Cold Storage Report: beef stocks less than expected, pork stocks top expectations... Beef stocks in frozen storage on Dec. 31 totaled 438.123 million lbs., which was around 13.3 million lbs. less than the average trade guess of 451.4 million pounds. Beef stocks declined 12.6 million lbs. from November and came in 27.6 million lbs. less than December 2012. The drawdown in beef stocks came amid tight market-ready cattle supplies, but also suggests demand to close out last year wasn't hurt by rising beef prices.
Pork stocks at the end of December totaled 557.130 million lbs., which was around 8.9 million lbs. more than anticipated. Pork stocks rose 10.9 million lbs. from November and 5.6 million lbs. from year-ago. Record kill weights created more product.
Total poultry stocks came in at 913.665 million lbs., which was down 32.4 million lbs. from November and 61.6 million lbs. less than year-ago. Given record beef prices, demand for poultry appears to be on the rise.
Argentina's seven-day weather forecast is wet... Buying in soybean futures was limited to short-covering today in reaction to improved moisture chances for Argentina. Meteorologist Gail Martell of MartellCropProjections.com verifies the wet seven-day forecast. "This heavy rain would follow on the heels of a strong wave of showers that moved through the grain belt the past 48 hours with a progressive cool front," she says.
"There's no question, corn and soybeans have perked up with recent rain, and may improve further with more rain in the week ahead. Yet Argentine corn and soybeans are still significantly worse than a year ago," she says, pointing to satellite vegetation imagery.
Oil begins flowing through southern part of the Keystone XL pipeline... TransCanada announced this morning that oil shipments have begun flowing through the southern leg of the Keystone XL pipeline. The shipments flow from Cushing, Okla. to Nederland, Texas. The more controversial northern leg of the pipeline is still under review by the State Department. Nevertheless, environmental groups are angry at the Obama Administration for permitting oil flow through the southern leg of the Keystone pipeline.
Propane prices surge... Inputs Monitor Editor Davis Michaelsen says propane prices have skyrocketed under the influence of high demand for both home heat and agricultural uses. "We observed the annual low in July '13 at a regional average of $1.32. This week's regional average price is $2.05, but word has come in from more than a few readers that propane is quickly moving much higher in the Midwest," he says.
A report today from Minnesota has prices there jumping from $2.99 to $3.79 with plenty of upside risk ahead. Missouri reports they have seen prices balloon from $2.60 to $3.50, just today. Deliveries east of the Rocky Mountains are problematic at best and experts expect more of the same, possibly for the rest of the winter, reports Michaelsen.
"As prices in New England and other markets increase, Midwestern producers will look to capture a higher spot price suggesting Corn Belt prices will remain high in order to compete with other markets," adds Michaelsen. Click here for more from Inputs Monitor.
PF midweek marketing game plan update...
Corn: Hedgers have 60% of 2013-crop production sold in the cash market, while cash-only marketers are 50% priced on old-crop. Hedgers and cash-only marketers have 20% of expected 2014-crop production sold via cash forward contract for harvest delivery. We expect sideways, choppy price action near-term as a low appears to be in place but the upside is limited. We'll use price strength to advance old- and new-crop sales.
Soybeans: Hedgers are 100% sold on 2013-crop production in the cash market, while cash-only marketers are 75% sold on old-crop. Hedgers and cash-only marketers have 10% of expected 2014-crop production sold via cash forward contract for harvest delivery. Cash-only marketers must continue to hold some old-crop in the bin as gambling stocks, though a drop below the early January low would be incentive for us to trim the amount we are willing to gamble with. An extended rally in November soybean futures would be incentive to increase 2014-crop sales, but we'll also increase new-crop sales if old-crop futures drop through near-term support and pull November futures lower.
Wheat: Hedgers are 100% sold in the cash market on 2013-crop production, while cash-only marketers are 75% sold. There's very little to get excited about in the wheat market. Be prepared to aggressively sell periods of price strength when the opportunity arises.
Cotton: Hedgers and cash-only marketers have 50% of 2013-crop production sold in the cash market. After the strong upside breakout over the past week, old-crop futures are at levels that have stalled rallies in the past. Be prepared to increase 2013-crop cash sales and/or protect downside risk with put option purchases. We'll also likely make initial 2014-crop sales when old-crop sales are increased.
Cattle: Fed cattle producers should continue to carry all risk in the cash market as the price outlook is bullish. But there is an opportunity to lock in record prices, though we'd like to see some proof of a top before hedging and we aren't looking for a major down swing in price on a pullback unless there's a blowoff top first.
Hogs: The technical picture for spring- and summer-month hog futures is improving and the market should be putting in a seasonal low. Carry all risk in the cash market unless there are indications a seasonal low will be significantly pushed back.
Feed: 25% of 1st-qtr. protein needs are covered in long March meal futures at $410.80. Stay in touch to exit. There's no urgency to add long corn coverage as the upside is limited even if the market confirms a short-term low.