Evening Report (VIP) -- May 16, 2013

May 16, 2013 09:55 AM

CATTLE ON FEED TO REFLECT TIGHTER SUPPLIES DESPITE BIG PLACEMENTS... Traders look for the report to show On Feed at 96.3%, Placements at 112.1% and Marketings at 102.9% of year-ago levels. The range of guesses for Placements of 104.0%-122.0% makes this the "wildcard" category for the report. USDA will release its monthly snapshot of the cattle industry tomorrow at 2:00 p.m. CT.

Report expectations

Avg. Trade Guess


% of year-ago levels

On Feed










NWS 6-10 DAY FORECAST CALLS FOR MOSTLY NORMAL PRECIP ACROSS CORN BELT... The National Weather Service (NWS) forecast for May 22-26 calls for normal precip across the bulk of the Corn Belt, with the exception being above-normal precip in far eastern Indiana and Ohio and below-normal precip over western Nebraska and Kansas. Below-normal precip is also expected through Oklahoma and Texas. Normal temps are expected across the entire Corn Belt and Central Plains, with above-normal temps expected in the Southern Plains and Southwest. Click here for related maps.


SOME DROUGHT IMPROVEMENT EXPECTED ACROSS AREAS OF PLAINS... The Climate Prediction Center's (CPC) Seasonal Drought outlook calls for "some improvement" to the drought in South Dakota, Nebraska and the eastern half of the Central and Southern Plains, while drought is expected to persist west of that area.

In its extended outlook for June through August, CPC calls for above-normal temps across the Central and Southern Plains as well as the southern Corn Belt. It also calls for below-normal precip continuing across the Central and Southern Plains, while there are equal chances for below-, normal and above-normal precip across the Northern Plains and the Corn Belt.

It's surprising to see CPC's forecast for some drought improvement across Nebraska give its forecast for below-normal precip through August for much of the state. Overall, traders view the forecast as non-threatening for the Corn Belt, especially given continued drought improvement across the Midwest (see next item).


MIDWEST DROUGHT CONTINUES TO SHRINK; SLIGHT EXPANSION IN SOUTH... According to the National Drought Monitor, 38.27% of the contiguous U.S. is free of drought, which is slight improvement from last week's 37.58%. While drought across the Midwest continues to shrink, slight expansion of drought across the South was seen last week.

In the South, the monitor shows 63.85% of the area covered by some form of drought, which is up marginally from last week. "Since mid-February, precipitation deficits of 4 to locally over 8 inches have accumulated in northeastern Texas, the adjacent Red River Valley in Oklahoma, northwestern Louisiana and southwestern Arkansas," notes the monitor.

The monitor shows 78.29% of the Midwest is now drought-free compared to 77.96% last week and 68.76% a year-ago. However, very little change was seen to Nebraska's drought footprint last week. Eastern Nebraska is mostly covered by "abnormally dry" to "severe" drought, with the western two-thirds of the state mostly in "extreme" to "exceptional" drought. Click here for related maps.


FARMLAND GAINS TEMPERED BY DECLINING PROFIT MARGINS... Prospects of declining profit margins due to rising input costs and lower commodity prices tempered gains in farmland values the first quarter of 2013, according to surveys conducted by the Federal Reserve Banks of Kansas City and St. Louis. The Kansas City Fed says cropland values from Oklahoma to Nebraska and western Missouri to the Rockies rose about 3% in the first quarter, down from 8% to 9% gains recorded the first quarter of 2012. The St. Louis Fed's survey found a slight decline in cropland values in the first quarter versus the fourth quarter of 2012, but indicated ag bankers still believed farmland prices would work higher. Click here for more details in from LandOwner Editor Mike Walsten.

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