WEEKLY ETHANOL PRODUCTION DECLINES SLIGHTLY... The U.S. Energy Information Administration (EIA) reports ethanol production the week ended March 8 declined to 797,000 barrels per day (bpd) -- down 8,000 bpd from the previous week. The four-week average for ethanol production stood at 803,000 bpd for an annualized rate of 12.31 billion gallons. Ethanol stocks tightened to a 15-week low of 18.7 million barrels.
ARGENTINE CROP-WATCHER CONCERNED ABOUT COLD TEMPS... Pro Farmer Member and Argentine farmer Eduardo Reynolds says soybean harvest has begun in southern Cordoba and results are disappointing with smaller-than-expected seeds in pods. "Low temps for this weekend will not help in the least... late-sown soybeans in Buenos Aires might be affected, as well as some corn. On Monday we will know how cold it has been and if there is any damage. For sure it will shut off a lot of soybeans that could have put on some more yield," he says.
BRAZILIAN PORT WORKERS PLAN TO STRIKE NEXT WEEK... Even though unions and the government are still in negotiations concerning workers' unease about the government's plan to privatize ports, unions representing Brazilian pork workers announced they will strike at 36 Brazilian ports on Tuesday, March 19. After a series of min-strikes in February, unions agreed to suspend any further strikes until March 15, but feel there has been little progress made in negotiations. The March 19 strike is scheduled to last 24 hours and unions say if progress on negotiations remains slow, they will plan additional work stoppages.
Meanwhile, the wait time to load vessels at the Port of Santos in Paranagua is already 50 to 60 days, says South American crop consultant Dr. Michael Cordonnier. "Any further labor stoppages are sure to make that even longer," he says.
Dr. Cordonnier also reports truck lines in Mato Grosso are record long, reaching 60 kilometers (37.3 miles). "More than 2,000 trucks were lined up along BR-364 between the cities of Alto Garcas and Alto Araguaia as they waited to enter the Ferronorte Railroad grain terminal at the city of Alto Arguaira," he adds, saying the poor infrastructure is leading to rising transportation costs for Brazilian producers.
LUCAS, PETERSON REACT TO RYAN'S BUDGET PROPOSALS... House Budget Chairman Paul Ryan (R-Wis.) on Tuesday suggested the House Ag panel should be able to generate $31 billion in savings from 2014 through 2023. Ryan deferred to the Ag Committee in determining the best way to make the changes, but cited direct payments and crop insurance as programs worth reviewing.
House Ag Committee Chairman Frank Lucas (R-Okla.) was noncommittal in his response to the budget proposal: "We will consider the suggestions contained in Chairman Ryan’s budget, as is customary for the Agriculture Committee to consider a variety of viewpoints when crafting comprehensive legislation."
Senate Ag Panel Ranking Member Collin Peterson (D-Minn.), on the other hand, was critical of Ryan's proposal. "If the House Republicans do take the Ryan budget numbers seriously, I don't see how they can be serious about passing long-term farm policy this year," he said.
DIFFERING FARM BILL SAVINGS TARGETS LIKELY... The Senate Ag Committee will likely work with a lower farm bill savings figure than the House Ag panel. Sources say an eventual compromise savings number would likely come via debt limit hike talks this summer. If so, a new farm bill may not be finalized until after the August congressional recess. Sources say that if another farm bill extension is the route (unlikely, according to veteran farm bill watchers), it will not likely be a "simple" extension.
PF MIDWEEK MARKETING GAME PLAN UPDATE...
CORN: Hedgers are 100% sold in the cash market, with cash-only marketers 75% priced on 2012-crop. Price action suggests the upside may be about tapped out for now, but given tight old-crop supplies, there could be a stronger push to the upside later in the marketing year. As a result, we're willing to hold onto remaining old-crop supplies for cash-only marketers. For 2013-crop, December corn futures must hold support at last week's low or we'll enter defensive hedges. Also be prepared to make initial cash sales on an extended price recovery.
BEANS: Hedgers are 100% sold in the cash market, with cash-only marketers 75% priced on 2012-crop. Get current with advised old-crop sales as futures rallied to the top of the extended range and are rolling over. November soybeans must hold support at the February low or we'll enter defensive hedges. Also be prepared to make initial cash sales on a rebound to $13.50 in November soybean futures.
WHEAT: Hedgers and cash-only marketers have 75% of 2012-crop sold in the cash market. There's more near-term downside risk as HRW crop concerns have been brushed aside for now. But we advise you to hold some old-crop in the bin as gambling stocks as crop concerns could resurface this spring. We're hoping to get an overdue bounce before starting 2013-crop marketings as the market is oversold, but we will make sales/hedges if support at last week's lows falters, especially if corn and soybeans also violate support.
COTTON: Hedgers and cash-only marketers have 50% of expected 2012-crop production sold in the cash market. With the strong uptrend still solidly in place, there's no urgency to increase old-crop sales. But be prepared to pull the trigger on signs of a top. Also, be prepared to make initial 2013-crop sales when December futures show signs of topping.
CATTLE: Live cattle futures are struggling to put in a low amid ongoing demand concerns. But the downside is also limited by tightening supplies. As a result, fed cattle producers should continue to carry all risk in the cash market. The sharp price break will eventually present an opportunity for feeder cattle buyers to cover a portion of upcoming needs, but we'll wait on signs of a bottom before advising long coverage.
HOGS: Lean hog futures are hinting that a short-term low may be in place, but demand concerns continue to hang over the market. Once futures definitively put in a low, we expect the upside to be overdone on the ensuing price rally. Continue to carry all risk in the cash market.
FEED: 25% of 2nd-qtr. Corn needs are hedged in long July corn futures at $6.78 3/4 and 25% of 2nd-qtr. Protein needs are hedged in long July soybean meal futures at $388.00. Be prepared to take profits if corn futures show signs of moving the next leg lower and soybean futures signal a short-term top is in place.