Evening Report (VIP) -- July 19, 2013

July 19, 2013 09:56 AM
 

CATTLE ON FEED REPORT: MOSTLY NEUTRAL... The On Feed and Placements categories were right in line with the average pre-report guesses at 97% and 95% of year-ago, respectively. Marketings came in a little stronger than anticipated at 96%, which topped the highest pre-report guess. The July 1 U.S. feedlot inventory was down 371,000 head from the beginning of June and 342,000 head under year-ago.

COF Report

USDA

Average

Range

% of year-ago levels

On Feed

97
97.0

96.0-97.7

Placements

95

94.9

89.3-99.8

Marketings

96

94.7

93.4-95.5

The breakdown of calves placed into feedlots in June signals improved pasture conditions in many areas are guiding those decisions. The placement of lightweight and 6-weight calves was down 31.5% and 27.5% from year-ago, while 7-weight and heavyweight calves were placed at a 6.4% and 26.5% greater clip than year-ago last month. Because of the generally improved pasture conditions, ranchers are keeping cattle on grass longer and delaying the movement into feedlots as long as possible.

The report data is mostly neutral, though the Marketings category was on the friendly side compared to pre-report expectations. This should support nearby live cattle, but traders will likely wait on confirmed lows in the boxed beef and cash cattle markets before actively pumping money into the long side of futures.

 

6-10 DAY FAVORABLE FOR POLLINATING CORN... The National Weather Service forecast for July 25 through 29 calls for below-normal temps across the bulk of the Corn Belt, while above-normal temps are expected across western Nebraska southward. Normal to above-normal precip is expected across the Corn Belt. The bulk of the corn crop is expected to pollinate the last week of July into early August. This forecast, if realized, signals favorable conditions would could help build yield potential after a stressful first half of July for the crop. Click here for related maps.

 

RESURVEY OF SOYBEAN ACREAGE UNDERWAY... USDA’s National Ag Statistics Service (NASS) is "resurveying" planted soybean acres now through the end of the month ahead of the August 12 Crop Production Report. Officially, NASS is resurveying bean plantings in 14 states. In reality, NASS is rechecking fields that were intended to be planted to soybeans ahead of the June Acreage Report to see if those fields were actually planted. A NASS official familiar with the process told us, "We plan to visit the fields from our June survey that had soybeans left to be planted."

Technically, if USDA is only rechecking fields that were intended to be planted to soybeans, NASS will not "find" acres that were still intended to be planted to corn during the June Acreage Report survey, but ended up being planted to soybeans. Therefore, any adjustments to USDA’s June estimate of 77.728 million acres should be only to the downside. If USDA finds all the acres labeled as "intended to be planted to beans" in the Acreage Report were planted, then planted bean acres for the August Crop Production Report would be unchanged at 77.728 million.

 

RIN VALUES APPROACH $1.50... It’s the high cost of renewable identification numbers (RINs) that is holding up gas prices in the U.S. even as domestic oil output climbs, according to most refiners. Reason: They’re having trouble buying enough ethanol to meet their blending requirements, which forces them to them to buy RINs to satisfy their blending requirements under the Renewable Fuels Standard (RFS). And, as is generally the practice, the cost of the RIN is being passed on to consumers at the pump. That has driven RIN values to all-time highs -- along with the volume of refiner complaints about the RFS.

Meanwhile, the Obama administration says calls to repeal the RFS are short sighted. Heather Zichal, deputy assistant to President Obama for energy and climate change said the RFS is "the backbone of our policy" to cut oil imports and to reduce greenhouse gas emissions.

 

PETERSON ERRED ON SUPPLY MANAGEMENT DAIRY LANGUAGE STRATEGY... Discussions with Democratic and Republican sources in the House conclude that Representative Collin Peterson (D-Minn.) made a strategic mistake during the initial markup of the House farm bill in the Ag Committee relative to Peterson's aggressive push to include supply management dairy policy provisions in the underlying bill -- language that was deleted during House floor debate, with ample Democratic and Republican support. Sources confirm Peterson did not follow House Ag Chairman Frank Lucas' (R-Okla. ) advice to have Peterson's language be voted on during Ag Committee markup.

Lucas reportedly told Peterson that dairy supply management would be defeated in the Ag Committee and that if an amendment was offered on the House floor to delete it, it would be approved via an amendment by Rep. Bob Goodlatte (R-Va.) (which it was), but that he (Lucas) would support Peterson during forthcoming House-Senate conference sessions to take the Senate version on this matter, which includes supply management.

But now, most sources believe Lucas will have no choice but to follow the will of the House and oppose the addition of supply management language in whatever farm bill comes out of forthcoming action on the measure.

 

PF VIDEO: SOYBEAN MARKET RESPONDS TO DOWNTICK IN CROP RATINGS... Pro Farmer Editor Chip Flory and Senior Market Analyst Brian Grete discusses concerns about the soybean crop and how end users are dealing with the uncertain yield potential in this week's Pro Farmer Profit Briefing clip on AgDay TV. Click here for more.

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