-month drop since August of 2011. Lynn Franco, the board's Director of Economic Indicators, says a similar decline was experienced in August of 2011 during the debt ceiling discussions. "While consumers are quite negative about the short-term outlook, they are more upbeat than last month about current business and labor market conditions," she states. Click here for more.

 

DROUGHT MONITOR SHOWS SLIGHT IMPROVEMENT, BUT MORE PRECIP NEEDED... The National Drought Monitor notes that beneficial precip the past seven days brought much-needed precipitation to some drought areas, but much more is needed to rid long-standing precip-deficit areas of drought. "The drought depiction was improved where the heaviest precipitation occurred, but generally the precipitation this week was not enough to ease long-term deficits. Half an inch to an inch of precipitation fell over parts of the Rockies and intermountain basin," it states. "Two inches to over five inches of precipitation occurred over much of the West Coast, but generally not over drought areas. No precipitation was observed over parts of the Southern Plains, northern High Plains, Upper Midwest and southern Florida." Click here for related maps.

 

EPA'S JACKSON TO LEAVE CABINET POST... The head of the Environmental Protection Agency (EPA) announced she is stepping down after a nearly four-year tenure. EPA Administrator Lisa Jackson says she will leave after President Obama's State of the Union address in late January. Whomever President Obama selects to fill the role will have to be confirmed, which will draw out a number of questions by both Democratic and Republican farm-state lawmakers.

Washington Consultant Jim Wiesemeyer had this to say about Jackson's resignation: "In my recent speeches, when I said that she would likely leave, farmers clapped. So that shows you the attitude they had about her, right or wrong." Wiesemeyer explains that producers would like to hear a more moderate tone from an EPA administrator that recognizes that sometimes "regulations are more costly than they're worth."

 

HSUS HEAD NO LONGER SEEKING TYSON BOARD POST... The Humane Society of the U.S. (HSUS) President Chief Executive Officer Wayne Pacelle has withdrawn his attempt to gain a seat on the board of directors of Tyson Food, Inc. Pacelle announced in October he was seeking the seat to urge Tyson to phase the use of gestation stalls out of its supply chain. South Dakota Pork Producers President Andrew Arhart says he's pleased with that decision and believes the whole situation was just an attempt to grab headlines by the anti-ag group.

 

HOUSE TO RETURN SUNDAY... The House will return on Sunday for votes, and will possibly continue working through Jan. 2. House Majority Leader Eric Cantor (R-Va.) announced the return of the House in this message on Twitter: "The House will return for legislative business on Sunday, December 30. First votes are expected at 6:30 p.m." The Sunday session could be a last-ditch effort to pass a plan to avert the fiscal cliff, but no confirmation of an exact topic for Sunday's session has been announced.

President Barack Obama recently telephoned House Speaker John Boehner (R-Ohio), House Minority Leader Nancy Pelosi (D-Calif.), Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.), the White House says. McConnell's office says it was the first time the GOP leader has heard directly from a Democrat on the fiscal cliff talks since Thanksgiving.

Boehner spokesman Michael Steel quickly shot back, saying it was up to Senate Democrats to pass a bill that can avert the $500 billion worth of tax hikes and spending cuts poised to take effect if Congress doesn't act. "Sen. Reid should talk less and legislate more," Steel said. "The House has already passed legislation to avoid the entire fiscal cliff. Senate Democrats have not."

It is widely thought that Reid is unlikely to push a bill to avert the fiscal cliff without assurances from McConnell that Senate Republicans would allow the measure to proceed and that Boehner would allow a vote in the House.

Market reaction to word the House has been called back was predictable: Selling pressure on grain futures subsided, but the news came too late to help lift livestock futures. Equities posted sharp losses early in the day, but recovered to trade near steady in the final minutes of trade.

PF Perspective: Any deal voted on at this time will be just that... a deal. It will be a deal simply to prevent the biggest one-time tax increase in American history. A deal passed before the new 113th Congress takes over won't do anything to stem the deficit spending -- it will only prevent the wide-ranging tax increases and huge cuts to discretionary spending (including defense spending). That kicks the grand bargain further down the road. That legislation is coming... it has to be done. And after the "display" the current Congress has put on regarding taxes and spending, the new Congress has to understand the only way to make significant progress towards cutting the deficit is to slash entitlement spending. (That's when the real name-calling will get started.)

 

DAIRY FISCAL CLIFF IS UNLIKELY... Farm-state lawmakers for decades have always thought they had the "leverage" on other lawmakers and the executive branch if a new farm bill was not in store because if a new version was not in place by the start of a new year, "permanent (1949) legislation" would take effect, forcing a big increase in dairy price support, USDA dairy purchases and a major impact on milk prices.

USDA Secretary Tom Vilsack has been reticent to provide much information about the matter, but sources deep inside the Obama administration and Capitol Hill predict the dairy "fiscal cliff" would not occur Jan. 1 as farm-state lawmakers threatened. The reason, sources say, is that USDA has that ability to and should take the proposed rule route and ask for public comments on dairy policy provisions -- a timeframe that could take months if the administration wanted to delay the topsy-turvy events for dairy policy until a very anemic Congress could right itself on a host of matters they have let linger for 13 months.

But should the dairy fiscal cliff come about (because with this Congress nothing should be ruled out) USDA officials have indicated they have been reviewing a host of options (space to store dairy products, food aid, etc.), just in case. Get more details here.

 

2008 FARM BILL EXTENSION IS THE MOST LIKELY OPTION... It is clear that House Speaker John Boehner (R-Ohio) does not want to "simply" attach nearly 1,000 pages of farm bill language to whatever fiscal cliff package is eventually proposed and agreed to. The most likely scenario, sources signal, is some type of extension of the 2008 Farm Bill.

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