Evening Report (VIP) -- October 23, 2013

October 23, 2013 09:44 AM

ATTACHÉ: BRAZIL POISED TO REMAIN WORLD'S TOP SOYBEAN EXPORTER... The U.S. ag attaché in Brazil says the country is poised to continue as the world's top soybean exporter due to potential for a record crop in 2013-14. It projects Brazilian soybean exports at 45 MMT and says it "should enjoy a slightly better export scenario, as export infrastructures experience less pressure from corn exports." If realized, Brazilian exports would be 2.5 MMT higher than year-ago, according to the attaché's forecast. Click here for more.


WEEKLY ETHANOL PRODUCTION RISES... The Energy Information Administration reports for the week ending Oct. 18 that ethanol production rose 28,000 barrels per day (bpd) from the previous week to 897,000 bpd -- the highest since the week ending June 15, 2012. Ethanol stocks climbed a marginal 0.5% from the previous week to 15.5 million barrels as gasoline demand declined.


CENSUS OF AGRICULTURE RELEASE DELAYED... The USDA's National Agricultural Statistics Service (NASS) will delay publication of the 2012 Census of Agriculture that was scheduled for release Feb. 4, 2014, as a result of the work stoppage caused by the recent lapse in federal funding. A new release date has not yet been set.


HEARING SCHEDULED FOR MOTION TO DISMISS BPI'S DEFAMATION LAWSUIT AGAINST ABC NEWS... A Dec. 17 circuit court hearing has been scheduled for ABC News' motion to dismiss Beef Products Inc.'s (BPI) defamation lawsuit. BPI is seeking $1.2 billion in damages. Officials at the company say ABC's coverage of lean, finely textured beef (dubbed "pink slime") mislead consumers into believing the product was unsafe and unhealthy, resulting in the closure of three of its four plants and more than 700 layoffs.


FIRST PUBLIC MEETING ON FARM BILL CONFERENCE NEXT WEEK... The House and Senate Ag Committee leaders today announced the first public meeting on the 2013 Farm Bill conference committee will take place Oct. 30 at noon CT. On tap will be opening statements and a discussion of the House-passed farm bill (HR 2642).



CORN: Hedgers and cash-only marketers have 25% of expected 2013-crop production sold via cash forward contracts for harvest delivery. Back-and-forth price action in corn futures signals the market is building a floor of support, but there is still no concrete sign the market has posted a low. We believe a corrective rally will provide a better opportunity to increase cash sales.

BEANS: Hedgers have 100% of expected 2013-crop production sold for harvest delivery, while cash-only marketers are 75% sold on 2013-crop. With hedgers sold out, we're looking for an opportunity to reown a portion of cash sales in long futures/call options. The short-term trend has turned up, but there is still strong resistance at the June highs. Moving above that resistance would confirm a low is in place.

WHEAT: Get current with advice to be 75% sold on 2013 crop in the cash market if you are a hedger and 50% sold if you are a cash-only marketer. Recent price strength should be rewarded. The wheat market still has tough overhead resistance to clear, but doing so would be a sign there is more near-term upside potential, which could lead to buyback advice for hedgers on a portion of 2013-crop sales.

COTTON: 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 at 83.87 cents. Today's sharp price weakness makes the hedge very profitable.

CATTLE: Fed cattle producers should continue to carry risk in the cash market as there's more upside potential, and downside risk is relatively limited amid tightening supplies. Feeder cattle buyers should be prepared to use a corrective pullback to add long coverage as calf supplies are tight and the outlook is price-negative for buyers.

HOGS: Hog producers have 50% of expected 4th-qtr. production hedged in Dec. lean hog futures at an average price of $82.12 1/2. On signs a top is in place we would look to add coverage on first-half 2014 marketings.

FEED: 25% of 4th-qtr. protein needs are covered in long Dec. soybean meal futures at $422.20, and 25% of 1st-qtr. needs are covered in long March meal futures at $410.80. We'll advise long corn coverage on confirmation the market has posted a low.

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