First Thing Today -- July 13, 2012

July 13, 2012 01:51 AM


FOLLOWTHROUGH BUYING OVERNIGHT... Light, scattered rains are being seen across the western Corn Belt this morning, but traders are more focused on crop damage that has already occurred due to extreme heat and dryness. As of 6:30 a.m. CT, corn futures were trading 7 to 12 cents higher, soybeans mostly 19 to 24 cents higher, Chicago wheat mostly 9 to 10 cents higher, Kansas City wheat 11 to 12 cents higher and Minneapolis wheat 9 to 11 cents higher. The U.S. dollar index is just below unchanged this morning.

CHINESE GDP IN LINE WITH EXPECTATIONS... China's economy grew at a 7.6% clip versus year-ago in the second quarter, which was the slowest growth rate in three years, but in line with expectations. This marked the sixth straight quarter of declining economic growth for China, suggesting more monetary policy easing is likely.

USDA ANALYSTS TO MEET W/EPA TODAY RE: REGULAR S/D UPDATE... USDA analysts will meet today with Environmental Protection Agency (EPA) staffers in a regularly scheduled meeting in which various issues are discussed and USDA analysts provide an update on supply and demand conditions, a government source confirmed. Commodity traders in recent days have discussed whether or not EPA would modify the corn-based ethanol mandate for 2013 as a result of tumbling yield and crop projections. U.S. government officials say no waiver request has yet been received at EPA and if one were to surface, the EPA must make a decision on any request within 90 days. That timeline was stretched in 2008 when a waiver request was made in late April by the governor of Texas, but it took until Aug. 7, the day before the USDA August Crop Production Report, before EPA rejected the waiver request. While EPA has authority on its own to modify the RFS requirement, no such solo action is anticipated. Meanwhile, EPA July 6 sent its final rule setting 2013 volume requirements for biomass-based diesel for White House Office of Management & Budget review.

HOUSE GOP LEADERS HAVE MADE NO FARM BILL FLOOR DECISION... The two House leaders from both political parties spoke out regarding the House Ag Committee-passed farm bill on Thursday. House Speaker John Boehner (R-Ohio) said the Ag panel did "an awful lot of good work" on its farm policy bill, but no decisions have been made about scheduling for floor action. Democratic House Leader Nancy Pelosi (D-Calif.) raised the House farm bill strategy privately with Boehner and said, "I don't know if it will even come to the House floor to be voted on." She said the cuts in the farm bill "are totally unacceptable." Boehner did not address the option of bypassing the House floor and sending the legislation (HR 6083) directly to conference with the Senate, which passed its bill (S 3240) on June 21. House Agriculture members have raised that as a possibility as a way to speed enactment. In commenting on the bill, Boehner said it includes "some good reforms," but he also expressed concerns and singled out its "Soviet-style dairy program." Dairy producers would be required to participate in a supply management plan if they enroll in a program to protect their profit margins under the bill’s dairy policy proposal.

SENATOR CALLS FOR CFTC CHAIRMAN TO RESIGN...  Sen. Jerry Moran (R-Kan.) called on Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler to resign after the collapse of the Peregrine Financial Group and amid escalating skepticism over the agency’s ability to supervise the futures market. CFTC was previously under the microscope after last year’s collapse of MF Global. The Senate Ag panel plans to meet on Aug. 1 to discuss the fallout from the failure last fall of MF Global. The Aug. 1 hearing's focus should be expanded to consider how regulators oversaw Iowa-based PFGBest, Sen. Chuck Grassley (R-Iowa) said in a letter to Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) and the panel's top Republican Pat Roberts (R-Kan.). "It’s important the Senate Agriculture Committee look into the PFGBest matter in the same manner as what we have done regarding MF Global," Grassley, a member of the Agriculture committee, said in the letter. "We have to make sure regulators are doing their job."

BLACK SEA PORT TAKING GRAIN AGAIN, NO DAMAGE... The Black Sea port of Novorossiisk sustained no damage to infrastructure or grain stocks due to recent flooding that temporarily shuttered operations, according to the deputy director of the port. He said as of late Thursday, Russia's main port is again taking grain.

CASH CATTLE TRADE LOWER... Cash cattle trade started at $115 in Texas and Kansas Thursday -- $2 below last week's trade. Similar prices are expected on remaining cash cattle sales throughout the Southern and Central Plains today. August live cattle futures finished at a $2 premium Thursday to the initial cash sales, which could lead to additional price pressure today, although that's not an excessive premium given tight supplies and hot temps.

PORK MARKET SHOWS MORE SIGNS OF A LOW... Packers moved a strong 113.63 loads of product Thursday and the average cutout value was just 6 cents lower thanks to strong gains in bellies. Seasonally, belly prices should continue to firm as retailers gear up for increased bacon demand for BLT season, but strength in other cuts will be needed for the product market to confirm a short-term low.

OVERNIGHT DEMAND NEWS... Japan bought 90,000 MT of wheat and tendered for another 46,000 MT. The United Arab Emirates purchased 30,000 MT of Australian feed barley and 20,000 MT of Argentine corn. Three Indian state-run firms tendered to export a total of 240,000 MT of government wheat stocks.

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