Evening Report (VIP) -- February 1, 2013

February 1, 2013 08:55 AM
 

CATTLE INVENTORY REPORT: HERD REBUILDING HAS STARTED... The U.S. cattle herd as of Jan. 1 at 89.3 million head was the smallest since 88.1 million head in 1952. The 2012 calf crop at 34.3 million head was the smallest since 33.7 million head were born in 1949. While both categories were slightly below the average pre-report guesses, neither was a major surprise.

The surprise in this report came from beef replacement heifers, which came in 2% above year-ago, signaling cattle producers have started rebuilding their beef herds. Much of the heifer retention is in areas outside of the Plains, with the exception of Texas, which had a heifer retention rate 9.1% greater than year-ago despite severe drought conditions. With more heifers being held back for breeding purposes, it points to less market supplies, which keeps the cattle market on pace for a 10-year cycle high later this year.

With the cattle inventory and calf crops coming in lower than anticipated and the start of herd rebuilding, the report data is bullish for cattle futures. This should help cattle futures build on this week's rebound off the recent lows.

 

Semiannual Cattle Inventory Report

USDA

Avg. trade guess

Range

% of year-ago

All cattle & calves

98

98.2

97.2-99.0

Annual calf crop

97

97.9

97.4-98.8

Total Cows/heifers calved

98

98.7

97.2-100.5

beef cows/heifers calved

97

98.5

96.4-100.7

milk cows/heifers calved

100

99.3

98.3-100.0

Heifers 500 lbs. and over

99

98.0

96.5-99.0

Beef replacement heifers

102

99.6

92.1-103.0

Milk replacement heifers

98

99.2

97.8-100.3

Other heifers

97

96.5

93.9-98.1

Steers 500 pounds and over

100

97.8

97.4-98.4

Bulls 500 pounds and over

98

97.3

95.0-99.5

Calves under 500 pounds

98

97.5

97.3-97.7

 

 

RUSSIA MAY SCRAP GRAIN IMPORT DUTY... As we reported earlier, Russia is considering suspending its 5% duty on grain imports to help alleviate rising domestic prices. Today, Russia's economy minister proposed the grain import duty be scrapped until Aug. 1. No timeline for a decision on the proposal is known, but Prime Minister Dmitry Medvedev is reportedly holding a meeting to discuss the grain situation next week.

Perspective: This would not directly increase demand for U.S. wheat, but it would make wheat from Europe more attractive, which could free up some additional global business for U.S. supplies. Russia is already importing duty-free grain from neighboring Kazakhstan.

 

 

UNEMPLOYMENT EDGES UP AS ECONOMY ADDS 157,000 JOBS IN JANUARY... This morning's employment report from the Department of Labor showed 157,000 non-farm payrolls increased in January, which came in just below expectations of around 160,000 to be added. The unemployment rate edged up from 7.8% to 7.9%. But offsetting the rather ho-hum data for January was a combined increase of 127,000 payrolls for November and December. Despite the uninspiring jobs data and disappointing gross domestic product for the fourth quarter (released earlier this week), investor attitudes are strong. Today the Dow Jones Industrial Average topped 14,000 for the first time since October 2007.

 

 

PUBLIC COMMENT PERIOD OPENS ON 'SMART SNACKS IN SCHOOL'... USDA today announced the public comment period has opened on the "Smart Snacks in School" proposed rule that is aimed at ensuring children have access to healthy food options in school. The Healthy, Hunger-Free Kids Act of 2010 requires USDA to establish nutrition standards for all foods sold in schools -- beyond the federally-supported school meals programs. This proposed rule is the first step in the process to create national standards.

Once the rule is published in the Federal Register, which is expected next week, the public will be able to provide feedback through www.regulations.gov for the next 60 days. The text of the proposed rule is available at http://www.fns.usda.gov/cga/020113-snacks.pdf.

 

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