Yellen Captures Limelight From Russia

Federal Reserve Chairwoman Janet Yellen appears to have stolen the limelight from Russia and its annexation of Crimea, a breakaway region of Ukraine.  \r\n   At the conclusion of March’s two-day Federal Open Market Committee meeting Wednesday, Yellen spooked traders by hinting that interest rate hikes could come as early as spring 2015.  Fed plans to pare its economic stimulus by another $10 billion a month was expected and caused barely a ripple in equities markets.\r\n   The US Dollar, however, was boosted by the news of further tapering to its Quantitative Easing program and retains the gains in Asian trading overnight.\r\n   Yellen’s comments were somewhat surprising in that she was thought to have a stronger bias toward economic stimulus, and hints that interest rates could rise about six months after QE3 ends were seen as somewhat hawkish.\r\n\r\nFOOD PRICES MAY HURT ECONOMY\r\n\r\n   Traders are becoming increasingly concerned about wheat prices as cold, dry weather takes a toll on crop conditions in the Plains.  Wheat prices are near last year’s but the 15% rise in the past month belies the apparent lack of market concern as the headlines were grabbed by world events.\r\n   The National Oceanic and Atmospheric Administration is to host a teleconference today to reveal its spring outlook.  The last seasonal outlook, called for improving conditions in Iowa, Minnesota, Nebraska and all but the southwest corner of Kansas.\r\n   A growing number of agricultural commodities traders also are becoming concerned about delayed planting of summer crops.  Fieldwork is progressing in the south, but winter’s extreme cold froze the ground to greater depths than normal in the Midwest, and the winter won’t give up.\r\n   The thinking goes that frozen ground and cold temperatures could delay corn and soybean planting as well as winter wheat harvesting, which would delay second-crop soybeans.  Planting delays could put pollination in the hottest, driest part of summer and hurt yields.\r\n   So far, it’s not too late for the crops, but it’s also not too early for traders to become anxious.\r\n   Economists worry that rising food prices will take money away from discretionary spending and divert food budgets toward store brands and lower-priced cuts of meat.  \r\n   There also are fears that Russia could retaliate against economic sanctions by shutting off grain exports, but others see this as unlikely since Russia needs the cash generated from export sales.\r\n\r\nTIGHT SUPPLIES SUPPORT MEAT\r\n\r\n   Continued fears of tightening supplies keep pushing cattle and hog prices higher.  The Labor Department said Wednesday that February consumer beef prices recorded their largest monthly gain since 2003 when Canadian supplies were cut off over a case of Bovine Spongiform Encephalopathy, or Mad Cow disease.\r\n   Retail pork prices rose 0.2% in February, although chicken fell 0.1%.\r\n   However, wholesale boxed-beef markets are running into turbulence as higher slaughter rates this week push more beef into the market.  \r\n   Slaughter rates Wednesday remained above week-ago rates, and weekly slaughter is closing in on last year’s rate. The USDA estimated slaughter Wednesday at 117,000 head, slightly more than the 115,000 of a week ago and last year’s 120,000.  Week-to-date slaughter was estimated at 351,000 head, compared with 334,000 a week ago and 360,000 a year ago.\r\n   Cash cattle last week were steady at $148 to $152 per cwt on a live basis and mostly $240 dressed.  \r\n   The USDA reported choice boxed-beef Wednesday at $243.37 per cwt, down $0.71 and select at $236.30, off $0.92.  The choice/select spread widened to $7.07, but the number of fabricated loads sold into the spot market was 157.\r\n   The CME Feeder Cattle Index for the seven days ended Tuesday was $173.55, down $0.12 while the March futures contract closed Wednesday at $174.40, up $0.27.\r\n\r\nOVER THE FENCE\r\n\r\n• February placements expected higher as wheat deteriorates\r\n• Stocks report likely to show more corn feeding\r\n• Dry soils, high winds causing dust issues for Plains feeders\r\n• Farmer selling of corn, soybeans down sharply with lower prices\r\n• Cattle producers worry that high beef prices will drive consumers to chicken permanently\r\n• Cattle feeders concerned beef is losing nearby momentum\r\n