Evening Report (VIP) -- January 9, 2013

January 9, 2013 09:01 AM
 

TRADERS PREPARE FOR BARRAGE OF USDA DATA FRIDAY... USDA will release its Annual Crop Production Summary, Supply & Demand Report, Winter Wheat Seedings and Quarterly Grain Stocks Report at 11:00 a.m. CT on Friday, Jan. 11.

According to pre-report guesses, traders look for USDA to lower the size of the corn crop slightly to 10.626 billion bu., with an average yield of 122.4 bu. per acre, while the size of the soybean crop is seen ticking up slightly to 2.999 billion bu., with an average yield of 39.6 bu. per acre.

 

Annual Crop Production

Avg.

Range

USDA Nov.

USDA 2011

in billion bushels

Corn

10.626

10.100-10.801

10.725

12.358

Soybeans

2.999

2.922-3.104

2.971

3.094

 

Traders look for USDA to raise 2012-13 corn and soybean carryover slightly from last month to 667 million bu. and 135 million bu., respectively. Wheat carryover is seen declining by around 11 million bu. from last month to 743 million bushels.

 

2012-13 carryover

Avg.

Range

USDA Dec.

2011-12

in billion bushels

Corn

0.667

0.489-0.764

0.647

0.988

Soybean

0.135

0.107-0.178

0.130

0.169

Wheat

0.743

0.637-0.792

0.754

0.743

 

Due to revenue assurance guarantees, traders expect that producers planted more winter wheat than last year. As a result, winter wheat seedings are expected at 42.6 million, compared to 41.3 million last season.

 

Winter Wheat Seedings

Avg.

Range

2012

in million acres

All winter

42.6

41.7-44.7

41.3

HRW

30.3

29.9-31.0

29.9

SRW

8.9

8.2-10.0

8.1

White

3.5

3.3-3.9

3.3

 

Not to be forgotten, the Quarterly Grain Stocks Report can often draw the largest market reaction, as it's a reflection of demand and has in recent quarters produced the biggest surprises. Traders expect the report to show Dec. 1 corn stocks tighter than last year at 8.21 billion bu., soybean stocks at 1.984 billion bu. and wheat stocks just above year-ago at 1.674 billion bushels.

 

Dec. 1 Grain Stock

Avg.

Range

Sept. 1, 2012

Dec. 1, 2011

in billion bushels

Corn

8.210

8.050-8.450

0.988

9.647

Soybeans

1.984

1.915-2.056

0.169

2.370

Wheat

1.674

1.553-1.721

2.104

1.663

 

 

WEEKLY ETHANOL PRODUCTION IMPROVES MARGINALLY... The Energy Information Administration (EIA) reports ethanol production for the week ended Jan. 4 averaged 826,000 barrels per day (b/d), up 19,000 b/d from the previous week. Production was also up from the four-week average of 822,000 b/d for an annualized rate of 12.6 billion gallons. Ethanol stocks dropped to their lowest level in five weeks at 19.9 million barrels.

The Renewable Fuels Association notes that as a percentage of daily gasoline demand, daily ethanol production was 10.31% -- the highest since mid-June 2012. "Notably, refiner/blender input of ethanol fell to its lowest point -- 714,000 b/d -- since EIA began tracking weekly data in June 2010," it states.

 

 

PF MIDWEEK MARKETING GAME PLAN UPDATE...

CORN: Hedgers are 100% sold in the cash market, with cash-only marketers 75% priced on 2012-crop. Unless there's a big rally ahead of Friday's reports, wait to get current with advised sales. If Friday's reports are bearish, be prepared to make light, initial 2013-crop sales.

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. Be prepared to start 2013-crop marketings if November 2013 futures violate support at the November lows as doing so would open sharp downside risk.

WHEAT: Hedgers and cash-only marketers have 75% of 2012-crop sold in the cash market. Get current with advised sales, but given crop struggles in the Plains and other areas around the world, we don't want to get more aggressive with old-crop cash sales at this time and no 2013-crop sales are advised.

COTTON: Hedgers and cash-only marketers have 50% of expected 2012-crop production sold in the cash market. With futures unable to push above the top of the broad, sideways trading range, it's recommended you get current with advised sales. The likelihood of a sharp drop in cotton acres next year is keeping us from advising 2013-crop sales at this time.

CATTLE: Fed cattle producers should continue to carry all risk in the cash market as tightening supplies limit downside risk even if a short-term top is close. Feeder cattle buyers and sellers carry all risk in the cash market for now, although feeder cattle buyer should be prepared to hedge a portion of needs if the December high is taken out.

HOGS: Hog producers should continue to carry risk in the cash market. But with today's sharp price pressure, the market is signaling at least a short-term top is in place. Be prepared to add hedge coverage on followthrough selling.

FEED: Carry all corn-for-feed and meal risk in the cash market for now, but be prepared to extend coverage in the cash market on signs of a short-term low. The price break is a good buying opportunity, but we want futures to signal a low is in place before extending coverage.

 

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