First Thing Today (VIP) -- February 22, 2013

February 22, 2013 12:38 AM


BEANS CONTINUE TO SURGE... As of 6:30 a.m. CT, soybean futures are trading mostly 17 to 21 cents higher, corn is fractionally to 1 cent higher and wheat futures are 2 to 3 cents higher at all three exchanges. The U.S. dollar index is trading just below unchanged.

CHINA BUYS OLD-CROP BEANS, NEW-CROP CORN... A Reuters report citing trade sources says Chinese importers have booked at least nine cargoes of old-crop U.S. soybeans this week amid concerns of shipping delays out of Brazil. The trade sources say at least two of the cargoes were previous Chinese purchases of Brazilian soybeans that were switched to U.S. Gulf shipment. The remainder were prior purchases that were switched to shipment from the U.S. PNW or new purchases. Trade sources also told Reuters private Chinese feed mills purchased 240,000 MT of U.S. 2013-crop corn this week.

USDA 2013-14 OUTLOOK HIGHLIGHTS... Following are the highlights of USDA's outlook for 2013-14 from its annual Agriculture Outlook Forum.

CORN: Plantings of 96.5 mil. acres, harvested acres at 88.8 million with a national average yield of 163.6 bu. per acre for a 14.350 billion bu. corn crop. With total domestic use at 11.510 billion (4.675 bil. ethanol; 1.435 bil. non-ethanol food, seed & industrial and 5.4 billion feed/residual) and exports of 1.5 billion bu. puts carryover at 2.177 bil. bu. with an average cash farm price of $4.80 per bu.

SOYBEANS: Plantings of 77.5 mil. and harvested area at 76.6 million acres and a 44.5 bu. per acre yield results in crop of 3.405 billion bushels. Total domestic use is put at 1.795 billion bu. (crush of 1.660 bill., seed use of 87 mil. and residual of 48 mil. bu.) and exports of 1.5 billion bu. puts carryover at 250 million bu. with season average cash farm price of $10.50 per bushel.

WHEAT: Total seedings of 56.0 million acres and harvested at 46.5 million with a yield of 45.2 bu. per acre produces a crop of 2.100 billion bushels. Total domestic use is at 1.332 billion (1.032 billion bu. for food, seed and industrial, 300 million bu. of feed and residual) and exports of 950 million bu. leaves carryover at 639 million bu. with a season average cash farm price of $7 per bushel.

COTTON: Planted area at 10.0 million acres and harvested area of 8.4 million (16% abandonment) and a yield of 800 lbs. per acre produces a crop of 14.0 million bales. With total use of 14.8 million bales (mill use is put at 3.5 million bales with exports at 11.3 million bales) leaves carryover of 3.7 million bales with a season average farm price of 73.0 cents per pound.

LIVESTOCK: Beef production is seen down 3% at 25.1 billion lbs, with exports forecast at 2.45 billion lbs. and imports outpacing them at 2.57 billion pounds. Average cash cattle price seen at $125 to $134 per cwt. Pork output is seen up 0.7% at 23.4 billion lbs, with exports at 5.46 billion lbs. with only 800 million lbs. of imports. Average price (51%-52% lean live equivalent) seen at $61 to $65. Broiler production seen at 37.3 billion lbs, with exports at 7.25 billion lbs. with an average broiler price of 92 to 98 cents per pound.

WEEKLY EXPORT SALES REPORT OUT THIS MORNING... For the week ended Feb. 14, traders expect: corn sales between 150,000 and 350,000 MT; wheat sales between 400,000 and 600,000 MT; soybean sales between 300,000 and 600,000 MT; soymeal sales between 100,000 and 200,000 MT; and soyoil sales between 10,000 and 30,000 MT.

CME GROUP WARNS OF POSSIBLE SEQUESTRATION IMPACTS... CME Group said Thursday across-the-borad spending cuts (sequestration), should they happen on March 1, could have an impact on the physical delivery and cash settlement mechanisms of certain CME livestock and dairy products. CME Group says, "As the CME live cattle contract utilizes USDA grading/inspection in the delivery process, a furlough of USDA staff may require the Exchange to modify in accordance with Exchange rules the current operational process around delivery/settlement of these products. In addition, CME Group's cash-settled livestock and dairy products could also be impacted in the event the data used to compile these indexes is unavailable. Finally, CME Group's spot call dairy markets could be impacted in the event USDA grading/inspection staff is unavailable effective on March 1, 2013."

FEEDLOT INVENTORY TIGHTENING, BUT PLACEMENTS COULD BE THE KEY... USDA's monthly Cattle on Feed Report will show feedlot inventories well below year-ago, traders know that. The "read" from the report will likely come from the Placements category as analysts surveyed are split on whether that figure will be up or down from year-ago. The average pre-report guesses put On Feed at 93.8%, Placements at 100.3% and Marketings at 104.7% of year-ago.

HEFTY PORK STOCKS EXPECTED IN COLD STORAGE REPORT... USDA's Cold Storage Report is expected to show pork stocks in storage as of Jan. 31 at 608.2 million lbs., based on the avearge pre-report guess. That would be just shy of the January record of 606.9 million lbs. posted in 2009. Beef stocks are guessed at 481.1 million pounds.

CASH CATTLE TRADE DONE?... Cash cattle sales volume has been moderate at best in the Plains this week, but cash sources signal trading activity may be done for the week. With a strong winter storm dumping heavy amounts of snow on the Plains, packers and feedlots may wait to reassess the supply/demand situation next week.

PORK CUTOUT DECLINES... The pork cutout value was 57 cents lower Thursday following two days of strong gains to start the week. Until the pork product market shows consistent strength, traders will be reluctant to move money into the long side of lean hog futures, especially given export demand concerns.

OVERNIGHT DEMAND NEWS... Japan bought 37,773 MT of milling wheat and 24,026 MT of food-grade barley.


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