Evening Report (VIP) -- March 28, 2014

March 28, 2014 09:58 AM
 

Hogs & Pigs Report: Negative compared to pre-report expectations... USDA's quarterly snout count shows the U.S. hog inventory down 3% from year-ago at 62.899 million head. However, that was at the very top of the pre-report guess range and 1.4 million head more than the average guess implied traders were expecting. The breeding herd at 100%, the market hog inventory at 96% and the winter pig crop at 97% also each topped the pre-report trade guesses. As a result, the data is negative compared to expectations and is expected to weigh on hog futures Monday.

Quarterly
H&P Report

USDA

Avg. trade guess

Range

% of year-ago

All Hogs and Pigs

97

94.5

92.0-97.1

Kept for breeding

100

99.6

98.9-100.7

Kept for marketing

96

94.0

91.2-96.9

Dec.-Feb. pig crop

97

96.5

90.8-101.4

Dec.-Feb. pigs per litter

95

96.7

92.9-99.8

Dec.-Feb. farrowings

103

100.0

97.8-101.3

Mar.-May farrowing int.

102

100.8

99.4-102.0

June-Aug. farrowing int.

102

101.2

99.7-102.0

Hogs under 50 lbs.

96

93.0

87.7-98.9

Hogs 50 to 119 lbs.

97

94.1

91.0-97.8

Hogs 120 to 179 lbs.

97

94.3

92.3-98.1

Hogs 180 and over

95

95.4

93.9-97.3

A breakdown of market hog weights suggests hog slaughter will run roughly 3% to 4% under year-ago in the coming months. That would be less than the current year-to-date pace, which is 7% under year-ago. That makes us wonder if USDA's data didn't catch all of the losses from porcine epidemic diarrhea virus (PEDV), in which case slaughter would run even more below year-ago than USDA's numbers imply.

In response to record hog prices, producers intend to expand their herds. Winter farrowings are up 3% from year-ago, while spring and summer farrowing intentions are 2% higher than last year. But pigs per litter at 9.53 head were down 5% from year-ago -- the first drop in that category in a long time. That's directly related to PEDV. Because PEDV is ongoing, it's safe to say the planned expansion isn't likely going to make up for death losses.

On revisions to past data, USDA says, "All inventory and pig crop estimates for March 2013 through December 2013 were reviewed using final pig crop, official slaughter, death loss, and updated import and export data. Based on the findings of this review, an adjustment of less than one half of one percent was made to the September 2013 total inventory. An adjustment of less than one half of one percent was made to the December 2013 total inventory. An adjustment of less than one percent was made to the June-August 2013 pig crop." Those revisions amounted to a 320,000-head decline in the Sept. 1, 2013, inventory; an 85,000-head increase in the Dec. 1, 2013, hog inventory; and a 229,000-head decline in the June-August 2013 pig crop.

 

Minor revisions to last week's PEDV cases... The National Animal Health Laboratory Network (NAHLN) says 266 new cases of porcine epidemic diarrhea virus (PEDV) were confirmed the week ended March 22, bringing the overall total to 5,017, which reflects a minor downward revision (5 cases) from the previous week's tally. PEDV has been confirmed in 27 states, which is unchanged from the previous week. Iowa, the No. 1 pork-producing state in the nation, continues to lead the number of total confirmed cases at 1,646, up 54 from last week. Minnesota follows with 793 confirmed cases, up 40 from last week and North Carolina is third on the list at 518 cases, up 16 from last week.

 

Trend-setting reports on Monday... USDA will release its Prospective Plantings and Quarterly Grain Stocks Report Monday at 11:00 a.m. CT. Click here to see what Pro Farmer's Chip Flory and Brian Grete have to say ahead of the reports.

Most pre-report estimates have corn plantings around 92 million to 93 million acres and soybean seedings around 81 million to 82 million acres. March 1 stocks are expected at around 7.1 billion bu. for corn, while soybean and wheat stocks are anticipated to come in around 1 billion bushels.

Prospective Plantings
Avg.
Range
2013
in million acres

Corn

92.748
90.50-94.0
95.365

Soybeans

81.075
78.50-83.6
76.533

All wheat

56.277
54.80-57.711
56.156

Winter wheat

42.157
41.80-44.0
43.09

Spring wheat

12.27
11.0-13.5
11.596

Durum

1.794
1.39-2.20
1.47

Since late last fall, Pro Farmer has been projecting corn plantings at 91 million to 93 million acres, depending on spring weather. We have pegged soybean plantings at 80 million to 82 million acres for the upcoming growing season. While the price ratio no longer favors beans over corn as much as it did when we initially predicted those numbers, we are sticking with them ahead of the report.

Grain Stocks

Avg.
Range

Mar. 1,
2013

in billion bushels

Corn

7.099

6.861-7.54

5.40

Soybeans

0.989

0.955-1.087

0.998

Wheat

1.042

0.985-1.115

1.235

The Quarterly Grain Stocks Report is often overlooked ahead of the reports, but it has provided plenty of fireworks in recent years, especially for the corn market. This data could well be the tone-setter again this year.

 

When El Nino begins key for 2014 growing season... Odds of El Nino developing this year are increasing, say the Australian Bureau of Meteorology and the U.S. Climate Prediction Center. With El Nino known as a "friend of the Midwest crop grower," we asked several meteorologists to give us their outlook. Click here for the spring weather feature.

 

Appeals court rejects effort to halt COOL implementation... A U.S. appeals court today rejected another challenge by the American Meat Institute and other trade associations that asked for a preliminary injunction that would have stopped USDA's country-of-origin-labeling (COOL) rule from taking effect. The groups say the labeling rule requiring retailers to list where animals were born, raised and slaughter will harm the livestock industry. The rule is also being challenged by Mexico and Canada via the World Trade Organization. An official WTO decision is expected in July.

 

FSA announces MILC program extension... USDA's Farm Service Agency (FSA) today announced the extension of the Milk Income Loss Contract Program (MILC) through Sept. 1, 2014, or until a new Margin Protection Program (MPP) for dairy producers is operating. Contracts for eligible producers who enrolled in MILC on or before Sept. 30, 2013 are automatically extended until the MILC program is terminated. Dairy operations with approved MILC contracts will continue to receive payments each month if the payment rate is in effect, FSA details. Since payments from the MILC program are limited to a maximum amount of milk production each fiscal year, dairy operations will also be able to select a production start month other than the October 2013 (the start of fiscal year 2014). Producers can make this election at their local FSA office between April 14 and May 30. Get more details.

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