Evening Report (VIP) -- January 16, 2013

January 16, 2013 09:17 AM
 

WEEKLY ETHANOL PRODUCTION FALLS... U.S. ethanol production slowed to 784,000 barrels per day (bpd) for the week ended Jan. 11, according to the Energy Information Administration. Weekly ethanol production declined 42,000 bpd from the previous week and was the lowest level since the agency started releasing weekly data in June 2010. Ethanol stocks rose 507,000 barrels to 20.36 million barrels despite slowed production.

Meanwhile, Abengoa SA, a Spanish renewable energy company, temporarily idled output at ethanol plants in York and Ravenna, Nebraska, until market conditions improve.

 

 

LUCAS: STOP THE FARM POLICY GUESSING GAME... House Ag Committee Chairman Frank Lucas (R-Okla.) today said that farmers and ranchers have been denied the certainty a new farm bill would provide and that lawmakers "need to stop the guessing game about farm policy for the 2013 crop year, especially with respect to direct payments." Acknowledging that producers are currently in the process of making spring planting decisions and securing loans, Lucas continued "I fully expect sign-up for the 2013 crop year -- including direct payments -- to begin as soon as possible," and he pledged that the five-year farm bill the House Ag Committee will mark up will honor the extension of the 2008 Farm Bill to cover 2013 crops. Read his full statement.

 

 

FREEZES DAMAGE MEXICAN CORN, SORGHUM CROP... Mexico's Ag Ministry today said it expects that an ongoing freeze in the northern states of Sinaloa and Sonora will damage the country's corn and sorghum crops among others, but it's too early to say to what extent. Sinaloa is the country's largest corn grower with production in excess of 5 MMT. While this is not overly concerning from a global production standpoint (Mexico largely grows white corn for use in tortillas), it does signal the country may need to import corn if freeze damage is extensive.

 

 

PF MIDWEEK MARKETING GAME PLAN UPDATE...

CORN: Hedgers are 100% sold in the cash market, with cash-only marketers 75% priced on 2012-crop. Let the recovery rally play out before getting caught up with advised sales if you aren't already current. Tough resistance for March corn futures is in the $7.65 to $7.75 range. Stay patient on 2013-crop sales for now, but be ready to make initial new-crop sales when the price recovery stalls.

BEANS: Hedgers are 100% sold in the cash market, with cash-only marketers 75% priced on 2012-crop. Hedgers and cash-only marketers should wait to get current with advised cash sales until the corrective rebound shows signs of stalling. Unless Argentine crop concerns heighten, it will be tough for futures to clear the December and November highs. Stay patient on 2013-crop sales for now, but be prepared to make initial sales on the price recovery.

WHEAT: Hedgers and cash-only marketers have 75% of 2012-crop sold in the cash market. With futures signaling a short-term low is in place, let the recovery rally play out before getting current with advised old-crop sales. Be prepared to make initial 2013-crop sales on an extended price recovery. But we don't want to get too aggressive with old- or new-crop sales at this stage given U.S. and global crop concerns.

COTTON: Hedgers and cash-only marketers have 50% of expected 2012-crop production sold in the cash market. With futures making a run at resistance at the top of the extended, sideways range, wait to get current. The likelihood of a sharp drop in cotton acres next year is keeping us from advising 2013-crop sales at this time.

CATTLE: Live cattle futures have put in a short-term top and more near-term price pressure is likely. But fed cattle producers should continue to carry all risk in the cash market as tightening supplies limit downside risk. Feeder cattle buyers and sellers should also carry all risk in the cash market for now

HOGS: Hog producers should continue to carry risk in the cash market. Buyers continue to show up on price breaks in nearby futures. Spring- and summer-month futures are showing greater signs of a top.

FEED: Get current with advised feed coverage. 25% of 1st-qtr. corn needs are covered in long March corn futures at $6.87 and 25% of 2nd-qtr. corn needs are covered in long July corn futures at $6.78 3/4. 25% of 1st-qtr. protein needs are covered in long March soybean meal futures at $395.30, and 25% of 2nd-qtr. protein needs are covered in long July soybean meal futures at $388.00.

 

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