Evening Report (VIP) -- March 21, 2014

March 21, 2014 10:07 AM


COF Report slightly negative compared to expectations... This afternoon's Cattle on Feed Report is getting a slightly negative read compared to expectations, as Placements came near the top end of pre-report expectations at 115% of year-ago levels. Marketings and On Feed came in near expectations at 97% and 99% of year-ago, respectively.

Marketings for February were the lowest for the month since the data began in 1996, which reminds of the tight supply situation. But the report could weigh slightly on futures to start next week due to higher-than-expected Placements.

Report details


Avg. Trade Guess


% of year-ago levels

On Feed











The weight breakdowns for feeders shows calves under 600 lbs. up 13%, 600-699 lbs. up 29.4% from year-ago; 700-799 lbs. up 4.3%; and 800 pounders up 17% from year-ago. Obviously, the heavier-weight calves will spend less time in feedlots and those animals will be coming to market starting later in the spring.


Cold Storage: Supportive for cattle, not so much for hogs... While the Cattle on Feed data is slightly negative for cattle futures, the Cold Storage data is a little more supportive. USDA reports at the end of February, total supplies of beef in frozen storage of 407.103 million lbs. were 5% tighter than a month ago and down 17% from year-ago levels.

Total frozen pork stocks, on the other hand, reflect a build in supplies and raise some concern about demand as supplies have tightened. Total pork stocks at the end of February of 653.8 million lbs. came in 6% higher than last month and are up 3% from year-ago levels.

USDA reports total frozen poultry supplies at the end of February were up 3% from the previous month, but were down 5% from year-ago.


U.S. sanctions start to bite Russia... Russia's equities tumbled as the effect of U.S. sanctions on some of the country’s wealthiest men rippled through the financial sector. Legal experts warned on Friday that European and U.S. companies who do business with Russia and Ukraine should take action to protect themselves from the unfolding sanctions regime. Most observers now believe sanctions will be ratcheted up in the next few weeks. While Obama has ruled out direct military involvement, a senior administration official said the Pentagon was studying whether to provide communications equipment and other nonlethal assistance to the Ukrainian military.

The key to sanctions is whether or not the EU ramps them up to the bite that U.S. sanctions are now having. Europe has far more to lose on tit-for-tat sanctions than the United States. The situation continues to escalate, and tensions would dramatically rise should Russian forces enter the Ukraine's mainland or some other former Soviet-controlled state. Nothing can be ruled out at this time.


Strong ethanol profits in 2013... The average U.S. ethanol plant made a $23-million profit last year, second only to $25 million in 2007, according to University of Illinois Economist Scott Irwin. That was up sharply from an average loss of $7.3 million in 2012.


Conflict within the EU regarding pork exports to Russia... The European Commission ordered members of the EU bloc to halt bilateral contracts with Russia regarding pork trade, threatening a complaint with the World Trade Organization. Russia has banned pork imports from the European Union, but France, Denmark and the Netherlands have reportedly formed bilateral contracts to skirt the embargo. Russia' pork ban stems from the nation's concerns about African swine fever.

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