FOMC IS PREPARED TO 'INCREASE OR REDUCE' PACE OF SECURITY PURCHASES... The Federal Open Market Committee (FOMC) says the economy is expanding at a "moderate" pace and that it will continue purchasing mortgage-backed securities of $40 billion per month and longer-term Treasury securities of $45 billion per month. But it said it is prepared to "increase or reduce" the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.
As expected, the FOMC kept its target range for the federal funds rate at 0% to 0.25% and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the "unemployment rate remains above 6.5%, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2% longer-run goal, and longer-term inflation expectations continue to be well anchored."
The decision was approved by an 11-1 vote. Voting against the action was Esther L. George, who was concerned the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations. Click here for more.
WEEKLY ETHANOL PRODUCTION RECORD FOR THE YEAR... The Energy Information Administration (EIA) reports ethanol production the week ended April 26 of 857,000 barrels per day (bpd), up 4,000 bpd from the previous week and the highest of the year. The four-week average for ethanol production stands at 849,000 bpd for an annualized rate of 13.02 billion gallons. Ethanol stocks declined 3.2% from the previous week to 17 million barrels -- the lowest of the year.
METEOROLOGIST SEES SOME WEATHER IMPROVEMENT FOR MIDWEST... Kyle Tapley, senior ag meteorologist at MDA Weather Systems, says while below-normal temperatures are expected to continue across the central U.S. the next couple of weeks and wet conditions are expected through the weekend, there are some signs that a drier trend may develop across the Midwest by next week. "We still expect above-normal temperatures in June, but we have recently cooled our forecast some and our confidence has decreased," he said.
TEXAS RURAL LAND MARKET SEES GROWTH IN 2012... According to the Outlook for Texas Land Markets, conducted by the Real Estate Center, Texas A&M University, the Texas rural land market saw a 6% increase in 2012. Click here for a detailed report from LandOwner Editor Mike Walsten.
PF MIDWEEK MARKETING GAME PLAN UPDATE...
CORN: Hedgers are 100% sold in the cash market, with cash-only marketers 75% priced on 2012-crop. Cash-only marketers should be prepared to trim old-crop stocks if basis sharply weakens and/or futures violate support at the April low. For 2013-crop, hedgers and cash-only marketers have 10% of expected 2013-crop production sold via cash forward contract for harvest delivery. Be prepared to advance new-crop sales on a strong price recovery. Hedge coverage may be added if support at the April low falters.
BEANS: Hedgers are 100% sold in the cash market, with cash-only marketers 75% priced on 2012-crop. Cash-only marketers must continue to hold some old-crop in the bin given tight supplies and the strong cash market. But be prepared to trim old-crop inventories if futures return to the top of the extended, choppy range. For 2013-crop, hedgers and cash-only marketers have 10% of expected 2013-crop production sold via cash forward contract for harvest delivery and 50% of expected production hedged in November soybean futures at $12.19. Stick with the hedge for now as the technical posture remains bearish, but we'll lift the coverage if there are clear signs of a bottom.
WHEAT: Hedgers and cash-only marketers have 75% of 2012-crop sold in the cash market. Wait to get current. For 2013-crop, there are signs of bottoming action and we continue to believe there will be a crop-scare rally at some point. Be prepared to make aggressive sales on a strong price rally.
COTTON: Hedgers are 100% sold on 2012-crop in the cash market, with cash-only marketers 85% sold on old-crop. Get current with recommended old-crop sales. Hedgers and cash-only marketers have 50% of expected 2013-crop production sold via cash forward contract for harvest delivery. Hedgers also have 50% of expected production hedged in December cotton futures at 83.87 cents. Stick with the hedge coverage unless downtrending resistance from the March highs is violated.
CATTLE: Tightening supplies give us the confidence to keep all risk in the cash market for fed cattle producers. Plus, demand should improve as grilling season gets underway, even if beef demand isn't as strong as normal. Feeder cattle buyers should also continue to carry risk in the cash market until there are clear indications of a low.
HOGS: Hog producers should carry all risk in the cash market for now. Supplies are tightening seasonally and demand is improving. Plus, the technical picture is gradually strengthening.
FEED: Old-crop corn futures are working on putting in a low. Be prepared to extend corn coverage beyond hand-to-mouth on signs of a low. For July soymeal futures, a dip below the $400 level would be a "value" buying opportunity.