Evening Report (VIP) -- January 28, 2013

January 28, 2013 09:13 AM

JAPAN EASES U.S. BEEF IMPORT RESTRICTIONS... The U.S. and Japan have agreed to new terms and conditions that pave the way for expanded exports of U.S. beef and beef products to Japan, U.S. Trade Representative Ron Kirk and USDA Secretary Tom Vilsack announced today. Japan will now allow beef imports from cattle less 30 months of age and younger, which compares to the current limit of 20 months and younger that was part of Japan's response to the 2003 bovine spongiform encephalophathy (BSE) finding in U.S. cattle. This, along with other changes set to be implemented Feb. 1 are expected to result in hundreds of millions of dollars in U.S. beef exports to Japan.

While the new terms will officially be implemented Friday, Japan will have to be "sold" on how the 30-month age limit on cattle will be determined; the paper trail to verify the determination; and the result when violations occur. Thus, actual implementation could still be a ways down the road. Get more details.


USMEF SEES SIGNIFICANT BOOST IN JAPANESE BEEF DEMAND... The U.S. Meat Export Federation today said the new beef agreement with Japan will provide a significant boost in demand for U.S. beef to the country.

Japan is currently the No. 2 market for U.S. beef exports in terms of value and No. 3 in volume (143,900 MT or 317.2 million lbs.) valued at $969.8 million through the first 11 months of 2012. The yearly total is expected to top $1 billion in value for the year for the first time since 2003. USMEF forecasts that U.S. beef exports to Japan in 2013 as a result of expanded access to the market will increase roughly 45% in volume and value, reaching 225,000 MT (496 million lbs.) and $1.5 billion. The deal should result in USDA raising its beef export forecast in the February Supply & Demand Report.


VOLATILE WEATHER PATTERN ACROSS CORN BELT... Meteorologist Gail Martell of MartellCropProjections.com says areas of the Corn Belt received up to 0.50 inches of rain, sleet and snow over the weekend, but drought conditions remain a serious concern for the western Corn Belt. "Nebraska has the worst drought with a 7-inch moisture deficit, with Minnesota's deficiency at 6 inches and Iowa in need of another 5 inches of precip."

Meanwhile, Martell says more precip is headed to the eastern Corn Belt, with the moist stream of air from the Gulf of Mexico fueling the storm's circulation. "One-inch rainfall amounts are expected in scattered areas of Illinois, Indiana, Ohio and Michigan. Gulf moisture would stream northward into the Mississippi Valley tonight, saturating the atmosphere and enhancing thunderstorm chances Tuesday. Partially frozen fields may absorb some moisture; mostly heavy rains are apt to run off frozen fields," she says.

Martell also notes the forecast for the Central and Southern Plains HRW wheat region calls for minimal precip accompanied by warming temps. "Dry winds from the Mexico desert would circulate up into the Southern Plains, causing low humidity and unusual warmth," she notes. Click here for related maps.


CEO: CME GRAIN TRADING WILL REMAIN OPEN DURING USDA REPORT RELEASES... According to an interview with the Chicago Tribune, CME Group's CEO Phupinder Gill said the exchange has no plans to pause grain trading when USDA releases major crop reports as some major grain traders had been pushing. These large traders, including Cargill, Archer Daniels Midland and Bunge, have requested a halt to trade during the release of major USDA reports because they say computerized speculators distort grain prices before traders have a chance to digest the reports.

Prior to June 2012, USDA reports had been released ahead of the start of open-outcry trade. That changed when CME Group expanded its hours of operation to 21 hours each day of the week. Gill points out that such a pause would be ineffective because other, less opaque markets would still be open during the reports. Last week, CME Group announced it would review its expanded grain and oilseeds trading hours to ensure customers' needs are met.

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