NWS 6-10 DAY OUTLOOK FEATURES WESTERN CORN BELT PRECIP CHANCES... The National Weather Service forecast for September 17-21 calls for above-normal temps to continue across the Plains and Midwest, but for some relief in terms of dryness for the western Corn Belt and Plains. The forecast calls for above-normal precip across Iowa, Minnesota, western Missouri and the entire Plains region. If realized, rains would benefit some late-planted corn and soybeans, but for the bulk of crops, rains would be too late as plants are shutting down quickly due to recent extreme heat. Below-normal precip is forecast from eastern Indiana eastward, with normal precip expected in Illinois, western Indiana and eastern Missouri. Click here for related maps.
WEEKLY ETHANOL PRODUCTION INCREASES... The Energy Information Administration reports ethanol production for the week ended Sept. 6 climbed by 29,000 barrels per day (bpd) from the previous week to 848,000 bpd. This is above the four-week average of 833,000 bpd. Ethanol stocks rose 53,000 barrels to 16.27 million barrels. Interestingly, gasoline demand for the week averaged 361.4 million gallons daily -- the lowest in 17 weeks. Therefore, daily ethanol production expressed as a percentage of daily gasoline demand was the highest in eight weeks.
COOL SURVIVES DISTRICT COURT BATTLE... A U.S. district court judge today denied an injunction brought by meat processors to stop the government's county of origin labeling (COOL) plan. The meat packers' lawsuit against COOL remains alive, though District Judge Ketanji Brown Jackson rejected the request for a preliminary injunction. The judge said the industry failed to show it would suffer irreparable harm if COOL was in effect while the case is being decided.
Canada and Mexico are channeling COOL before the World Trade Organization as a trade barrier, but earlier this week we reported USDA Secretary Tom Vilsack said COOL was a battle worth fighting.
PF MIDWEEK MARKETING GAME PLAN UPDATE...
CORN: 100% of 2012-crop has been priced in the cash market as the 2012-13 marketing year is complete. For 2013-crop, hedgers and cash-only marketers have 25% of expected new-crop production sold via cash forward contracts for harvest delivery. While attitudes are negative and the market needs a bullish catalyst to spark a sustained price recovery, we are willing to dig in our heels and wait for what we feel is an overdue price recovery. But if tomorrow's reports trigger a bearish reaction, we may have to increase cash sales and/or add hedge coverage to limit downside risk moving forward.
BEANS: You should be 100% priced on 2012-crop in the cash market as the 2012-13 marketing year is complete. For 2013-crop, hedgers and cash-only marketers have 50% of expected new-crop production sold via cash forward contract for harvest delivery. Be prepared to increase cash sales and/or add hedge coverage if Nov. soybean futures fill the Aug. 26 gap, as that would signal at least a short-term top is in place. Otherwise, we'll wait to see if the contract can move to a new high before increasing sales.
WHEAT: The wheat market will continue to take its price cues from the corn market. We'll wait on an overdue price recovery before advancing 2013-crop sales unless there's a decided bearish reaction to USDA's reports tomorrow.
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. Maintain that hedge coverage unless the market signals a sustained and extended price rally is in the works.
CATTLE: The cattle market should continue to grind higher as supplies tighten. Therefore, fed cattle producers should continue to carry all risk in the cash market. Feeder cattle buyers should be prepared to add long hedge coverage if the corn market moves the next leg lower.
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. We'll use the price rally to heavy up 4th-qtr. coverage and to add 1st-qtr. 2014 hedges in Feb. lean hog futures, but with the current hedge coverage under water, we want to make sure a top is in place before increasing coverage.
FEED: 25% of 4th-qtr. protein needs are covered in long Dec. soybean meal futures and 25% of 1st-qtr. needs are covered in long March meal futures. Be prepared to extend coverage on a . price pullback as we feel prices are ultimately headed higher. We're also looking to add long corn coverage, although that market is giving us no indication of a sustained price rally.