Evening Report (VIP) -- December 28, 2012

December 28, 2012 08:50 AM

HOGS & PIGS REPORT: BEARISH...Traders expecting the Quarterly Hogs & Pigs Report to show contraction in the pork industry are disappointed by most categories coming in near year-ago levels -- pointing to at least-steady pork production in 2013. With a steady breeding herd and another increase in the number of pigs per litter, pork production will likely increase in the year ahead. As a result, the report is getting a bearish read and is expected to weigh on futures when traders return on Monday.

The report showed All Hogs & Pigs, Kept for Breeding and Kept for Marketing at 100% of year-ago levels. The same was true for all market hog weight categories. The report also showed the Sept.-Nov. pig crop equal to year-ago and pigs per litter at 101% of year-ago levels to reflect continued efficiency gains.

Where it gets interesting is in the farrowing intentions categories. Traders had expected the report to reflect farrowing and farrowing intentions two to three percentage points lower than year-ago, and the report showed intentions steady to two percentage points below year-ago. This signals high feed costs have not yet begun to dramatically impact producers' plans.

USDA made adjustments of less than one half of one percent to the September 2012 total inventory. However, the March-May 2012 pig crop was revised UP by 2.16%, to 30.077 million, to now stand at 102.8% of year-earlier levels. Most of those hogs have been marketed, but it indicates the slaughter surge in September didn't include sows.

Quarterly H&P Report


Avg. trade guess


% of year-ago

All Hogs and Pigs




Kept for breeding




Kept for marketing




Sept-Nov pig crop




Sept-Nov pigs per litter




Sept-Nov farrowings




Dec-Feb farrowing int.




Mar-May farrowing int.




Hogs under 50 lbs.




Hogs 50 to 119 lbs.




Hogs 120-179




Hogs 180 and over





2012 CROP INSURANCE INDEMNITIES HIT $9.6 BILLION... Indemnities under the federal crop insurance program total $9.655 billion as of Dec. 24, pushing the loss ratio for the program overall to 0.87, nearing the 0.91 level seen on the record payouts for 2011 crops, according to Risk Management Agency data. At this point last year, indemnities totaled $7.9 billion on their way to a record of $10.839 billion.

Corn continues to lead the indemnity totals, with $5.87 billion paid out. Thus far, Illinois is the only state so far that has seen more than $1 billion in payouts, but other Corn Belt states are not far behind. Soybean payouts increased to $1.236 billion. Get more details.


MAJOR PORT STRIKE AVERTED... The threat of a major strike by dock workers this weekend that we reported in "First Thing Today" has been averted, according to the Federal Mediation and Conciliation Service (FMCS). Labor and management representatives at 15 container ports along the Gulf and East Coasts reached a deal on a key provision and extended their contract talks to Jan. 28. FMCS Director George Cohen says the International Longshoremen's Association and U.S. Maritime Alliance of terminal operators reached an agreement in principal Thursday on a container royalties issue that had kept the two sides apart, subject to completion of a final overall contract accord. Learn more.


SENATE AG PANEL LEADERS FINALLY CONSIDER 2008 FARM BILL EXTENSION... With little time remaining in 2012 and odds all but nil for a new farm bill to be completed, Senate Ag Committee Chairwoman Debbie Stabenow (D-Mich.) and Ranking Member Pat Roberts (R-Kan.) are now looking at the prospect of extending the 2008 Farm Bill -- something Stabenow has completed resisted until now.

Stabenow told Congressional Quarterly that they are talking with all the leaders about what a short-term extension would look like, but noted, "The challenge is we have 37 programs that have no baseline to be extended." Stabenow says if Congress approves a farm bill extension her intent "would be to immediately do a markup in the new year and get a farm bill done. I am sure it would be February." Stabenow says she would like a short-term extension, but gave no timeframe.

But there appears to be differences between Stabenow and Roberts on what the extension should include. "You could have a clean extension or you could have an extension adding some things in, which I think would be more difficult. If you tried to add something in for one specific crop or one specific area, what do you do for the rest of them?" asked Roberts, according to CQ. "I would hope that we don't do one particular section of the farm program and leave the rest. We might as well do a clean one or do the farm bill," he continued.

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