Margin Watch: May

June 2, 2013 by Chip Whalen

Hog
Margins improved since the middle of the month as strength in hogs more than offset feed cost increases, particularly for soybean meal. While corn prices advanced as well over the past two weeks, most of the gain was focused on new-crop contracts due to ongoing concerns of planting delays. As of this past Sunday, May 26, only 86% of the intended corn acres had been planted according to USDA vs. 99% last year and the 10-year average of 92%. May 31 is the cutoff date for taking preventative planting in Iowa and Illinois, and there has been widespread discussion that final corn acreage may end up 1-2 million below the Prospective Planting estimate. Soybean meal prices have been supported by a continued strong export pace and a slowdown in domestic crush due to processors having difficulty sourcing remaining old-crop soybean supplies. While hog futures have been supported by a stronger trend recently in both the pork cutout and cash hog markets, there have been concerns … Get the Complete Report »

Dairy
Dairy margins continued to weaken through the second half of May as higher projected feed costs have begun to erode profitability against a backdrop of steady milk prices over the past two weeks. New-crop corn prices in particular have been showing strength as planting delay concerns continue to fester. USDA reported corn planting progress for the week ending May 26 at only 86% complete vs. 99% last year and the 10-year average of 92% for this point in the season. May 31 is the preventative planting date in both Illinois and Iowa and talk is growing that final acreage may be 1-2 million below the March Prospective Plantings estimate. Soybean meal prices have likewise firmed as a combination of strong exports and slowing domestic crush are supporting the higher price trend. The milk market meanwhile has been … Get the Complete Report »

Beef
Beef margins improved since the middle of May, particularly in forward marketing periods where feeder cattle are yet to be priced. Margins against both the December and February marketing periods in particular remain quite strong, at or above the 90th percentile on a historical basis. Margins improved despite an increase in corn prices over the past two weeks, as a slight decline in feeder cattle prices and increase in fat cattle prices more than offset the increased feed cost projection. USDA’s crop progress report last week pegged corn planting at 86% complete for the week ending May 26 compared to 99% last year and the 10-year average of 92% for this point in the season. Recent wet weather across the Midwest has slowed further planting progress and the key states of Iowa and Illinois have reached their preventative planting deadlines. With corn planting progress only expected to reach around … Get the Complete Report »

Corn
Corn margins have strengthened since the middle of May as both basis values and futures’ prices have risen. Old crop fundamentals remain fairly anchored, as export sales and shipments continue at a sluggish pace while ethanol production has picked up in recent weeks. In fact, weekly production runs have come back to last June’s levels as profitability has picked up over the last few weeks says Mark Rochon Washington DC. For new crop corn, the key has been, not surprisingly, weather. Rain has been the feature over the course of the past two weeks, and plenty of it. While that weather profile would have been more than welcomed last year, it has delayed seeding and brings a prevent plant scenario into the picture. NASS recently reported that 86% of the intended crop has been planted versus 91% on average. However, with the recent rains and prospects for further moisture, farmers will now debate leaving … Get the Complete Report »

Soybean
Soybean margins have strengthened further since the middle of May as the rise in futures’ prices offset lower basis values. Demand for old crop beans remains robust despite elevated basis levels. NOPA recently reported the crush pace for April at 120.1 million bushels, roughly 5 million bushels below the average trade guess, but well above what’s needed to meet the current USDA estimate. Export shipments continue to exceed the average pace while sales have been mixed over the period with net cancellations occurring on a few occasions. Export sale commitments remain at 100% of what the USDA expects to be shipped by the end of the marketing year on August 31. For new crop soybeans, weather has played its role this season as excessive … Get the Complete Report »

Wheat
Wheat margins have appreciated since the middle of May as both futures’ prices and basis values have increased. A mixed bag has been the wheat market over the last few weeks as the market evaluates the winter wheat harvest and spring wheat planting. Winter wheat harvest has been delayed to a degree due to the persistently wet weather. The arrival of new supplies has put some pressure on the market while delayed planting of spring wheat has helped to support prices a bit. NASS recently reported planting progress to be 79% complete versus 86% on average. In a bit of negative news, GMO wheat has been found in fields in Oregon. This could have a potentially … Get the Complete Report » Read more about best air compressor on the official website.

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