First Thing Today -- July 26, 2012

July 26, 2012 01:41 AM


RAINS PRESSURE BEANS OVERNIGHT... Some areas of the Corn Belt got the best rains they've seen in months overnight as a band of spotty storms pushed across the Corn Belt. Scattered rains are continuing across the region this morning. In addition to the precip, a break from the recent extreme temps is in the five-day forecast. That pressured grain and soy futures overnight, especially soybeans. As of 6:30 a.m. CT, soybean futures were trading 16 to 21 cents lower, corn fractionally to 6 cents lower, Chicago wheat 2 to 4 cents lower, Kansas City wheat steady to 2 cents lower and Minneapolis wheat 2 to 3 cents lower. The U.S. dollar index is sharply lower this morning, which is helping limit selling in corn and wheat futures.

HOUSE GOP PUSHING ONE-YEAR FARM BILL EXTENSION WITH AG DISASTER AID, BUT DEMOCRATS BALK... A farm bill extension with ag disaster relief is a distinct possibility -- at least in the House. House GOP leaders and House Ag Chairman Frank Lucas (R-Okla.) are coalescing around a modified one-year extension of the 2008 Farm Bill, a measure that would include lapsed ag disaster aid. A vote could come as early as next week. Thorny issues include finding budget offsets, defending any continuation of direct payments and getting both House and Senate Democratic lawmakers on board. Democratic lawmakers balk. Key House Democrats, including House Ag Ranking Member Collin Peterson (D-Minn.), and many Senate Democrats, including Majority Leader Harry Reid (D-Nev.) And Senate Ag Chairwoman Debbie Stabenow (D-Mich.), have rejected the extension push and instead continue to urge the House to take up a new farm bill. One funding offset for ag disaster aid could be reducing direct payments for 2013 crops -- the reduction would depend on the estimate of ag disaster aid funding needed.

LIKELY ROAD AHEAD FOR FARM BILL AND AG DISASTER BILLS... A one-year farm bill extension would not likely garner the 218 votes in the House because very few if any Democrats would vote for it, and some Republicans would balk at voting for a measure that does not significantly reduce food stamp funding and eliminate direct payments. A more likely avenue is for the House to pass Rep. Emerson's ag disaster relief bill, with offsets, and possibly include a short-term farm bill extension in September when lawmakers must pass at least a short-term continuing resolution (CR) for Fiscal Year 2013 spending (appropriations). That would give lawmakers time to work out a potentially longer-term farm bill. But if that fails, then a more lengthy CR in the lame-duck session could include a one-year extension of the current farm bill legislation.

RUSSIA TO MEET ON GRAIN SITUATION... A Russian government commission on food security is scheduled to meet Aug. 8 to discuss the country's grain situation. Rumors Russia could limit grain exports given production losses due to drought surfaced Wednesday, but the head of the Russian Grain Union says he sees no need to curb exports.

INDIA TO DISCUSS DROUGHT NEXT WEEK... An Indian government panel will meet next Tuesday to discuss the possibility of drought, according to the country's farm minister, as monsoon rains have been disappointing. A decision may be made whether to ban futures trading in some commodities amid an uncertain supply situation. But any decision on whether to limit exports won't likely come until at least mid-August.

HRS TOUR CONTINUES TO FIND ABOVE-AVERAGE YIELD POTENTIAL... Scouts on the Wheat Quality Council HRS wheat tour found favorable yields in northern North Dakota. The day 2 average yield calculation came in at 45.5 bu. per acre compared to 42.1 Bu per acre on similar routes last year. Scouts will sample fields in central and northeastern North Dakota today before wrapping up in Fargo.

WEEKLY EXPORT SALES REPORT OUT THIS MORNING... For the week ended July 19, traders expect: corn sales between 250,000 and 350,000 MT; wheat sales between 400,000 and 600,000 MT; soybean sales between 350,000 and 550,000 MT; soymeal sales between 75,000 and 125,000 MT; and soyoil sales between 10,000 and 20,000 MT.

WAITING ON CASH CATTLE TRADE... Cash cattle negotiations have been slow to advance in the Plains with bids and asking prices still far apart as of Wednesday afternoon. While cash trade is still uncertain, most cattle traders are expecting steady to firmer cash cattle prices compared with last week's $113 trade.

PORK MARGINS CONTINUE TO IMPROVE... Given recent strength in the pork product market and weakness in cash hog prices, packers have seen margins dramatically improve. In fact, some plants are now cutting in the black. That may be enough to firm up cash hog bids as some plants will expand late-week kills, although the break in temps should boost hog movement and may keep some packers from raising cash bids.

OVERNIGHT DEMAND NEWS... Iraq purchased 150,000 MT of Russian wheat. South Korea tendered for up to 140,000 MT of corn and up to 70,000 MT of feed wheat. Jordan tendered for 100,000 MT of optional origin wheat after rejecting all bids in a similar tender on Wednesday. India's state grain firm tendered to sell 60,000 MT of government wheat stocks.


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