Evening Report (VIP) -- September 20, 2013

September 20, 2013 10:04 AM

CATTLE ON FEED REPORT: MORE FRIENDLY THAN EXPECTED... USDA's monthly Cattle on Feed Report showed all categories on the friendly side of the average pre-report guesses. The combination of smaller-than-expected Placements and heavier-than-expected Marketings last month left the Sept. 1 feedlot supply slightly less than anticipated.

Report expectations


Avg. Trade Guess


% of year-ago levels

On Feed












A breakdown of calves placed into feedlots last month shows all weight categories down from year-ago, suggesting the animals just aren't there -- or cow-calf operators are holding back heifers for breeding purposes. Because we don't have a mid-year Cattle Inventory Report any longer (due to budget cuts), we are left guessing at the reason. But we know that calf placements are declining and that trend will very likely continue.

With all three categories coming in on the bullish side of the pre-report guesses, the data should give cattle futures a boost on Monday. After technical action hinted that a short-term low was posted earlier this week, this could (should) be enough to trigger the next rally attempt in live cattle futures.



PRO FARMER RAISES CORN CROP ESTIMATE... Pro Farmer is sticking with our 154.1-bu.-per-acre national average corn yield estimate. We know that will upset some of our Members, but with record ear populations and already-reduced ear weights factored into USDA's national average yield peg of 155.3 bu. per acre, we feel there's a little downside risk to yields after the stressful kernel-fill period, but not a lot due to the record ear populations.

But Pro Farmer is making some adjustments to our harvested acreage estimate based on Farm Service Agency (FSA) certified acreage data released this week. We now estimate harvested acres at 87.593 million, which compares to our Aug. 24 estimate of 87.335 million acres and USDA's current peg of 89.135 million acres. The result is a crop of 13.5 billion bu., up just 40 million bu. from our previous estimate.



PRO FARMER LOWERS SOYBEAN CROP ESTIMATE... Pro Farmer updated our soybean crop estimate this week, based on updated FSA certified acreage data and recent crop condition observations. In August, FSA data suggested bean plantings were about 800,000 acres below USDA's peg, and our Aug. 24 crop estimate included a harvested acreage estimate 800,000 acres below USDA’s harvested acreage tally. We now see harvested soybean acres of 75.961 million, up 383,000 from our previous harvested acreage estimate. However, our harvested acreage tally is still 417,000 below USDA’s current harvested acreage estimate of 76.378 million.

We also lowered our national average bean yield estimate by 1 bu. per acre since our Aug. 24 estimate to 40.8 bu. per acre. USDA's current national average yield projection is at 41.2 bu. per acre. We lowered our yield estimate based on (1) extremely stressful conditions, as much of the Midwest bean crop was trying to build bean size; (2) our aerial observations of the bean crop in northeastern Iowa and southeastern Minnesota; and (3) Member reports on the earliest beans harvested.

The result is a bean crop estimate of 3.097 billion bu., 52 million bu. below USDA’s September forecast of 3.149 billion bu. and 61 million bu. less than our previous estimate.



INFORMA ADJUSTS ACREAGE, CROP PEGS... Sources familiar with Informa Economics say the firm has adjusted its corn and soybean acreage estimates based on the latest round of Farm Service Agency (FSA) certified acreage data. The firm reportedly dropped its planted corn acreage tally by 1.5 million from USDA's June estimate to 95.8 million and lowered its corn harvested acreage estimate to 88.1 million acres. For soybeans, Informa reduced harvested acres by 391,000 from USDA's current peg to 75.987 million acres.

As a result of the revised acreage estimates, Informa now reportedly estimates 2013 corn production at 13.889 billion bu., which is 46 million bu. above USDA's September estimate. Informa now reportedly estimates 2013 soybean production at 3.224 billion bu., 75 million bu. above USDA's current estimate.



EPA PROPOSES CLEAN AIR ACT STANDARDS FOR NEW POWER PLANTS... The U.S. Environmental Protection Agency (EPA) today proposed Clean Air Act standards to cut carbon pollution from new power plants, as directed by President Obama's June 25 memorandum as part of his Climate Action Plan. Under today's proposal, new large natural gas-fired turbines would need to meet a limit of 1,000 pounds of CO2 per megawatt-hour, while new small natural gas-fired turbines would need to meet a limit of 1,100 pounds of CO2 per megawatt-hour. New coal-fired units would need to meet a limit of 1,100 pounds of CO2 per megawatt-hour, and would have the option to meet a somewhat tighter limit if they choose to average emissions over multiple years, giving those units additional operational flexibility. The proposed standards will be open for public comment for 60 days following publication in the Federal Register.

EPA has also initiated broad-based outreach to establish carbon pollution standards for existing power plants; the president's memorandum requires the agency to propose these by June 1, 2014. Get more details.



MORE DETAILS ON PASSED HOUSE FOOD STAMP BILL... Yesterday's passage of a measure cutting $39 billion over 10 years from food stamp funding in the House has spurred questions about at what level of cut any eventual farm bill conference measure will ultimately arrive. Some say Senate farm bill conferees will negotiate for a final number between the $4 billion cut in the Senate and the $20.5 billion in the original House farm bill, with Ranking House Ag Committee member Collin Peterson (D-Minn.) saying the final cut could be in the $8-billion to $10-billion range, while others have signaled a cut of $10 billion to $12 billion.

Washington Consultant Jim Wiesemeyer notes that House farm-state Democrats likely erred in voting against the initial House farm bill, which had $20.5 billion in food stamp funding cuts. Now they are faced with a strengthened House Republican hand going into the farm bill conference, and will likely have to accept a final figure above the $8 billion to $10 billion figure Peterson has indicated.

Further, Jim notes that if the House and Senate cannot reach an accord on nutrition funding, many nutrition programs would likely continue at current spending levels under other bills to keep federal agencies funded into the new fiscal year, which starts on Oct. 1. The two chambers are working on a short-term measure that would fund agencies through mid-December at current levels, giving lawmakers time to negotiate spending levels for the remainder of the year. Learn more.


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