Evening Report (VIP) -- May 17, 2013

May 17, 2013 09:47 AM
 

CATTLE ON FEED REPORT: BEARISH... USDA's Cattle on Feed Report shows all three categories on the bearish side of the average pre-report guesses. The combination of much stronger Placements and slightly lighter-than-expected Marketings pushed the On Feed category 0.7 percentage points higher than the average pre-report guess.

COF Report

USDA

Average

Range

% of year-ago levels

On Feed

97%
96.3

95.0-98.0

Placements

115%

112.1

104.9-122.0

Marketings

102%

102.9

100.0-104.1

The 15% surge in cattle placements last month was likely tied to lower feed costs and poor pasture conditions in the Plains. Placements were higher than year-ago in virtually all of the key cattle production states of the Plains and Iowa, aside from South Dakota.

A weight breakdown of placements shows all categories up from year-ago, though the bulk of the increase was in 7-weights (up 19.7%) and heavyweights (up 21.3%). Lightweight placements were up 5.6% and 6-weight placements rose 8% from year-ago.

With all three categories coming in on the bearish side of the average pre-report guesses, this data is negative, especially for farther deferred futures as the Placements number was the most bearish. But given recent price pressure, some of this report is already likely "in" the market, which should help limit selling pressure Monday.

 

INFORMA UPDATE 2013 ACREAGE PEGS... Sources familiar with Informa Economics say the firm has updated its planted acreage estimates to reflect developments through early May. Following are details:

  • Corn: Informa at 96.827 million acres, down 455,000 acres from USDA's March Prospective Plantings Report.
  • Soybeans: Informa at 78.286 million, up 1.16 million acres from USDA's March estimate.
  • Other spring wheat: Informa at 12.401 million, down 300,000 acres from USDA's March Prospective Plantings Report.
  • All cotton: Informa at 10.241 million, up 215,000 acres from USDA's March estimate.

 

PERSPECTIVE ON BRAZILIAN PORT SITUATION... As we reported in "First Thing Today," Brazil's congress has passed a bill that would modernize ports, including private investment and the hiring of non-union laborers. Brazilian President Dilma Rousseff will sign the bill into law once it lands on her desk. While this could (likely will) lead to more conflicts between unions representing dockworkers and the Brazilian government, major work stoppages are not likely. The reason, according to Pro Farmer South American consultant Dr. Michael Cordonnier, is that Brazil's unions can't strike without permission from the Brazilian government or they face hefty daily fines. Because the government must respect the union's "right" to strike, they will grant permission, but only for temporary work stoppages. That's why most of Brazil's port strikes are short-lived -- one to two days. However, unions can tell dockworkers to slow down operations without striking.

 

CORN PLANTING ACCELERATES DESPITE WET FIELDS... Meteorologist Gail Martell of MartellCropProjections.com says farmers worked to accelerate corn planting this week, but in many cases are "mudding" in seeds after extremely wet conditions. "Fifty percent of the U.S. corn area was extremely wet in April, meriting much-above-normal or record wet standings in the 118-year data-set. Top corn states Iowa and Illinois are among the wettest," says Martell. "Whenever weather records are broken it is detrimental for crops. There will be a yield penalty to pay for severe planting delays in corn. North Dakota, the top spring wheat state, experienced the coldest April on record, Minnesota the third coldest. This explains the delayed snowmelt and cold soil temperatures that set back spring planting. Only one-fourth of wheat was sown by May 12, compared to 65% normally." Click here for related maps, including the 5-day precip forecast.

 

PACE OF GAINS OF CENTRAL CORN BELT FARMLAND VALUES SLOWS... The value of "good" central Corn Belt farmland rose 4% on a quarterly basis during the first quarter of 2013, according to the Federal Reserve Bank of Chicago. While a gain, the pace of the increase is down from the 7% rise posted during the fourth quarter of 2012. On an annual basis, farmland rose 15% for the year ended March 31, nearly matching the 16% annual increase reported for the year ended Dec. 31. The bank notes the strong annual increases in Illinois, Indiana, Iowa and Michigan "masked the weaker results of some areas, such as Wisconsin." The Chicago Federal Reserve Bank serves the northern two-thirds of both Illinois and Indiana, all of Iowa, the Lower Peninsula of Michigan and southeastern Wisconsin. Click here for more from LandOwner Editor Mike Walsten.

 

TIGHT OLD-CROP STOCKS SITUATION 'WELL KNOWN'... Pro Farmer Editor Chip Flory and Senior Market Analyst Brian Grete discuss how the market is digesting the tight old-crop corn stocks situation in this week's Pro Farmer Profit Briefing clip on AgDay TV. Click here to view the clip.

 

SURVEY: PUBLIC BACKS COOL LAW, USDA PROPOSAL... Widespread public support for country-of-origin labeling (COOL) in general and USDA's approach to labeling is the conclusion in a survey commissioned by the Consumer Federation of America. Ninety percent of those polled favored COOL of meat in general and 87% supported requiring labels to disclose specifically in what countries animals were born, raised and slaughtered, according to the survey by ORC International. But none of the surveys asks the question "at what cost?" Washington Consultant Jim Wiesemeyer notes, "If you ask naive questions, you can normally get an answer that will support darn near anything."

The House Ag Committee-passed farm bill puts a marker in place in case the World Trade Organization (WTO) were to rule that the U.S. final rule on complying with a prior WTO ruling against the U.S. is not in compliance with the dispute settlement body ruling, which led to the coming U.S. final rule. The U.S. Cattlemen's Association noted "deep concerns" about the COOL provision and said it will "continue to work to defeat this provision as the bill progresses to the House floor."

Meanwhile, U.S. meat industry officials and their lobbyists are urging USDA to have at least a one-year phase in of any actions resulting from the final rule to allow time for the WTO to make its assessment and, if approved, to get ready to implement the rule.

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