Evening Report (VIP) -- November 15, 2012

November 15, 2012 09:06 AM
 

CATTLE ON FEED REPORT TO REFLECT TIGHTENING SUPPLIES... Traders expect Friday afternoon's Cattle on Feed Report to reflect a current feedlot situation, as On Feed and Placements are seen below year-ago levels and Marketings are expected above year-ago levels. Rising feed costs are expected to result in an On Feed number of 94.6% and Placements at 87.3% of year-ago levels, while strong cash cattle prices encouraged producers to get lots current, resulting in Marketings figure of 102.6% of year-ago levels.

Report expectations

Avg. Trade Guess

Range

% of year-ago levels

On Feed

94.6

93.5-96.0

Placements

87.3

83.3-92.0

Marketings

102.6

100.8-103.5

 

CPC: DROUGHT TO PERSIST ACROSS PLAINS AND WESTERN CORN BELT... The National Weather Service's Climate Prediction Center (CPC) in its outlook for December calls for below-normal temps across the Northern Plains and Minnesota, above-normal temps across the South and equal chances for below-, normal and above-normal temps elsewhere, including the Midwest. The forecast also calls for above-normal precip across the eastern Corn Belt, but equal chances elsewhere across the country. In its Seasonal Drought Outlook, it says drought will likely persist across the western Corn Belt, much of the Plains and Southwest, while more drought improvement is expected in the Upper Midwest and eastern Corn Belt.

"Some improvement in long-term drought conditions is also anticipated over the northern Plains and a significant portion of the Mississippi Valley. Persistence of drought is deemed the best bet across central and southern portions of the Intermountain Region, the Rockies and the Plains. Persistence of existing drought, or the development of new drought areas are expected in Texas," states the drought outlook. Click here for related maps.

 

PRECIP HELPS RECHARGE MIDWEST TOPSOIL MOISTURE... According to the National Drought Monitor, a Pacific storm system and its associated cold front moved slower across the lower 48 states last week, bringing welcome precip the the Northwest, Plains, Midwest and lower Mississippi Valley. The system tapped into Gulf moisture, producing showers from central Kansas to the upper peninsula of Michigan and from northeastern Texas to southern Indiana and central Kentucky. But unfortunately, parts of the Southern and north-central Plains missed out on precip, causing drought conditions to persist or worsen there.

The precip associated with the system resulted in one-category drought improvements for central and northeastern Kansas, Missouri, Iowa, Wisconsin, eastern South Dakota, western Kentucky and Illinois. No changes were made to the drought footprint in Indiana, Ohio, Michigan or Minnesota as rainfall totals were generally light. Drought increased in South Dakota. The monitor notes that much more precip is needed to restore long-term hydrological drought damage. View maps and get more details here.

 

EGYPT'S GASC RECEIVES NOTIFICATION FROM UKRAINE... Egypt's GASC says it has received notification from Ukraine that beginning Dec. 1, the country will no longer export wheat. Ukraine's ag ministry had previously informed traders that exports of wheat were near the 5.5-MMT allotment. Traders believe this signals an official announcement regarding an Ukrainian export ban is near.

 

FARM BILL TIMELINE IN HANDS OF HOUSE GOP LEADERS... Washington Consultant Jim Wiesemeyer warns not to listen to those too closely involved with the farm bill, including leaders of the Senate and House Ag Panels, when trying to discern its timeline, perhaps with the exception of House Ag Committee Chairman Frank Lucas (R-Okla.). He should be one of the first to know the eventual final decision of House GOP leaders regarding whether/how the farm bill will be dealt with during the lame duck session. Following are some guidelines regarding the farm bill fate:

  1. If there is no fiscal cliff compromise agreement, there will be no farm bill this year.
  2. The farm bill could be part of a larger plan as a budget offset this year.
  3. The farm bill could be extended in a larger package, but with directions for Ag Committees to report a bill saving a designated amount by a specified date in 2013.
  4. Relative to cotton and other issues, some type of extension of the 2008 Farm Bill is likely. What happens to the nearly $5 billion in direct payments is murky -- some of the cut could be used to extend expired disaster and dairy programs.

 

PF PERSPECTIVE: Many sources predict option 3, but do not rule out option 2.

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