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Daily livestock report apr 16 2013
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1. Vol. 11, No. 71 / April 16, 2013 Sponsored byThe Daily Livestock Report is published by Steve Meyer & Len Steiner, Inc., Adel, IA and Merrimack, NH. To subscribe, support or unsubscribe visit www.dailylivestockreport.com. Copyright © 2013 Steve Meyer and Len Steiner, Inc. All rights reserved. The Daily Livestock Report is not owned, controlled, endorsed or sold by CME Group Inc. or its aﬃliates and CME Group Inc. and its aﬃliates disclaim any and all responsibility for the informa on contained herein. CME Group®, CME® and the Globe logo are trademarks of Chicago Mercan le Exchange, Inc. Disclaimer: The Daily Livestock Report is intended solely for informa on purposes and is not to be construed, under any circumstances, by implica on or otherwise, as an oﬀer to sell or a solicita‐on to buy or trade any commodi es or securi es whatsoever. Informa on is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projec ons of future condi ons are a empted. Futures trading is not suitable for all investors, and involves the risk of loss. Past results are no indica on of future performance. Futures are a leveraged investment, and because only a percentage of a contract’s value is require to trade, it is possible to lose more than the amount of money ini ally deposited for a futures posi on. Therefore, traders should only use funds that they can aﬀord to lose without aﬀec ng their lifestyle. And only a por on of those funds should be devoted to any one trade because a trader cannot expect to proﬁt on every trade. The Daily Livestock Report is made possible with support from readers like you. If you enjoy this report, find if valuableand would like to sustain it going forward, consider becoming a contributor. Just go to www.DailyLivestockReport.com tocontribute by credit card or send your check to The Daily Livestock Report, P.O. Box 2, Adel, IA 50003.To say we are “off and running” with this year’s cornplanting would be somewhat of an overstatement, we think. May-be “off and stumbling” would be a better description. That is our-take of the first planting progress numbers from USDA’s weekly CropProgress report that was released on Monday. Yes, it is very early inthe process but for a year in which every kernel is going to be countedcarefully, this is not the kind of beginning we had hoped for. That state-ment has nothing to do with the people involved — unless of course oneincludes Mother Nature in that group.First, let’s remember that any planting progress number thisyear is going to pale in comparison to those of one year ago. The 16%of acres planted by mid-April 2012 was record high. The only year thatgets close to that figure was in 2005 when 14% of the acres were plant-ed by week 16 — the week number that corresponds to this week.Second, having only 2% of the acres planted by week 16 is inno way a death knell for corn yields. That was the same figure for plant-ing progress as at this time in 2008 and 2009. The 2008 national aver-age yield of 153.9 bushels per acre was 3 bushels above the 1960-2010 trend line yield and just 0.5 bushels below the 1996-2010 “biotechyears” trend yield of 154.4. 2009, of course is the year of the reigningrecord-high national average yield of 164.7 bushels per acre.Bottom line: Things can still turn out very good — or very bad.It is indeed a long, long while until the combines roll this fall!But Monday’s numbers were lower than the 6% expected byanalysts and the 7% average for 2008-2012. Texas corn planting wasright on its 5-year average of 56%. Of the other states that indicatedacres have been planted, only Pennsylvania got within 1% of its 5-yearaverage. The mid-South states that a) had indicated intentions to plantsignificantly more corn acres and b) we and others had hoped wouldraise large crops that would help get corn users through to the end ofthis crop year are lagging their normal paces rather badly. Tennesseehad planted only 11% of its acres (5-yr average of 27%) as of Monday.Only 7% of Kentucky acres (5-yr average of 18%) were in the ground.The same is true for Kansas (3% planted vs. 10% 5-yr average) andMissouri (8% vs. 17%).One positive note for feed supplies is that grain sorghum plant-ing (24%) is slightly ahead of both last year (22%) and the 5-yr average(22%). Winter wheat condition was steady for the week but remainspoor relative to last year with only 36% (vs. 64% in 2012) of the acresrated as good or excellent and 31% (vs. 11% in 2012) rated as poor orvery poor. Summer wheat supplies are not likely, at this point, to bemuch help in “getting to” the new corn crop.The importance of this year’s crops is underscored bycost and revenue projections for cattle feeders and hog producers.The top chart at right comes from the Livestock Marketing InformationCenter in Denver and shows a VERY BLEAK picture for cattle feedersfor the remainder of 2013. While breakeven costs are projected tl de-cline to near $130/cwt. live by the end of the year, losses will still belarge given fed cattle futures prices of $120, $124 and $125 for the re-mainder of 2013. Further, those losses come on top of many $200 perhead losses during the past two years. Readers should realize that theLMIC model included full yardage and feed markup costs but the profitpicture is still bleak even for yard-owned cattle for which cash costs maybe a bit lower.The pictures is somewhat better for pork producers, especiallyas one looks into 2014. Current corn and soybean meal futures pricessuggest a substantial drop in breakeven costs by the end of 2013 and amove to below $80/cwt. carcass by June 2014. Those would be thelowest average costs since early 2011 and position hog producers forprofits according to current lean hogs futures prices. While hog pricesthis spring and summer have been disappointing to say the least, it isalso clear from this chart that the culprit in this loss episode is stillCOSTS. Projected 2013 losses, as of Friday’s close, of $14.38/headwould make this the 6th worst year since 1990 for U.S. hog producers.CHOICE STEER PRICE vs BREAKEVENCattle Feeding, S. Plains, Monthly80901001101201301401502005 2006 2007 2008 2009 2010 2011 2012 2013$ Per CwtSteerPriceBreakevenProjectedBreakeven40.0050.0060.0070.0080.0090.00100.00110.002005 2006 2007 2008 2009 2010 2011 2012 2013 2014$/cwt carcassACTUAL & PREDICTED HOGPRODUCTION COSTS* AND PRICESActual Costs Forecast Costs Futures-Implied IA-MN Price Actual Hog Price - Ia/Mn*Based on relationsip between ISU Estimated Costs & Returns data and historic Omaha corn and Decatur soybean meal prices4/14/20132011 Profits = $4.59/hd.Forecast 2012 Profits = $-9.67Forecast 2013 Profits = $-14.38