Evening Report (VIP) -- January 22,2013

January 22, 2013 08:43 AM

COLD STORAGE: BEEF AND PORK STOCKS ABOVE EXPECTATIONS... USDA reports total beef stocks in frozen storage at the end of December of 465.5 million pounds. That was above pre-report expectations of 449.2 million lbs., and 2% above year-ago and 5% higher than end-of-November stocks. Pork stocks in frozen storage came in at 554.4 million lbs., which topped pre-report expectations of 527 million pounds. Pork stocks were down 1% from the previous month, but 14% above year-ago.

Total frozen poultry supplies were up 5% from the previous month and 16% higher than year-ago at 976.8 million pounds. Therefore, the market has a larger supply on total meat in frozen storage compared to year-ago to deal with, which could weigh on the product markets.



CONSULTANT LEAVES BRAZILIAN CROP ESTIMATES UNCHANGED... South American crop consultant Dr. Michael Cordonnier left his estimates of Brazil's soybean and corn crops unchanged at 81 MMT and 70 MMT, respectively. He says there have been conflicting reports of the trend of the soybean crop, but for now, improved conditions across central and northeastern Brazil are offsetting drier conditions in southern Brazil.

Meanwhile, he reports 10% of the corn crop in Rio Grande do Sul has been harvested and yield reports indicate better-than-trendline yields. "If the full-season corn yields continue to come in better than expected, then we may have to increase the corn estimate a few million tons," he says. "On the other hand, the timing of the end of the rainy season will have a huge impact on the safrinha corn crop, which is slated to be bigger than the full-season corn crop."



DRY WEATHER A CONCERN FOR ARGENTINE CROPS... Dr. Cordonnier left his estimates of Argentine's soybean and corn crops at 53 MMT and 22.5 MMT, respectively, but says the soybean crop estimate could move lower if recent dryness continues.

"At this point I don't think the dry weather is having a dramatic impact on the soybean crop, but that could change if the drier pattern becomes entrenched," he says. "The Argentine soybean estimate was left unchanged this week at 53 MMT, but the estimate could easily move lower in the future. There is a real dichotomy with the crops in Argentina this year for both soybeans and corn. If the crop was planted early and it did not encounter flooding conditions, then it is doing very good and will be able to withstand a short period of dry weather without significant damage. The later the crops were planted, the more susceptible they will be to lower yields due to the drying conditions."



MARTELL: WEAK LA NINA SIGNAL EMERGING... Meteorologist Gail Martell of MartellCropProjections.com says a weak La Nina signal is emerging, but for a full-fledged La Nina to occur the sea surface temperature anomaly must fall below the -0.50 C threshold. Presently, conditions are considered ENSO-neutral with sea surface temperature anomalies near -0.40 C.

"With ENSO-neutral conditions, showers are possible in the Southern Great Plains. The five-day forecast calls for light to moderate moisture in the Southern Great Plains. The southern jet stream would carve out a deep trough over the southwest United States, spinning out waves of showers into the Southern Great Plains. Precipitation from .10 to .40 inch is predicted in hard red winter wheat in the updated outlook," she says. Click here for more.



CME GROUP REVIEWING EXPANDED TRADING HOURS... CME Group today announced it will begin the process of reviewing its expanded trading hours to ensure customers' needs are met. "CME Group will engage participants on CBOT grain and oilseed trading hours, which were expanded to 21 hours per day in May of 2012, through one-on-one conversations, customer focus groups and an online survey. The survey will be made available to participants on CME Group's website from Tuesday, January 22 through Thursday, January 31," it said in an official announcement. Click here for a link to the survey and more details.



REID MAKES FARM BILL A PRIORITY IN POLITICALLY CHARGED MOVE... Senate Majority Leader Harry Reid (D-Nev.) today introduced the Senate-passed version of the farm bill as one of several privileged, top-priority bills. Senate Ag Committee Chairwoman Debbie Stabenow (D-Mich.) applauded Reid for his commitment to making a new farm bill a priority for this Congress. This move was not surprising and Reid's action had a very political angle: Democratic senators know House GOP leaders want to take a go-slow approach to the farm bill; thus, this puts farm bill focus in the Senate. Get more details.



JAPAN TO EASE BEEF IMPORT RESTRICTIONS NEXT MONTH... Cattle futures received a boost from reports Japan's health minister, Norihisa Tamura, today said the Japanese government will ease beef import restrictions for the U.S. and Canada effective Feb. 1. The change would allow Japan to import beef from cattle aged up to 30 months, whereas the current upper age limit is 20 months. The U.S. Meat Export Federation has said Japan's Ministry of Health, Labor & Welfare is in the final stages of approving the change, but it has not yet confirmed any such announcement.


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