Evening Report (VIP) -- November 16, 2012

November 16, 2012 08:38 AM
 

 

CROP TOUR NEWSLETTER AVAILABLE... The November Crop Tour Newsletter wraps up 2012 and details South American conditions. The newsletter is available at this link.

 

CATTLE ON FEED REPORT: ABOUT AS EXPECTED... Traders did a good job of anticipating this afternoon's USDA Cattle on Feed Report, as all categories came in near traders' pre-report expectations. The report showed On Feed at 95%, Placements at 87% and Marketings at 103% of year-ago levels. The report reflects traders' expectations that producers worked to get feedlots current, which should translate into smaller marketings in next month's report.

COF Report

USDA

Average

Range

% of year-ago levels

On Feed

95

94.6

93.5-96.0

Placements

87

87.3

83.3-92.0

Marketings

103

102.6

100.8-103.5

The weight breakdown of placements shows calves 600 lbs. and lighter down 19%, 600-699 lbs. down 14.4%, 700-799 lbs. down 10.7%, and 800 lbs. and heavier down 2.6% from last month.

The report should get a neutral read by the market, but is supportive for deferred futures as it once again reminds traders of the tightening supply situation.

 

CHINESE ORDER CANCELLATIONS DON'T SIGNAL SLOWED DEMAND... In "First Thing Today" we reported that China had cancelled orders for 600,000 MT of U.S. soybeans. This news weighed on the soybean market today, but the cancellations do not imply that China doesn't need those beans. Rather, it likely signals that prices have fallen more than enough to make up for the fine the country will have to pay exporters for the cancellations. More Chinese purchases and cancellations likely lie ahead.

 

EPA REJECTS ETHANOL WAIVER REQUESTS... The Environmental Protection Agency (EPA) along with the Obama administration announced they have denied requests for a waiver of the ethanol mandate component of the Renewable Fuels Standard (RFS). EPA says it found no evidence to support a finding of severe "economic harm" that would warrant an ethanol-use waiver and that any such waiver would only reduce corn prices by 1%. The decision was not surprising as several studies prior to the decision showed a waiver would have neither the price nor the supply impact those requesting a waiver had hoped. Get more details.

 

MALANGA WEIGHS IN ON FISCAL CLIFF... Lawmakers were meeting with President Obama today regarding plans to overt the so-called "fiscal cliff." Pro Farmer economic consultant Dr. Vince Malanga, president of LaSalle Economics, Inc., says, "Three crucial domestic issues face lawmakers and financial markets. There is the course of monetary
policy; the fiscal cliff (potential downgrade of U.S. debt); and the deep chasm between consumer confidence (rising) and business confidence (falling)."

Monetary policy: "Fed Chairman Bernanke will serve until early 2014 and his successor
will be of the same policy orientation. Monetary policy will remain very accommodative and
very likely there is more quantitative easing on the horizon."

Fiscal cliff: "Some compromise is likely, but there is no escaping the fact that fiscal drag will hit the economy in 2013. As part of any cliff deal, the federal debt ceiling will be raised, but how the rating agencies view the eventual outcome is questionable."

Business confidence: "There will be more taxes and there will not be any less regulation. The Affordable Care Act and Dodd- Frank financial reform will go forward. Aside from any fiscal cliff compromise, tax increases to finance the Affordable Care Act kick in beginning in January."

 

SURVEYS FIND MIDWEST FARMLAND VALUES CONTINUE TO RISE... Pro Farmer's LandOwner newsletter reports the Federal Reserve Bank of Chicago's survey found good agricultural land rose 13% on an annual basis and 5% when compared to the second quarter of 2012. Iowa continues to lead the pace with an 18% annual rise and a 6% boost in the quarter compared to the second quarter of 2012. Click here for more details in "Your Precious Land."

 

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