Margin Watch: October

November 2, 2012 by Chip Whalen

Hog
Margins deteriorated since the middle of the month as corn and hog prices were relatively flat while soybean meal prices have begun to firm. Hog finishing margins remain extremely depressed in spot Q4, existing in the bottom decile of the past 10 years and Q1 2013 is likewise historically weak and also reflecting a loss. Deferred margins in the second half of 2013 still look like the best opportunity right now to protect above-average profitability in The Official AGEN judi online SBOBET Casino Slots Jawarabet Game. Hog prices appear to be stabilizing after some recent weakness although concerns remain about heavy supplies. Hog slaughter last week totaled 2.379 million head, 3.1% larger than last year with the slaughter pace running about 3.4% above a year ago since the beginning of September. Hog weights have also been trending … Get the Complete Report »

Dairy
Dairy margins deteriorated slightly since the middle of October, although forward profitability remains relatively high from a historical perspective. Spot milk prices are very high with the October Class III price announced at $21.02/cwt., up $2.02 from September and $2.99 higher than last year. Deferred futures are trading at a discount which suggests that cheese prices will moderate over the near-term although this is far from certain. September milk production from the USDA was reported at 14.67 billion pounds, down 4.4% from August and 0.5% lower than 2011. Milk per cow during September was pegged at 56.9 pounds per head/day which was down 4.1% month over month compared to a seasonal decline of 0.7%. Total milk cows also declined 27,000 head from August as herd liquidation continues. Countering this however were monthly Cold Storage data that reflected cheese inventories only down 0.8% during September when seasonally they normally … Get the Complete Report »

Beef
Beef margins generally were weaker over the past two weeks with the exception of the October 2013 marketing period which showed a marginal improvement and is now approaching the 90th percentile of the past five years. Overall, prices have been quite steady since the middle of October with only small movements in corn, feeder cattle and live cattle futures. The USDA September Cattle on Feed report showed feedlot placements during the month at 2.004 million head, down 19.6% from last year and the lowest September placement figure on record. The number was also about 5% below analysts’ expectations and is the third straight month that feedlot placements have declined by more than 10% from last year, signaling that spring fat cattle supplies are going to be very … Get the Complete Report »

Corn
Corn margins have improved slightly since the middle of October as futures prices have strengthened while basis levels remain elevated. Harvest progress continues to advance at a rapid, near-record pace this year, with 91% of the crop harvested to date. Debates surrounding total production remain, as some market participants argue the USDA is still too high on the harvested acres estimate. USDA announced it would not make any changes to abandonment until the January crop report when production for the crop year is finalized. Demand prospects therefore will be the main focus for price direction in the near-term. Weekly ethanol production remains below last year’s level and is currently running 7.8% behind last year’s pace while the USDA estimates a slowing of 10% for the crop year. Export demand has been quite … Get the Complete Report »

Soybean
Nearby soybean margins have improved since the middle of October while deferred 2013 soybean margins have likewise strengthened during the period. Soybean harvest has advanced at a near-record pace this year as plant maturation occurred much earlier than normal due to the extreme heat this summer and early spring planting. The latest reports show that 87% of the crop has been harvested. With harvest advanced, the market will begin determining whether demand forecasts are achievable. NOPA recently released its crush figure for September, reporting 119.7 million bushels crushed for the month, up from 110.3 last year. NOPA members represent roughly 95% of all domestic crushing plants which would translate to approximately 126 million bushels crushed for the month including non-members of NOPA. The current USDA projection is for a crush rate of 1.54 billion bushels, translating to just over 128 million bushels per month. Export sales and shipments have been quite … Get the Complete Report »

Wheat
Wheat margins have strengthened a bit since the middle of October as futures prices have moved higher. Winter wheat plantings are now 88% complete with 63% of the crop emerged. Weather forecasts are slightly wetter past November 1 which should help early crop development prior to dormancy. Initial crop conditions were reported to be 40% good-to-excellent versus 46% at this time last year. On the global front, Ukraine recently announced a ban on exports after November 15 due to the poor harvest this past year and a lack of exportable surpluses. Russia also has produced a smaller crop and has seen domestic prices for wheat, flour, and barley increase of late causing the market to worry whether they will likewise place restrictions on exports as they did in 2010. With Egypt and China sourcing large quantities of wheat recently, the E.U. will be relied upon fulfill demand. There is concern however that … Get the Complete Report »

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