Evening Report (VIP) --March 22, 2013

March 22, 2013 10:33 AM
 

CATTLE ON FEED REPORT: BULLISH... This afternoon's Cattle on Feed Report showed the total number of cattle on feed was lighter than expected and placements came in much lighter than anticipated. Marketings were just above expectations. This signals that feedlots are current and feeder calf supplies are tightening. With the amount of pressure the cattle market has been under lately, this is exactly what it needed to put in a low.

COF Report

USDA

Average

Range

% of year-ago levels

On Feed

93%
93.5

92.9-94.6

Placements

86%

91.0

86.3-96.3

Marketings

93%

92.7

91.2-96.0

A breakdown of cattle placed into feedlots last month reveals: Lightweight calf placements were down 11.3%; 6-weights were down 19.4%; 7-weights were down 13.2%; and heavyweights were down 8.0%.

 

COLD STORAGE: PORK STOCKS COME IN AS EXPECTED... Pork stocks in storage as of Feb. 28 totaled 636.693 million lbs., which came in just below expectations for 637.5 million pounds. This represents a 5% increase from the previous month and a 2% increase over year-ago. Stocks of pork bellies rose 17% from last month, but this tally was down 31% relative to year-ago. Also of note, bone-in picnics were up 27% from year-ago and up 29% from last month.

Frozen beef stocks at the end of February totaled 490.313 million lbs., which topped expectations by more than 14.4 million pounds. This represents a 1% increase from last month and a 4% increase over year-ago.

Poultry stocks as of February 28 totaled nearly 1.037 billion lbs., which represents a 9% increase over year-ago and a 2% increase over the month prior.

 

CFTC APPROVES NEW TRADING HOURS FOR CME GROUP, MGEX... The Commodity Futures Trading Commission (CFTC) today approved CME Group's plan to cut its trading hours from 21 hours of trade to 17 hours for grain and oilseeds and Kansas City Board of Trade (KCBT) markets beginning April 8. The following is the new trading schedule for these markets:

  • Sunday to Friday, electronic trading from 7:00 p.m. to 7:45 a.m. CT
  • Monday to Friday, break in electronic trading from 7:45 a.m. to 8:30 a.m. CT
  • Monday to Friday, floor and CME Globex trading from 8:30 a.m. to 1:15 p.m. CT

CFTC also approved the new, reduced trading hours for the Minneapolis Grain Exchange's (MGEX) HRS wheat futures and options. These changes will also go into effect April 8. MGEX trading hours will be: Sunday to Friday, electronic trading from 7:00 p.m. to 7:45 a.m. CT, a break in electronic trading from 7:45 a.m. to 8:30 a.m. CT and then floor and electronic trading from 8:30 a.m. to 1:30 p.m. CT. The daily settlement time will remain unchanged at 1:15 p.m. CT.

 

BRAZIL READY TO PUSH MEAL, SOYOIL EXPORTS... The current tax structure in Brazil favors the export of soybeans and discourages exports of soybean meal and soyoil. The Brazilian government has already wrapped up consultations with exporters on a plan to give crushers tax credits to encourage meal and oil exports, while lowering incentives on bean
exports, Reuters newswire reported today.

 

INFORMA UPDATES 2013-CROP ACREAGE PEGS... Sources familiar with Informa Economics say the firm has released its 2013-crop acreage projections ahead of the March 28 USDA Prospective Plantings Report.

  • Corn: 97.753 million planted; up from 97.155 million in 2012.
  • Soybeans: 78.457 million planted; up from 77.198 million in 2012.
  • Cotton: 10.367 million planted; down from 12.315 million in 2012.
  • All wheat: 56.074 million planted; up from 55.736 million in 2012.
  • Spring wheat: 12.364 million planted; up from 12.289 million in 2012.

 

REVIEW OF THE ETHANOL MANDATE IS NEEDED & LIKELY... The petroleum industry wants to repeal the renewable fuel standard (RFS), saying the prospect of hitting the ethanol blend wall in 2013 has already caused steep increases in renewable fuel credit prices, with refiners predicting major economic harm in the coming years. The blend wall is the point at which the amount of ethanol that must be blended into the gasoline supply to meet the country's renewable fuel mandate exceeds 10%, the maximum that can be safely used by all vehicles and small engines.

The Energy Information Administration (EIA) projects the U.S. will consume 133.37 billion gallons of gasoline in 2013, but the Environmental Protection Agency's (EPA) proposed renewable fuel standard (RFS) would require 13.8 billion gallons of ethanol, 10.4% of the fuel supply and 16 billion gallons less than forecast in 2008. The mandate jumps to 14.4 billion gallons of ethanol for 2014. At the time the Energy Act of 2007 was passed, forecasts by the EIA for gasoline consumption implied almost 150 billion gallons of blended gasoline by 2014.

Both ethanol producers and petroleum refiners agree EPA should reduce the amount of advanced biofuels that will be required in 2013 because cellulosic ethanol production has not yet reached commercial scale. In previous years, EPA has drastically reduced the requirement for cellulosic ethanol, which is a subset of advanced biofuels, but it has not reduced the total advanced biofuels requirement by a commensurate amount. Instead, the gap has been filled by imported sugar cane ethanol from Brazil.

As noted in "First Thing Today," there is a growing belief that Congress will revisit the fuel standard blending requirements regarding the 2014 ethanol mandate, but no change is expected when EPA finalizes its requirements for 2013. Get more details.

 

BANK SURVEY FINDS NEAR-10% RISE IN CASH RENTS FOR 2013... LandOwner Editor Mike Walsten reports a survey of rural bankers in 10 Midwestern states signals they expect farmland cash rents, on average, to climb by 9.3% in 2013 from last year. The findings are part of the regular monthly Rural Mainstreet Index update of rural banker attitudes conducted by Creighton University Economist Dr. Ernie Goss. The March update found: the rural economy continues to expand; bankers expect cash rents for farmland to grow by 9.3% this year; agriculture input prices are expected to grow by 6.5% from last year; and more than half of bankers reported an upturn in the percentage of farmland purchases that are bank-financed. Click here for more information in Your Precious Land.

 

NUTRIENT REDUCTION STRATEGY NEEDS VOLUNTARY EFFORT, NOT EPA REGULATION... Inputs Montior Reporter Davis Michaelsen wraps up a three part blog series with an interview with Iowa Secretary of Agriculture Bill Northey. As crop and livestock producers look for ways to reduce the flow of nitrogen and phosphates into the watershed, Northey lends insight into what growers across the Midwest can do to avoid EPA taking a regulatory role in nutrient management on the farm. Click here for the interview.

 

MARCH MADNESS HITS THE MEAT MARKETS... Pro Farmer Senior Market Analyst Brian Grete and News Editor Julianne Johnston discuss demand concerns in the meat markets on AgDay. Click here to view.

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