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BRIAN HOOPS

By Staff | Jan 1, 2016

Cold storage

The monthly cold storage report is bearish for beef and pork.

USDA said total red meat supplies in freezers were down 3 percent from the previous month, but up 21 percent from last year.

Total red meat is a record high for the month of November, since the data was first recorded in 1916.

Total pounds of beef in freezers were up 1 percent from the previous month and up 27 percent from last year.

Frozen pork supplies were down 7 percent from the previous month, but up 14 percent from last year. Total pork is a record high for the month of November,

since the data was first recorded in 1915.

Stocks of pork bellies were up 131 percent from last month and up 15 percent from last year.

COOL

The Country of Origin Labeling law is repealed thanks to a provision in the omnibus spending bill signed into law by the president.

A statement from Ag Secretary Tom Vilsack said effective immediately; the USDA is not enforcing the COOL requirements for muscle cuts and ground beef and pork outlined in the final January 2009 and May 2013 rules.

The USDA will amend the COOL regulations to reflect the repeal. Vilsack also said all imported and domestic meat will continue to be subject to rigorous inspections by the USDA to ensure food safety.

Canadian officials say the repeal measure fully answers its WTO complaint and effectively killed the possibility of tariffs, according to an AgriPulse report.

Retaliatory tariffs

Repealing COOL helps the U.S. avoid more than $1 billion in retaliatory tariffs from Canada and Mexico, said the National Pork Producer’s Council communications director Dave Warner.

Warner believes this is a huge success for pork and beef producers and the entire U.S. economy.

It wasn’t going to do any of us any good to have $1 billion in tariffs, essentially taxes on our goods, going into our No. 1 and No. 2 trading partners.

Repealing this language means our trade will continue to flow freely between the U.S. and Mexico and the U.S. and Canada.

Biodiesel

The biodiesel industry is happy with the inclusion of the biodiesel blenders credit in the tax

package passed.

Fuel blenders will be able to claim a $1-per-gallon tax credit for biodiesel through the end of 2016. The extension will be retroactive to Dec. 31, 2014 and continue through the end of next year.

The credit will continue to be available only to blenders, not producers, as some farm-state lawmakers preferred.

National Biodiesel Board vice president of government affairs Anne Steckel said the addition of the tax credit gives the biodiesel industry some certainty going forward.

“We were really pleased. It will give us two more years of security knowing we have a tax incentive in place,” Steckel said.

CORN ANALYSIS

Corn closed the week 10.25 cents lower.

Last week, private exporters did not report any corn sales.

Weekly export sales showed corn sales were 31.8 million bushels.

Annual sales are 771 mb, or 23 percent slower than last year’s pace.

This month’s supply/demand report has the potential to be a major market mover as the USDA will issue the final production forecast for the 2015 crop and update the demand figures.

Export forecasts are 23 percent slower compared to last year at this time. Traders are going to look for the USDA to increase its final 2015 corn production estimate and possibly decrease its demand estimates, slowly widening the balance sheets.

Farmer selling should increase after the first of the year as farmers will need to move some corn to maintain the quality of the stored crop, but basis levels should narrow through the winter months.

Strategy and outlook: Producers should use rallies into the end of the year to make additional sales or buy protection if storing the crop until a weather scare develops in the summer months.

SOYBEANS ANALYSIS

Soybeans closed the week 10.25 cents lower.

Last week, private exporters announced sales of 100,000 metric tons of soybeans to an unknown destination.

Weekly export sales of new crop soybeans were 76 mb.

The export pace of the 2015/16 marketing year now stands at 1.373 billion bushels, or down 14 percent mb from last year’s pace.

The market has been anticipating a record soybean crop in South America and updates on this year’s production from South America will be a major driving force for prices throughout the winter.

This month’s supply/demand report has the potential to be a major market mover as the USDA will issue the final production forecast for the 2015 crop and update the demand figures.

Export forecasts are down 15 percent from last year at this time and with South America lowering export taxes, demand should remain soft.

Traders will be looking for the USDA to increase its final 2015 soybean production estimate and decrease demand, therefore expanding ending stocks.

Farmer selling looks to be a minimum this winter as producers are more interested in selling corn and holding onto their soybeans in case another weather problem develops in South America and prices move higher.

Strategy and outlook: Producers should have used the last rally to make additional sales or buy downside protection if storing until the summer.

Do not store unprotected soybeans into the winter months.

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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