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					                                                                                           Loewen and Associates
                                                                                             Commodity Brokerage/Consulting
                                                                                                     Pete Loewen, Tim Strunk,
                                                                                                     Matt Hines, Doug Biswell,
                                                                                                           LaVell Winsor
                                                                                                            866 341 6700
                                                                                                     www.loewenassociates.com

Date: 9.13.12
                                                               Morning Ag Markets
The cattle complex saw some decent gains for the most part Wednesday, led by the feeder
market as corn futures retreated in the wake of Wednesday morning’s USDA reports. With
December corn futures now about 80 cents below the contract high scored a month ago, the
feeder market does not seem overly concerned about current feed costs. The cash feeder
market is also staying well-supported heading into fall with concerns over availability
combining with the improved wheat pasture potential in parts of the Southern Plains and the
fact that a lot of farmer-feeders have been looking for animals to run silage piles through.
Pick your reason, but the feeder market continues to stay well supported as most have taken
on the attitude that was prevalent early this year-meaning you just pay whatever you have to
in order to own cattle and trust that the market moves higher so you can make money. Let’s
just hope it works out better this time around.

The biggest news Wednesday was the cash business getting underway late in the afternoon,
with a decent number of cattle trading in Texas from $126 to $127, which would be $2 to $3
higher on the week. Kansas moved cattle at $127 as well, also up $3. There wasn’t much
going on in the North, but the Southern packers would have needed cattle the worst after not
buying much at all last week. The strength in futures likely gets the credit for the higher
trade, as short-bought packers needed supplies and had no choice but to pay up for them after
the board had strung together a couple solid days.

Cattle slaughter Wednesday 122,000 -5k wa -11k ya
Choice Cutouts: 191.71 +.18             Select Cutouts: 179.70 +.50
Feeder cattle index: 142.73 +.07                Lean Hog index: 70.17 -.98
Pork cutout value: 77.46 -1.70
Hog Slaughter Wednesday 434,000 -1k wa +6k ya

Calls this morning in the cattle complex are stronger, with the front end of the live market still
leading the way in the wake of the $3 higher cash business seen yesterday. There is still
probably some Northern trade to come this week but the tone has clearly been set. The corn
market remains a non-factor for the time being and we should be able to see feeders follow
fats to a stronger open if the electronic trade is any indication. For the open this morning, I
will call live cattle 50 to 75 cents higher on the front end at least and feeders maybe 30 to 60
cents higher.

IMPORTANT—PLEASE NOTE
This does constitute a solicitation to buy or sell commodities futures and/or options. The information contained herein is provided for informational purposes
only. The information is not guaranteed as to its accuracy or completeness, although the information was taken from sources we believe to be reliable. The
market recommendations of Loewen and Associates, Inc. are based solely on the judgment of Loewen and Associates, Inc. personnel. We do not guarantee or
warranty, either expressed or implied, of success to you in the use of this information. Loewen and Associates, Inc. disclaims responsibility for or loss associated
with use of information from our commentary, analysis or recommendations. There is risk of loss in trading commodity futures and options. The risk in
trading can be substantial; therefore only genuine “risk” funds should be used.
Moving over to the grain markets, the USDA surprised some folks with a little bit larger corn
crop than expected as well as a larger old crop carryover, resulting in a higher than expected
new crop carryout projection and therefore the lower trade. Soybeans on the other hand
raced to some big gains despite report numbers that really weren’t too far off the expectations.
Kansas City wheat futures followed corn early in the session and stayed lower, but into the
close we were able to work to some moderately higher trade despite what should be very
beneficial rains headed to hard wheat country over the next few days.

Well another round of monthly reports is behind us after yesterday and as usual, there has
been plenty of disagreement on the numbers. I’m not going to waste any time telling you I
know for a fact some of the numbers are wrong simply because there is no way to prove
anything. The market will do that over time, so I’ve never understood why some people get
so worked up over these numbers. Don’t you think if we truly are going to run out of corn,
beans, or wheat that the market will reflect that when it comes down to those final bushels?
Do I agree with all the current USDA projections? Absolutely not, but that doesn’t mean they
are wrong just because they made the corn market go down for a day. About the only thing
that is certain is that these numbers will all change again in a month and we can start a whole
new round of arguments.

The soybean market clearly had the best performance yesterday, despite most of the numbers
coming in fairly close to the expectations. Perhaps the numbers were just a grim reminder we
don’t have much margin for error when it comes to soybean supplies and we have seen no
signs of slowing demand at this point as China doesn’t seem to care what beans cost and
domestic crushers are still making money as well. Early bean yield reports seem to be pretty
decent for many areas, but it will be a couple more weeks before we have a better handle on
the general trend. I would expect the bean market to have the most volatility and the widest
swings here for the foreseeable future.

The wheat market didn’t get a whole lot of attention yesterday as the carryout projection was
left unchanged and wheat seemed to follow corn for the most part. We did get a boost later in
the session when news of another Egyptian tender broke, and maybe this time we can get
some of the business as Russia appears to be backing off a bit on their offerings. This is
Egypt’s 7th tender in the last month as they are apparently trying to get their hands on plenty
of supplies in case Black Sea wheat does become harder to find later in the year. In other
wheat news, there is still some talk about dryness in Australia reducing that crop, with most
private estimates now 4 to 5 MMT below the number the USDA used on their report
yesterday. A lot of wheat bulls out there are trying to talk these markets higher based on
global production concerns, but keep in mind wheat is grown about everywhere around the
world and it takes prolonged problems throughout a big portion of the major producing
countries before global supplies get uncomfortably tight. Could we get there? Sure. Are we
there now? Not by a long shot. The best news for wheat producers in the U.S. this week has
nothing to do with markets and more to do with the rain showers currently falling across
much of hard wheat country, as some should now have a much better shot at getting a wheat


IMPORTANT—PLEASE NOTE
This does constitute a solicitation to buy or sell commodities futures and/or options. The information contained herein is provided for informational purposes
only. The information is not guaranteed as to its accuracy or completeness, although the information was taken from sources we believe to be reliable. The
market recommendations of Loewen and Associates, Inc. are based solely on the judgment of Loewen and Associates, Inc. personnel. We do not guarantee or
warranty, either expressed or implied, of success to you in the use of this information. Loewen and Associates, Inc. disclaims responsibility for or loss associated
with use of information from our commentary, analysis or recommendations. There is risk of loss in trading commodity futures and options. The risk in
trading can be substantial; therefore only genuine “risk” funds should be used.
crop out of the ground this fall. Much more will still be needed for many areas, but it would
be nice if everyone at least had a fighting chance to start the new growing season.

Moving on to some news from this morning, weekly export sales data didn’t really hold any
surprises. Soybean sales were just over 23 million bushels after most were expecting 20 to 28
million. Wheat sales came in at just over 14 million bushels, near the low end of guesses
from 13.8 to 22 million. Lastly, corn sales were 8.5 million bushels for the current marketing
year and another 8.4 million for next marketing year, as someone is trying to plan ahead.
Most were expecting 11 to 17 million in corn sales, so nothing out of the ordinary for corn. It
will be interesting to see if sales pick up any next week after this break in prices, as that
would be a quick way to stabilize the market and get us working back in the right direction.
One interesting headline from this morning on that same subject-China’s National Grain and
Oils info center said this morning that 2013 Chinese corn imports could fall by as much as
80% down to just 1 MMT due to high prices. Obviously anything said by anyone in China
has to be taken with a grain of salt, but it was worth mentioning.

Well that is about all I’ve got this morning, with the markets much quieter overnight and this
morning. Soybeans seem to be taking a breather after yesterday’s big rally while the corn
market is trying to stabilize somewhat and perhaps we could see some short covering help us
out there. The wheat markets are pretty much stuck as well, with everyone waiting for some
fresh news or direction now that the USDA reports and subsequent reaction are over.

Tim Strunk
Loewen and Associates, Inc.
866 341 6700




IMPORTANT—PLEASE NOTE
This does constitute a solicitation to buy or sell commodities futures and/or options. The information contained herein is provided for informational purposes
only. The information is not guaranteed as to its accuracy or completeness, although the information was taken from sources we believe to be reliable. The
market recommendations of Loewen and Associates, Inc. are based solely on the judgment of Loewen and Associates, Inc. personnel. We do not guarantee or
warranty, either expressed or implied, of success to you in the use of this information. Loewen and Associates, Inc. disclaims responsibility for or loss associated
with use of information from our commentary, analysis or recommendations. There is risk of loss in trading commodity futures and options. The risk in
trading can be substantial; therefore only genuine “risk” funds should be used.

				
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