Evening Report (VIP) -- March 31, 2014

March 31, 2014 10:03 AM

Reports spur active price activity... Grain and soy complex futures saw an active day of price action as traders factored in the 11:00 a.m. CT Prospective Plantings and Grain Stocks Reports. In the end, the reports spurred renewed buying in the corn market as traders recognize the markets' need to bid for corn acres, while bull spreading was prominent in the soybean pit due to a higher-than-expected soybean planted acreage peg and the reminder of the tight old-crop stocks situation. Wheat futures ended the day near the session high with slight gains due to a smaller-than-expected all wheat acreage figure.

USDA's acreage data points to farmers planting 325.9 million acres to principal crops, up 1.1 million acres from 2013 and closer to 2012 planted principal crop acreage of 326.3 million. Click here for Pro Farmer's report reaction.


Economists: H&P Report doesn't fully reflect PEDV impacts... University of Missouri Ag Economist Ron Plain says after examining USDA's Quarterly Hogs & Pigs Report, he doesn't believe the report fully reflects the impacts of Porcine Epidemic Diarrhea Virus (PEDV).

Plain notes USDA's estimate of December-February pigs per litter of 9.53 was down 5.5% from a year-ago and doesn't appear to be a big enough drop to justify record prices. But Plain says the biggest surprise was in the number of litters farrowed this winter. In December, USDA predicted December-February 2014 farrowings would be up 1.3% from year-ago. Now the agency says winter farrowings were up 2.8%, but with 5.5% fewer pigs per litter. In December USDA predicted spring farrowings would be up 1.4% from year-ago and now they say farrowing intentions for spring are up 2.4% from year-ago, he says.

Looking at the weight breakdowns of market pigs, Plain notes, "USDA's survey indicated the number of market hogs weighing 180 pounds or more on March 1 was down 4.8% compared with 12 months earlier. It looks like daily barrow and gilt slaughter in March was down 6.7% compared to a year ago. The 120-179 pound market hog inventory was down 2.9% from a year ago. The 50-119 pound inventory group was down 3.3% from a year earlier. The inventory of pigs weighing less than 50 pounds was down 4.0% compared to a year earlier," notes Plain. "Feeder/weaner pig imports from Canada during December-February were down 12.2% and slaughter hog imports were down 13.8%. Based on the market hog inventory and the expectation of a slow decline in live hog imports, USDA's numbers imply a decrease of 3.3% in second quarter 2014 hog slaughter."

"I believe USDA has not yet captured the full impact of PEDV," says Plain. "I expect 2014 hog slaughter to come in 2% below that implied by the March survey numbers. Look for second and third quarter 51% to 52% lean hogs to average around $90 per cwt. live and Iowa/Minnesota negotiated sales to average close to $120 per cwt. on a carcass weight basis. For the fourth quarter, look for 51% to 52% lean hogs to average in the low $70s per cwt. live and Iowa hogs averaging around $92 per cwt. on a carcass basis."


Forecast not wet enough for western HRW wheat areas... Meteorologist Gail Martell of MartellCropProjections.com says only scattered showers moved through the Southern Plains last week, denting the drought in Kansas, Oklahoma and Texas. She says March precip of only 20% to 40% of normal in the three states means more rains are needed in the near-term to support the growing crop. She says the forecast calls for only limited relief in northern and eastern Kansas and eastern areas of Oklahoma and Texas. Across the heart of the Wheat Belt, little rains are in the near-term forecast. Click here for related forecast maps.


Lineup of vessels at Brazilian ports down from year-ago... Crop Consultant Dr. Michael Cordonnier says the lineup of vessels in Brazil waiting to load soybeans during April is down significantly compared to last year. He says considering the current pace of arrivals, the lineup is expected to total 5.3 MMT of grain, compared to 8.7 MMT of grain a year ago.

"The situation at Brazilian ports was very chaotic last year as importers jostled for early soybean shipments after the drought-reduced 2012 U.S. soybean crop. The demand for soybeans this year is much less heated and, in fact, China has canceled 600,000 MT of soybeans from Brazil and Argentina for March to May shipments," says Dr. Cordonnier.

Additionally, Dr. Cordonnier says this year's lineup is only enough to handle 80% of the expected exports in April and none of the expected exports in May. "The primary reason for the reduced lineup is the weaker demand for soybean meal in China due to avian flu in the Chinese poultry flock. The demand for soybean meal in China during February and March was off by 20% to 30% compared to normal," he notes.


Restaurant Performance Index softens in February... The National Restaurant Association's (NRA) comprehensive index of restaurant activity -- the Restaurant Performance Index (RPI) -- remained above the benchmark 100 level that signifies expansion in the industry, but declined 0.2 from the previous month to stand at 100.5 in February. But restaurant owners say they are more optimistic about traffic moving into the spring season, which is good news for red meat demand, as restaurant sales represent a significant portion of total demand. Click here for more.

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