First Thing Today (VIP) -- April 15, 2014

06:34AM Apr 15, 2014
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Good morning!

Corn lower, beans and wheat mixed this morning... As of 6:30 a.m. CT, corn futures are trading 1 to 3 cents lower, soybeans are 4 to 5 cents higher in old-crop contracts and steady to 2 cents lower in new-crop contracts, SRW and HRS wheat futures are 1 to 2 cents higher, while HRW wheat futures are narrowly mixed. The U.S. dollar index is firmer this morning.

Sub-freezing temps hit HRW areas... Temps dipped below freezing (well below in some areas) of the Plains overnight. Temps got low enough for long enough to do some damage to a portion of the crop that is headed and also some of the crop that is jointed. But damage assessment will take time and post-freeze weather will be critical to the crop's ability recover.

Ukraine begins military operation in eastern areas of its country... Ukraine’s acting president said that a military operation to wrest control of cities in eastern Ukraine from pro-Russian militants has begun. "Overnight, an antiterrorist operation began in the north of Donetsk. But it will be phased, responsible and balanced. The purpose of the actions, I stress once again, is to protect the citizens of Ukraine," Oleksandr Turchynov told Ukraine’s parliament, according to Interfax news. Meanwhile, Russian President Vladimir Putin made his first call to President Barack Obama in over two weeks as more parts of eastern Ukraine saw tensions ratchet up. Obama reportedly pushed Putin once again for a diplomatic solution to the crisis in the region. The White House said the evidence is overwhelming that Russia is behind the latest actions in Ukraine despite the repeated denials coming from Moscow.

HRW CCI drops, SRW improves... When USDA's weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale with 500 being perfect), the HRW crop dropped 6 points to 293. Kansas accounted for nearly 3 1/2 points of the decline. The SRW CCI rating improved 4 points to 352. Last year at this time, the HRW CCI rating was 272, while the SRW crop had a 373 rating.

Crush expected to be up from February... NOPA members are expected to report soybean crush totaled 146.1 million bu. last month, based on the average pre-report guess from a Reuters survey. That would be up 3.2% from February and 6.6% more than March 2013. Soyoil stocks are guessed at 1.917 billion pounds.

GAO report concludes delays in issuing annual RFS hurt refiners... When the Environmental Protection Agency (EPA) is late in issuing its annual Renewable Fuel Standard (RFS), and it has been since 2009, the tardiness increases costs for refiners, according to a Government Accountability Office (GAO) report. The report examines the impact on the petroleum industry of the RFS; combined corporate average fuel economy (CAFE) and greenhouse gas emissions standards for vehicles; Tier 3 vehicle emissions limits and fuel standards; greenhouse gas regulations for petroleum refineries; and California's Low Carbon Fuel Standard. The GAO conducted 32 interviews with refining companies, environmental organizations, consultants and federal and state regulators. The GAO said EPA should identify delays in issuing yearly renewable fuel levels and implement a plan to get them out on time. Janet McCabe, EPA's acting assistant administrator for air and radiation, said the agency is reviewing the RFS to determine how the regulatory process can be improved, including the interagency process that involves the Office of Management and Budget, according to a March 5 letter to GAO included in the report. EPA Administrator Gina McCarthy told two House Energy and Commerce subcommittees April 2 that the agency will issue the final 2014 RFS by June. McCarthy told the subcommittees that she hopes the agency can propose the annual standards earlier in the year in hopes of reducing uncertainty that could limit investment in the renewable fuel industry.

Brazil continues to say U.S. 2014 Farm Bill doesn't fix all of the cotton policy problems... While Brazil continues to be negative that ongoing talks with Obama administration officials will resolve that country's continued objections to U.S. cotton subsidies, Brazil's Deputy Minister of Finance, Carlos Marcio Cozendey, acknowledged the level of any potential penalties Brail could impose on U.S. exports has likely been reduced due to changes in the new U.S. farm law. Cozendey said the U.S. farm bill changes could resolve Brazil's concerns about the way the export credit guarantees operate and if so, would make any retaliatory penalties far less severe. But Brazil believes the new STAX program falls short of satisfying the WTO’s finding that the U.S. cotton program encourages farmers to overproduce, depressing global prices. Meanwhile, the board of the Brazilian Association of Cotton Producers (ABRAPA) has called for a quick implementation of the WTO panel against the U.S. farm bill. What is irritating to some U.S. farm stakeholders is that some cotton industry lobbyists listened very closely to Brazilian concerns during the lengthy U.S. farm bill debate, so much so that some observers thought some U.S. interests were literally letting Brazil write the U.S. cotton program. But it now appears, as some expected, that Brazil still is not satisfied.

Cash cattle uncertainty for the week... While packer margins are deep in the red, some traders feel packers may pay steady prices for cash cattle in the Plains this week as they are buying for a bigger kill schedule next week compared to this week's holiday-shortened schedule. Showlist supplies are estimated to be steady to up slightly compared to week-ago. Most feedlots and packers will want to get cattle negotiations completed prior to Friday since markets are closed for Good Friday.

Wholesale pork prices continue to slide... The pork cutout value was 98 cents lower Monday and packers moved only 212.85 loads of product on the day. With pork prices continuing to fall, packers have no incentive to actively pursue cash hogs, especially since many plants are taking some down time Friday and/or Saturday for the Easter weekend. Therefore, cash hog bids are expected to remain steady to weaker across the Midwest today.

Overnight demand news... South Korea bought 53,000 MT of optional origin feed wheat. The Philippines purchased 120,000 MT of soymeal (unspecified origin) but passed on a tender for 134,500 MT of feed wheat. Japan is seeking 136,261 MT of wheat in its weekly tender.