Kleist Comments

CLOSING AGS 2/10/14
CLOSING AGS 2/10/14

Cattle: Cash cattle last week: $139-142.00. On 67 boxed loads cut outs up. $.22(c) to dn. $.20(s) on light midday movement.

Comments: USDA report: 2014 total red meat & poultry production lower on the month with higher beef production offset by lower pork and poultry (‘relatively large’ 4th Q placements 2013 to….carry through 1st half 2014….result(s) in larger 2014 kills); 1st half cow kills to stay relatively strong on ‘favorable cull prices’. 1st. Q avg. px. $137-$141.00; 2nd. Q $132-$140.00; 3rd. Q $128-$139.00. Beef imports and exports unchanged on the month. My take: supply-friendly 1st. half of year but no surprises.

The retail/export demand factors will determine how high cash cattle prices can be sustained.

Hogs: Interior hogs Not/Est. early west, firmer east.
Pork cut outs rose $.20, mixed trade.

Comments: USDA report: the wording here is important….pork production…lowered….” as reports of (PEDv) continues to spread”. My take: That’s not what I call a handle on that virus but it’s that unknown guessing that will rule, and keep premiums high in futures, until concrete evidence evolves. Avg. px. 1st.Q $59-61.00; 2nd.Q $64-68.00.

GRAINS & OILSEEDS:

Corn: USDA: Carryover 1.481bln.bu. down 150mln.bu. all due to an increase in exports of 150mln.bu.; avg. price $4.20-4.80 up $.10 on each side; world carryover 157.3mln.m/t’s off nearly 3.0mln.m/t’s largely due to increased global trade and a 1.0mln. drop in Argentine production. My take: the ‘missing’ ingredient perhaps is NO change in domestic use. The incrase in exports looked for by the trade included both. I will not split hairs here, it’s a friendly report. But at +40 cents off its lows, not sure I can look at $4.50 as ‘cheap’. Yes, already there’s talk of…..all this damn moisture around will surely delays plantings in spring and…..bean/corn ratio means we MUST lose several million acres to the soybeans. Only surprise is no one talking up a drought in the summer yet due to erratic winter weather.

Soybeans: USDA report: Carryover unchanged at 150mln.bu. as an increase in exprts of 15mln.bu. is offset by an increase in imports of 5.0mln. (mostly Canada) and a decrease of 10mln.bu. in residual use (here’s the non-negative USDA reason: usage took them away), and the crush was unchanged; world carryover about unchanged as Brazil raised 1.0mln.m/t’s and Argentina lowered 500,000t ( and other minor changes); avg. px. $112.95-13.45 up $.20 each end. My take: what’s bullish is bullish and what’s bearish is bullish? Seems so. March beans fell about 20 cents after the report but currently back a bit higher. Like the last report however, I believe the ‘negative’ part of the report will kick in on a delayed basis. The market knows South American crops are record large but there’s still time to milk the ‘no old crop beans around’ idea awhile longer.

Wheat: USDA carryover 558mln.bu. off 50mln.bu. and well lower than trade estimates (mine included); this was accomplished by an increase of exports by 50mln. (imports up 10mln. offset by food use up 10mln.); avg. px. $6.65-6.95 up $.05 on each end. World carryover 183.7mln.m/t’s was down 1.7mln.m/t’s due to….”largest declines for the U.S. and E.U. (ending stocks) partially offsetting increases for Argentina/Brazil and Ukraine (ending stocks). My take: March Chgo. basis this report does not to me suggest prices over $6.00.

DJ Iowa, U.S. Soybean Acres to Rise as Corn Area Falls — Market Talk

Soybean acres will jump 11% to 10.3 million in Iowa while land planted with corn will drop 2.2% to 13.3M acres, according to a survey by the Iowa-Nebraska Equipment Dealers Association and….(sic) Iowa is the biggest US producer of both crops. Nationwide, soybean acreage will rise 6.8% to 81.75M as corn area falls 1.8% to 93.15M acres, according to the survey. Corn for March delivery on the Chicago Board of Trade recently fell 1 1/2c, or 0.3%, to $4.42 3/4 a bushel.

Kleist Comments

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

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