Kleist Comments

CLOSING AGS 11/15/13
CLOSING AGS 11/15/13

Cattle: Cash cattle: $132.00 Tx./Ks. up $1.00; On 67 boxed loads cut outs dn. $1.36(c) to dn. $.28(s) on light midday movement.

Comments: Well, futures did hold important support and now early cash cattle sales better than I would have expected. Better considering the recent beef price performance and low weekly export sales.

Hogs: Interior hogs early unquoted east and west dn. about $1.33 and under $79.00; pork cut outs fell $1.62 led by hams, loins & bellies.

Comments: Futures held important chart support and keeping its premium in the Dec. to the interior avg. and now over the lean index. Perhaps the market saying PED is alive and well and coming to deal with soon. One credible source mentioned a large producer saying 260,000 sows in South Carolina and 200,000 sows in Texas reported affected. As such, might be time to protect hedge equity via option calls.

GRAINS & OILSEEDS:

Corn: Two-side trade in what looked like subdued volume due to the funds being ‘busy’ elsewhere (beans). Nonetheless, the tidal pull from the sharp losses in the soymeal precluded a sustainable rally. Demand was only able to ‘save’ the December somewhat but via spreads.

LATE SESSION BREAK:

15 Nov 2013 14:00 EST DJ EPA Shrinks Ethanol Mandate for First Time Right-click here to download pictures. To help protect your privacy, Outlook prevented automatic download of this picture from the Internet.

By Tennille Tracy and Keith Johnson

WASHINGTON–The Environmental Protection Agency on Friday proposed for the first time to ease an annual requirement for ethanol in gasoline, acknowledging that mandated levels specified in a 2007 law are difficult, if not impossible, to meet.

The EPA is asking refiners in 2014 to blend 15.2 billion gallons of renewable fuel–most of it ethanol–into U.S. gasoline supplies. That is about 16% less than what Congress specified in a 2007 renewable fuels law. The law gives EPA the ability to lower the requirement.

The move represents one of the biggest setbacks to date for ethanol, long seen as a promising way for the U.S. to reduce dependence on imported oil. Most U.S. ethanol comes from corn.

The recent surge in domestic oil and gas production, coupled with a decline in the demand for transportation fuel, has lessened the appeal of ethanol. At the same time, food producers said the ethanol mandate makes animal feed more expensive by raising corn demand.

The EPA’s proposal, which will be open to 60 days of public comment before being made final in the spring of next year, trims volume requirements for all kinds of biofuels. The EPA proposed that between two billion and 2.5 billion gallons of advanced biofuels be blended into the nation’s fuel supply. That’s significantly less than the 3.75 billion gallons mandated by the 2007 law for advanced biofuels, a category that includes fuels made from things other than corn.

Those volumes would leave between 12.7 billion and 13.2 billion gallons of corn ethanol in the nation’s mix. That’s lower than any time since 2011.

Soybeans: Sharply lower and caught me blind-sided. The only tip off might have been that ‘battle’ I mentioned as open interest shot up 5,100 yesterday. Perhaps the funds playing a longer term scheme as South American planting weather turned ideal basically and portends a huge crop if growing weather allows it. Secondarily, but importantly, From a source: The FSA preventive planting acres are the 2nd highest on record at 8.8 million acres. Average prevent planted acres 2.5 to 3.0 million acres, hence producers could plant an additional 5 to 6 million acres in 2014 should conditions allow it. Or maybe that the EPA’s biofuels wasa part of the equation and the timing of the large shortselling very suspect; technically prices crashed through extensive m/a support areas. We’ll pick up the pieces Monday.

Wheat: As with the corn, wheat not given the funds short-side attention as seriously as yesterday. However, Chicago held (until corn fell late) while K.C. and Minn. stayed pressured. Weekly export sales were poor but in the market. Key will be IF they stay poor.

Kleist Comments

This is John Kleist, of Kleist Ag Consulting.
Questions? Email me: johnwkleist@sbcglobal.net

Disclaimer: Trading options and commodities involves risk of loss and my not be for every investor. Past trading results may not be indicative of future performance. Although information and opinions provided herein are compiled from sources believed reliable, the sender, EBOT Trading, or its principals cannot attest as to accuracy or assume any responsibility for any errors or omissions as the information may not be complete or events may have changed.