Evening Report (VIP) -- November 28, 2012

November 28, 2012 09:05 AM
 

OBAMA URGED TO DECLARE FEDERAL EMERGENCY ON MISSISSIPPI RIVER… Shippers and lawmakers are calling on President Barack Obama to declare a federal emergency along the Mississippi River to prevent "catastrophic consequences" in the Midwest should low water levels bring barge traffic to halt. Specifically, these stakeholders are encouraging the administration to direct the U.S. Army Corps of Engineers to immediately move forward on plans to remove submerged rocks near Cairo, Illinois, that pose risks to boats at current low water levels and for the Corps to stop its seasonal restriction on the flow of the Missouri River into the Mississippi River, as directed by laws aimed at conserving water for reservoirs. Computer models indicate that if rain does not fall, low water levels will disrupt navigation on the Mississippi River by Dec. 11 and the river will hit a record low by Dec. 22.

Barge traffic on the Mississippi River is responsible for carrying 60% of U.S. grain exports to the Gulf of Mexico. Between December and January about $7 billion worth of commodities, $2.3 billion of ag products and $1.8 billion of chemical goods are transported via the Mississippi River, according to the American Waterways Operators and Waterways Council.

 

 

LOWER CROP INSURANCE PREMIUMS FOR CORN & SOYBEANS… USDA's Risk Management Agency (RMA) on Nov. 29, 2011, announced it would phase-in adjustments to crop insurance premium rates; it followed that up with today's announcement that on average, these adjustments have caused corn and soybean insurance premiums to fall by 7% and 9%, respectively, over the past year. The new methodology gives more weight to county crop losses in recent years as opposed to the former approach that gave equal weight to losses in all years going back to 1975.

 

 

'JUNK SCIENCE' USED TO SCARE CONSUMERS INTO BUYING ORGANIC PORK… The National Pork Producers Council (NPPC) yesterday issued a scathing response to a "study" of raw pork chops published by the advocacy group Consumers Union in Consumer Reports that found 69% of samples were contaminated by a little-known food-borne pathogen. NPPC says the report was "designed to scare consumers into purchasing only organic pork by using junk science against pork from conventionally raised hogs." The NPPC and scientists, including Dr. Scott Hurder, former USDA deputy undersecretary for food safety, criticized Consumers Union for trying to link antibiotic use in food animals with antibiotic resistance in humans and "for ignoring more than 15 years of data from federal public health agencies showing significant reductions in bacteria on meat. Click here for more details.

 

 

PF MIDWEEK MARKETING GAME PLAN UPDATE...

CORN: With corn futures moving back into the upper bounds of the two-plus month, sideways trading range, hedgers and cash-only marketers should get current with advised 2012-crop cash sales. Hedgers are 100% sold in the cash market, with cash-only marketers 75% priced on 2012-crop. Hedgers should be prepared to reown a portion of 2012-crop cash sales in long futures/options on an upside breakout from the choppy range. Also, hedgers and cash-only marketers should be prepared to make initial 2013-crop sales if Dec. 2013 futures challenge the contract highs.

BEANS: Hedgers and cash-only marketers should get current with advised cash sales as the move higher is no more than a correction to the sharp price plunge at this point. Hedgers are 100% sold in the cash market, with cash-only marketers 75% priced on 2012-crop. With hedgers 100% sold on 2012-crop production, we are watching for signs to reown a portion of 2012-crop, but January beans must clear old support at $14.84 to indicate a short-term, technical bottom.

WHEAT: Hedgers and cash-only marketers have 75% of 2012-crop sold in the cash market. Get current with advised sales as futures have moved back into the upper end of the four-plus month sideways range. But with global supplies tightening and multiple crop concerns around the world, we aren't advising additional sales at this time. Also, be prepared to use a strong rally to make initial 2013-crop sales.

COTTON: Hedgers and cash-only marketers have 50% of expected 2012-crop production sold in the cash market. Get current with recommended sales. But with a lot of time left in the marketing year, no additional cash sales are recommended at this time.

CATTLE: Fed cattle producers should continue to carry all risk in the cash market as supply fundamentals are bullish and demand is holding up well. Feeder cattle buyers and sellers carry all risk in the cash market for now.

HOGS: Fundamentals are improving as the bulk of the seasonal build in supplies has been worked through. Additionally, the technical picture is strong. As a result, hog producers should continue to carry all risk in the cash market. But be prepared to hedge a portion of winter production on signs the upside has been exhausted.

FEED: Carry all corn-for-feed and meal risk in the cash market for now. Be prepared to extend coverage on an upside breakout from the extended, choppy range in corn futures and on violation of the sharp downtrend from the all-time high in meal futures. While basis is strong, any extended coverage should be done in the cash market as futures are likely to be volatile.

 

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