Evening Report (VIP) -- September 21, 2012

September 21, 2012 10:01 AM

CATTLE ON FEED REPORT: FEEDLOT SUPPLIES SLIGHTLY LOWER THAN EXPECTED... USDA reports feedlot inventories totaled 10.637 million head as of Sept. 1. At 99% of year-ago, that figure was slightly less than the average pre-report guess. While August marketings were lighter than expected, the number of calves placed into feedlots last month was also less than anticipated.

A breakdown of calf placements during August shows: lightweights down 32.6%, 6-weights up 5.5%, 7-weights down 0.2% and heavyweights down 4.3% from year-ago levels. That would suggest the supply of lightweight calves is very light and feedlots aren't overly interested in putting animals on feed for an extended period given high feed prices.

The lighter-than-expected Marketings number, along with slaughter weights running well above year-ago suggests feedlots are falling behind on cattle sales. With declining feedlot inventories, that's not a major concern, but it could become a greater issue if the trend continues.

COF Report




% of year-ago levels

On Feed













Based on the report data, traders should bear spread the market Monday -- sell nearby futures and buy deferred contracts. But the bulk of traders' attention will be on the boxed beef and cash cattle markets as traders anticipate short-term tops.



COLD STORAGE REPORT: PORK STOCKS RECORD LARGE FOR AUG. 31... USDA's Cold Storage Report showed total pork stocks were record large for the end of August at 580.783 million pounds. That was 33.5 million lbs. more than the average pre-report guess. Pork stocks rose 5.7% during August and came in 31.1% above year-ago.

Beef stocks totaled 429.785 million lbs. on Aug. 31, which was below the average pre-report trade guess of 453 million pounds. Beef stocks declined 6.8% during August and are now just 0.3% above year-ago.

Total frozen poultry stocks as of Aug. 31 were 1.213 billion lbs., up 0.9% from July, but 1.2% under year-ago.



INFORMA UPDATES ACREAGE ESTIMATES... Based on the latest USDA Farm Service Agency (FSA) certified acreage data, Informa Economics reportedly increased its planted corn acreage estimate to 97.2 million -- 767,000 acres higher than USDA's June estimate, but 385,000 fewer than Informa previously estimated based on earlier FSA data. Informa raised its planted soybean acreage estimate to 77.1 million -- 1.06 million acres more than USDA's June estimate, but 489,000 fewer than the firm's previous peg.

Based on the new acreage estimates, Informa reportedly increased its forecast for the 2012 corn crop to 11.093 billion bu. with a yield of 126.6 bu. per acre and raised its soybean production peg to 2.662 billion bu. with a yield of 35.2 bu. per acre.

For 2013, the firm projects corn acreage at 97.5 million (365,000 above its revised 2012 estimate), soybean acreage at 79.9 million (2.7 million above its revised 2012 estimate), all wheat acreage at 57.1 million acres (1.3 million above its 2012 estimate) and cotton acreage at 10.017 million (2.3 below its 2012 estimate).



INFORMA MILDLY RAISES U.S. WHEAT CROP ESTIMATE... Sources familiar with Informa Economics say the firm has updated its U.S. wheat production estimates ahead of next week's USDA Small Grains Summary. Informa reportedly pegs the U.S. wheat crop at 2.273 billion bu., 5 million bu. above USDA's August estimate of 2.268 billion bu.; the spring wheat crop at 525 million bu., 25 million bu. above USDA's current peg; and the winter wheat crop at 1.66 billion bu., 23 million bu. below USDA's last estimate.



UKRAINE RAILWAYS SEEK EXPORT QUOTA DOCUMENTATION... Earlier this month Ukraine's ag ministry and exporters reportedly agreed that 2012-13 wheat exports would not exceed 4 million metric tons (MMT), but the ministry has said it would avoid grain export limits despite drought-reduced production. However, Ukraine's state railway administration today reportedly ordered local railways to ask traders for export quota documentation. The ag ministry says the move by the state railway is a "misunderstanding" and that no quotas or limits are in place. But this is leading to speculation the government is concerned about tightening supplies. Meanwhile, Ukraine has told its trading partners it wants to raise maximum tariffs on hundreds of imported goods.

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