Evening Report (VIP) -- March 27, 2014

March 27, 2014 10:01 AM
 

 

Hogs & Pigs Report to reflect PEDV outbreak... USDA will release its Quarterly Hogs & Pigs Report tomorrow at 2:00 p.m., CT. Based on pre-report expectations, traders look for the report to show the porcine epidemic diarrhea (PEDV) outbreak will continue to have a major impact on near-term marketings and has created an even deeper marketing hole this fall. But if expectations are realized, it appears producers are doing all they can to hold onto their breeding herd, with Kept for Breeding expected very close to year-ago levels. The same can be said for farrowing intentions.

Quarterly H&P Report Expectations

Avg. trade guess

Range

 

% of year-ago

All Hogs and Pigs

94.5

92.0-97.1

Kept for breeding

99.6

98.9-100.7

Kept for marketing

94.0

91.2-96.9

Dec.-Feb. pig crop

96.5

90.8-101.4

Dec.-Feb. pigs per litter

96.7

92.9-99.8

Dec.-Feb. farrowings

100.0

97.8-101.3

Mar.-May farrowing int.

100.8

99.4-102.0

June-Aug. farrowing int.

101.2

99.7-102.0

Hogs under 50 lbs.

93.0

87.7-98.9

Hogs 50 to 119 lbs.

94.1

91.0-97.8

Hogs 120 to 179 lbs.

94.3

92.3-98.1

Hogs 180 and over

95.4

93.9-97.3

But few in the arena are talking about potential revisions to the December Hogs & Pigs Report. Our expectations is that USDA may not show as steep of a reduction in its hog weight breakdowns, but the agency will revise the previous data to explain the steeper-than-expected drop in hog marketings that is ongoing. USDA would then revise its March report in June.

 

Majority of drugmakers agree to phase out antibiotic use for livestock growth... The Food and Drug Administration (FDA) yesterday reported that 25 of the 26 drugmakers that sell antibiotics for growth enhancement in livestock have agreed to phase out the use of these drugs for growth promotion. FDA in December announced guidelines aimed at stopping such companies from selling antibiotic drugs to enhance growth and instructing them to change the availability of such drugs from over-the-counter to ones requiring veterinary consultation. It gave the companies 90 days to respond to the voluntary guidelines. Pharmaq AS, which produces a powder to treat conditions in certain fish, was the lone company that did not agree FDA's guidelines. Critics of the voluntary guidelines note that there is no enforcement mechanism and that the plan will likely result in labeling changes rather than reductions in use.

 

Drought Monitor reflects slight expansion... For the contiguous 48 states, the U.S. Drought Monitor shows 38.3% of the area in moderate drought or worse, compared with 37.5% a week earlier. The monitor reports that 48% of the area is drought-free, compared to 48.5% the previous week and 35% a year ago. Minor changes were made for the Midwest drought area, with the drought area of the South and High Plains expanding by a percentage point and minor improvement noted in the West. Click here for related maps.

 

IGC foresees sharp recovery in global corn stocks... The International Grain Council (IGC), in its first look at the global 2014-15 coarse grains situation, looks for a significant increase in global corn carryover to result in a build in global total grains carryover.

The group sees 2014-15 global corn production of 961 MMT, up just 2 MMT from 2013-14, but it expects carryover will climb by 16 MMT from 2013-14 to 171 MMT. IGC projects the 2014-15 global wheat crop down 9 MMT from last season to 700 MMT, with carryover expected to be steady at 190 MMT. Total grains carryover is projected at 402 MMT for 2014-15, up 14 MMT from 2013-14.

In its first look at the global 2014-15 soybean situation, IGC expects carryover to remain unchanged from 2013-14 at 27 MMT.

 

Survey reveals Iowa farmland value softened... The value of an average acre of Iowa farmland slipped 5.4% in the six-month period ending March 1, according to the Iowa Chapter of the REALTORS Land Institute (RLI). That is the first statewide average decline since 2009. Combining that decline with the 1.2% increase reported in September results in an annual decline of 4.2%. That is also the first statewide decline since 2009. For more, go to Your Precious Land.

 

Nh3 transport constraints to elevate pricing... Pro Farmer Inputs Monitor Editor Davis Michaelsen says a host of factors are currently working to support anhydrous pricing in the Midwest. Upside potential has been building for Nh3 since December, when urea and UAN prices began an upside run that continues today. Anhydrous, however, has held firm at prices over $200.00 below year-ago.

Today word comes from points south that an anhydrous supply crunch is blooming. We look to southern states as indicators of upcoming fertilizer demand and as early applications roll out, Nh3 prices are recovering in a hurry. Michaelsen spoke this morning with a fertilizer purveyor in Missouri who echoed the speculation of dealers in Iowa that supplies headed eastward from production and storage facilities in Texas and Oklahoma and northward from the Gulf are constrained by lagging pipeline capacity.

A source from southeast Missouri told the Inputs Monitor, "We've had to run trucks clear to Oklahoma to get supplies this year. We don't have rail service close by so we have to rely on trucks and pipelines, and they are having a hard time keeping up."

Adding to the transport constraints is a general trend for rail companies to exit the anhydrous transport business due to increasing regulations, and the mounting liability related to moving Nh3 via rail. Add to that Canadian rail bottlenecks, and the northbound pipelines through Kansas and Louisiana have a heavy load to transit.

Demand has also been in question as new-crop revenue is just now breaking even for many growers. As southern farmers are well into preplant applications, the expectation is for anhydrous pricing to rise quickly as fieldwork makes its way northward.

We have already noted ruthless increases in wholesale ammonia into Tampa but suspect much of that will be linked to phosphate production. The factors outside of that wholesale increase are strong enough on their own to pressure prices to the high side for growers, and we have been waiting for anhydrous to find its excuse to rejoin the rest of nitrogen, which is much closer to year-ago prices than is Nh3.

There was a fair amount of carryover anhydrous in the market over the winter, but as one fertilizer dealer told Michaelsen, "There's only so much you can store at most elevators and all that is pretty much used up by now."

Transport constraints, pipeline bottlenecks, the end of carry product and anticipation of delayed plantings are all working together to create a supply shortage that will push Nh3 pricing higher near-term. But it does not end there. Michaelsen had speculated that conflict in Ukraine would also run prices higher, and a fear premium is factoring in to deferred pricing, inflating the April ammonia contract price by $120.00 week-over.

Look for strong upside price risk in areas serviced by ammonia pipelines, which is pretty much everybody. The Inputs Monitor advised subscribers to fill anhydrous on March 4 and reiterated that advice yesterday (click for more) based on strong upside potential before this story even came to our attention. With this added supply bottleneck in southern farm country, prices have double if not triple the upside risk we observed just yesterday. Go to InputsMonitor.com for more.

Back to news


Comments

 
Spell Check

No comments have been posted to this News Article

Corn College TV Education Series

2014_Team_Shot_with_Logo

Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!

Markets

Market Data provided by QTInfo.com
Brought to you by Beyer
Close