The U.S. Department of Agriculture is working to find the best way to compensate for samples of corn and soybean crops it was unable to collect during the partial U.S. government shutdown, a top official said.
USDA enumerators, who gather crop samples nationwide to help determine harvest estimates that can jolt grain prices, were among the government workers sidelined by the shutdown that began on Oct. 1. When they returned to work last week, some of the crops had already been harvested, meaning they lost the opportunity to make final physical assessments of some of the country’s agricultural production.
The USDA knows some samples are missing and is working “to try to understand what we have and where we have it,” said Joe Prusacki, director of the statistics division for USDA’s National Agricultural Statistics Service.
The USDA must determine how to compensate for the missing samples before a widely followed, monthly grain production report is released on Nov. 8. The department, on Oct. 24, canceled the monthly report for October because of the shutdown.
Users of corn and soybeans, from food companies to exporters, will be counting every bushel to determine if supplies recover after three years of declining production. As a result, markets have been highly sensitive to the USDA estimates.
For the November crop report, the USDA will run its usual survey of more than 10,000 growers and send crop enumerators to check yields at hundreds of fields selected for monthly inspections.
The USDA’s crop estimates, issued around the 10th of each month, are based on conditions on the first of the month.
The enumerators “know that if a farmer is working in the area, they will make an attempt to get out and make that final gleaning of soybeans, those mature corn ears,” Prusacki told Reuters on the sidelines of an industry conference in Chicago. “This year, they were not afforded that opportunity” during the shutdown, he said.
The USDA will likely rely more heavily on surveys of farmers in that areas where crop enumerators missed out on the chance to collect samples, said Alan Brugler, president of brokerage Brugler Marketing and Management. Farmer surveys are a less accurate way to assess the size of the crops, but the missing samples likely accounted for a small percentage of the total harvests, he said.
Leaning on farmer surveys is “a way of bandaging up the situation,” he added.
Lower feed costs and improving cash hog values turned pork producer profit margins positive last week.
According to Pork Network, margins increased by 88 cents to $0.67 cent per head according to the Sterling Pork Profit Tracker.
Although margins are in the black and 84 cents per head higher than a year ago, they’re well below the $13.51 per head set a month earlier.
Feed costs moved $1.28 lower per head, bringing the total cost down to $148.56.
Pork packer margins remain negative, averaging negative $3.31 per head. Last week’s margins are only two cents lower than a month earlier and $1.84 above the negative $1.47 per head average of a week earlier.
Packer margins were hit by higher cash hog values, up 12 cents to $92.87 head and lower pork prices which fell 37 cents per hundredweight.
Cash cattle trade improved by a dollar per hundredweight last week, but higher total costs moved feeder margins marginally lower according to the Sterling Beef Profit Tracker.
Feeder margins fell 40 cents per head last week, averaging $88.68 per head. Margins are more than double the $42.88 per head average of a month ago and well above the negative $35.60 this time last year when feeders were forced to pay high feed costs for drought-depleted grain supplies.
Although cash trade improved during the week, higher feed costs and total costs pushed profit margins lower, according to estimates by Sterling Marketing Inc., of Vale, Ore.
Feed costs were $345.19, increasing by 21 cents per head, which helped push total costs up to $1,733.51 per head.
Beef packer margins fell $1.71 lower per head last week, remaining in the red with an average of negative $60.28. Packer margins have fallen drastically over the past month, decreasing by $36.65.
Losses were limited last week by higher beef cutout values which increased by $2.39 per hundredweight.
Corn closed the week $.01 1/2 lower. Last week, private exporters reported a 210,000-metric-ton corn sale to Mexico.
Weekly export sales of corn showed a total of 52.8 million bushels, above the 13.8 mb needed each week to reach the
USDA forecast of 1.225 billion bushels.
The USDA announced corn harvest has advanced to 39 percent completed, behind the average pace of 53 percent.
This tells us the bulk of harvest pressure is yet to come to the market. RJ O’Brien has increased its corn production estimate to 13.91 bb, up from 13.843 bb the USDA forecasted in September.
Its corn yield is 157.1 bushels per acre compared to the USDA estimate of 155.3 bpa. Thus, the corn market looks to find hedge pressure as harvest progresses during October and into the Nov. 8 report.
By Nov. 1, 50 percent of the crop should be harvested and then the market should find the most selling pressure from producers who don’t have enough on-farm storage.
Producers have been aggressively adding on farm storage, which may limit the pressure.
Strategy and outlook: Producers are 50 percent sold of 2013/14 crop and own the December 560 strike puts on 50 percent of production.
Exit at $4.10. Producers are 10 percent sold of the 2014/15 crop.
Soybeans closed the week $.08 3/4 higher from last week. Last week, private exporters reported a sale of 120,000-metric-ton soybean sale to China, 235,000 mt of soybeans to an unknown destination, 120,000 mt of soybeans to Russia and 120,000 mt of soybeans to Taiwan.
Weekly export sales of soybeans showed a total of 34.8 mb, above the 8.3 mb needed each week to reach the USDA forecast of 1.370 bb.
The USDA reported soybean harvest has reached 63 percent complete, slightly behind the average of 69 percent.
Farmers are in the latter one-third of harvest and should complete the soybean harvest by the end of October.
RJ O’Brien has increased its soybean production estimate to 3.211 bb, up from 3.149 bb the USDA estimated in September due to better-than-expected private yields.
Its soybean yield estimate is 42.3 bpa versus the USDA estimated in September at 41.2 bpa.
Harvest is nearly completed and $12.65 looks like a major support area that prices should not violate.
For producers who have made sales, this would be a strong buying area for re-ownership.
November and January still have a carry being offered compared to storing soybeans into the summer, so storing soybeans at harvest makes no financial sense.
Strategy and outlook: Producers are 80 percent sold of the 2013/14 crop. Producers are 10 percent sold of 2014/15 production.
This material has been prepared by a sales or trading employee or agent of Midwest Market Solutions and is, or is in the nature of, a solicitation. This material is not a research report prepared by Midwest Market Solution’s Research Department. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Midwest Market Solutions believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such.
Brian Hoops can be reached at (605) 660-1155.
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