Evening Report (VIP) -- February 10, 2014

February 10, 2014 08:42 AM

USDA reports increase daily price volatility... Today's USDA February Supply & Demand (S&D) Report resulted in a volatile day of price action, with corn settling near session lows, while wheat and soybeans ending mostly mid-range. USDA trimmed 2013-14 corn and wheat carryover more than expected, while leaving soybean carryover unchanged. Click here for more, including an audio summary of the report.


USDA raises cash steer, hog prices... USDA raised its average 2014 cash steer and hog prices in this morning's S&D Report. While USDA raised its 2014 beef production forecast marginally, it raised its average cash steer forecast by $2 on both ends of the range from last month of $132 to $140, which compares to an average price of $125.89 in 2013. USDA raised its average cash hog projection by $1 on both ends of the range to $61 to $65, compared to an average of $64.05 in 2013.

USDA says the higher cash steer price reflects expected tight supplies compared to 2013 and recent price strength for fed cattle, while the higher hog price forecast is due to reduced supplies of market hogs and strong demand. USDA lowered its 2014 pork production forecast to now be just marginally higher than 2013 due to indications PEDV continues to spread.


Martell: Talk of potential El Nino premature... Meteorologist Gail Martell of MartellCropProjections.com says recent outlooks that see potential for El Nino to emerge this summer are premature, especially with La Nina signals strengthening. She notes sea surface temperatures last week fell 0.65 C below normal in the region where ENSO conditions are monitored.

Martell says the question is if the La Nina signal has strengthened, why has eastern Australia been so dry? "Interestingly, the Eastern Australia forecast has suddenly become wet, consistent with a strengthening La Nina signal. In the U.S., the La Nina effect causes extreme cold in winter, also consistent with the current weather conditions," she notes.

"This is a climate fluctuation, not related to week-to-week changes in weather patterns. In a full-fledged La Nina, specific weather patterns develop that promotes very heavy rainfall in Eastern Australia and throughout the Indonesian Basin. At the same time Argentina typically is dry," she adds. Click here for more.


Attache: Chinese trade issues likely to persist or worsen... The U.S. ag attache in China, in a report that outlined the situation in which the country began to rejecting shipments of U.S. corn due to detection of the unapproved biotech MIR 162 trait, says there is no quick fix to the situation.

"China’s slow and unpredictable biotechnology regulatory system, combined with a lack of a low level presence policy for unapproved biotechnology events, has created a challenging environment for agricultural imports that is likely to persist or worsen," says the attache, who predicts China's corn carryover in 2013-14 will be the highest in over a decade at 76.5 MMT. Click here for more.


Beef exports hit new record for 2013... Beef exports for 2013 surpassed the $6 billion mark for the first time, hitting a new annual value record, according to U.S. Meat Export Federation (USMEF) analysis of USDA data. Also of note, the U.S. export value per head hit an annual record of $244.96 per head of fed slaughter, which is up $28.23 from last year. Beef exports surged 13% over year-ago in terms of volume and 20% in value in December relative to the year prior. USMEF attributes this to sales growth in Japan, Mexico, Hong Kong and Central/South America. For the year, beef exports were up 3% in volume to 1.17 MMT and 12% in value to $6.157 billion.

Pork exports, on the other hand, declined relative to 2012's record highs, USMEF reports. While pork exports topped $6 billion for the third straight year, exports declined 5% in terms of volume (to 2.14 MMT) and 4% in terms of value (to $6.05 billion) relative to 2012's record-setting year. "Mexico, Central/South America and the ASEAN region posted strong results in December to bring the month’s totals up slightly from year-ago levels," USMEF reports.

Reflecting on 2013, USMEF President and CEO Philip Seng said, "2013 presented a new set of challenges." Specifically, he noted, "Last year, the closure of the Russian market to U.S. red meat products and our continued absence from the dynamic beef market in the People’s Republic of China stand out. And there were challenges in other markets, ranging from Indonesia to Saudi Arabia. The industry is focused on these challenges and USMEF is targeting the markets where we have the best chance of succeeding and creating a positive return for American producers and exporters."


House Republicans to meet on debt ceiling strategy... House GOP leaders have called a special meeting of their conference tonight at which they plan to present and discuss a plan regarding what policy provisions to attach to a measure to raise the $16.7 trillion debt ceiling, which the nation hit on Friday. The Hill cites a senior GOP aide as saying one of the most likely policy additions to the bill is a reversal of military pension cuts that came with the December budget deal. Another possibility would be a short-term "doc fix" reversal regarding doctor fee cuts under Medicare. Minority Leader Nancy Pelosi (D-Calif.) has said increasing the nation's borrowing limit must come free of other provisions, which is similar to the stance of the president.

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