Evening Report (VIP) -- September 26, 2013

September 26, 2013 09:45 AM
 

HOGS & PIGS REPORT TO REFLECT EXPANSION PLANS... Traders expect tomorrow afternoon's Quarterly Hogs & Pigs Report to show All Hogs & Pigs at 98.6% and Kept for Marketing at 98.3% of year-ago to reflect the recent tightening of supplies. But the report is expected to reflect producers' expansion plans, as the average pre-report guess for Kept for Breeding is 101.5% of year-ago. The report will be released at 2:00 p.m. CT.

Because of the recent contra-seasonal rise in hog prices due to smaller-than-expected marketings (thought to be the result of PEDV disease and gilt retention), as well as lower feed prices, traders expect fall and winter farrowing intentions to be around one percentage point above year-ago. Interestingly, traders expect pigs per litter to be steady with year-ago, which, if realized, would suggest efficiency in the farrowing house is stabilizing.

Quarterly H&P Report Expectations

Avg. trade guess

Range

 

% of year-ago

All Hogs and Pigs

98.6

96.4-100.3

Kept for breeding

101.5

100.6-102.0

Kept for marketing

98.3

95.9-100.2

June-Aug. pig crop

99.6

98.4-101.7

June-Aug. pigs per litter

100.0

98.5-101.8

June-Aug. farrowings

99.8

98.2-100.9

Sept.-Nov. farrowing int.

101.0

100.0-101.8

Dec.-Feb. farrowing int.

101.1

99.9-102.1

Hogs under 50 lbs.

98.8

97.0-101.6

Hogs 50 to 119 lbs.

98.9

96.1-100.0

Hogs 120-179

98.3

95.9-101.1

Hogs 180 and over

96.2

94.0-99.3

 

SOYBEAN EXPORT SALES OFF TO A STRONG START... Based on USDA's Weekly Export Performance Indicator, the 2013-14 marketing year is off to a strong start for soybeans. Meanwhile, with corn export demand in a rebuilding phase, the data suggests corn sales need to pick up the pace to reach USDA's corn export forecast. Following is a snapshot based on the performance indicator:

Corn: With 49 weeks left in the 2013-14 marketing year, total corn bookings are running 37% ahead of year-ago. USDA projects 2013-14 exports at 1.225 billion bu., which would be up 66.7% from the previous marketing year. USDA reports total bookings as a percent of total exports are at 45% compared to 56% last year at this time and a five-year average of 36%. With demand still rebuilding from last year and the marketing year just beginning, USDA has plenty of time before revising its export forecast.

Soybeans: Just three weeks into the 2013-14 marketing year, total soybean bookings are running 16% above year-ago. USDA projects exports of 1.37 billion bu., which would be a 4.2% increase from 2012-13. USDA reports total bookings as a percent of total exports are at 69% compared to 61% last year and the five-year average of 46%. The USDA data reflects a very strong start for exports, which raises traders' expectations that USDA could raise its export projection in next month's Supply & Demand Report.

Wheat: With 36 weeks left in the 2013-14 marketing year, total wheat bookings are running 38% ahead of year-ago. USDA projects wheat exports at 1.10 billion bu., up 9.2% from last season. Total commitments (sales plus shipments) are at 59% of USDA's export forecast, which is ahead of the five-year average of 52% and last year's pace of 49%. The data points to USDA raising its export forecast, although there is still a lot of marketing year ahead. Click here for details from the latest weekly sales report.

 

IGC RAISES GLOBAL GRAIN CARRYOVER SLIGHTLY... The International Grains Council (IGC) raised its total global grain carryover forecast for 2013-14 by 2 MMT from last month to 367 MMT, up from 330 MMT in 2012-13. The group raised its global wheat carryover forecast by 4 MMT from last month to 180 MMT (175 MMT in 2012-13), which was slightly offset by a 2-MMT reduction to global corn carryover to 148 MMT (121 MMT in 2012-13). Meanwhile, IGC trimmed its 2013-14 global soybean carryover projection by 3 MMT from last month to 29 MMT, which is up 3 MMT from 2012-13.

In a special report on Chinese demand prospects, IGC says reports of poor milling-quality wheat are behind rising wheat needs and says despite a record corn harvest, high domestic prices and internal transportation costs make imports of corn cost-competitive. Read more.

 

DROUGHT MONITOR NOTES VARIED PLAINS MOISTURE... The National Drought Monitor reflects slight drought expansion across Kansas, with 43.9% of the state covered by drought. But slight drought improvement was noted across Texas and Oklahoma over the past week. For the Midwest, the monitor reflects slight improvement, although "extreme" drought was introduced into western Iowa. Click here for related maps.

 

BANKER SURVEY POINTS TO SLOWDOWN IN FARMLAND PRICE GROWTH... LandOwner Editor Mike Walsten reports the monthly farmland price index maintained by Creighton University provides further indications the pace of increase in farmland values has slowed. Click here for more.

 

USDA REPORTS STUDY: LIKELY SMOKING GUN... As reported in "First Thing Today," the University of Illinois study to examine why USDA reports and trade expectations have diverged at times is expected to be completed this fall. Traders continue to think USDA is not adequately accounting for what they say has been a significant increase in on-farm storage in key corn areas of the country and that corn-based ethanol has a more efficient extraction rate than USDA currently assumes.

But PF Washington Consultant Jim Wiesemeyer cautions the report may echo what USDA's own analysis of the situation has been: they have not been able to determine why the spread between expectations and actual data has arisen. And, on the farm storage front, Jim notes National Ag Statistics Service (NASS) does track that data and has been reporting an increased level of on-farm storage facilities on an annual basis the past several years. That would tend to suggest that if traders are on the mark with their contention on ethanol extraction rates, that may be the "smoking gun."

But odds are the corn-based ethanol component of usage probably has reached a plateau of sorts given the expectation that EPA will reduce the Renewable Fuels Standard (RFS) requirements for 2014 compared to the levels spelled out in law. And the corn-based ethanol component was poised to top out in 2015 as well under the 2007 energy law.

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