First Thing Today (VIP) -- April 23, 2014

06:22AM Apr 23, 2014
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Good morning!

Corn mixed, beans and wheat lower this morning... As of 6:30 a.m. CT, corn futures are trading fractionally to 1 cent lower in old-crop contracts and fractionally higher in new-crop contracts, soybeans are 5 to 7 cents lower in old-crop contracts and fractionally to 2 cents lower in new-crop contracts and wheat futures are 2 to 6 cents lower with HRW contracts leading losses. The U.S. dollar index is under pressure this morning.

Details on Brazilian soy cargoes now U.S. bound... News that two Brazilian soybean cargoes originally sold to China are now headed to the U.S. weighed heavily on soybean futures yesterday and through the overnight hours. Reuters reports the two cargoes are carrying 126,000 MT of soybeans. One of the cargoes is scheduled to arrive at the Port of Wilmington (North Carolina) on May 7, while the other is scheduled to dock at the Port of Mobile (Alabama) on May 15. While news of Brazilian soybeans coming to the U.S. is triggering a negative price response, soybean imports shouldn't be a surprise, as USDA is projecting 2013-14 soybean imports at a record 65 million bu. (1.77 MMT).

EPA scales back 2013 cellulosic biofuel volume... EPA late Tuesday announced it is revising downward the 2013 Renewable Fuel Standard (RFS) for cellulosic ethanol. The final 2013 cellulosic biofuel volume will be 810,185 ethanol-equivalent gallons, according to an EPA fact sheet. EPA had initially predicted that 14 million ethanol-equivalent gallons would be produced last year, only to reduce it to 6 million gallons last summer. The 2007 law creating the mandate envisioned 1 billion gallons of ethanol from cellulosic sources in 2013. EPA is proposing 17 million gallons as a target for 2014. The law required 1.75 billion gallons.

Opponents of water rule want to extend comment period, seek congressional action... Groups including the American Farm Bureau Federation have a multi-prong plan to alter EPA’s proposed rule defining the reach of the Clean Water Act (CWA). The initial step is to extend the current 90-day comment period to six months, thus delaying the rule’s implementation. The comment period on the rule began Monday. Another effort will be to woo Congress into blocking the rule. While observers say the House will likely go along with that initiative, the Senate will be a hurdle, but the odds of getting Senate approval would rise should Republicans gain control of the Senate following the November elections.

Bernanke sees economy on right track... Former Fed Chairman Ben Bernanke said in Canada Tuesday that the US economy is "making considerable progress" as many of the headwinds that have been holding economic performance down are "beginning to dissipate." The current Fed is focusing on inflation or a lack thereof, and Bernanke said there will "be a time coming soon when inflation will improve and when central banks will move to a more normal monetary policy road." Bernanke also lamented not explaining more about what the Fed was doing to try and right the U.S. economy, sort of an ironic lament since the Bernanke-led Fed provided far more insight into the policy-making process than prior regimes of the U.S. central bank.

China's preliminary PMI data shows mild uptick, but ongoing contraction... China's purchasing managers' index (PMI) upticked to 48.3 this month from 48.0 in April, according to initial data from HSBS. While up modestly, the data suggests China's vast manufacturing sector contracted for a fourth straight month. Factory output and new orders continued to fall, though at a slower pace, while new export orders dropped after an uptick in March.

Strong boxed beef price gains again... Boxed beef prices followed up Monday's price surge with strong gains again yesterday. Choice beef firmed $2.15 while Select was $1.55 higher. While wholesale beef prices are surging, movement remains light as packers moved only 118 loads yesterday. If beef movement doesn't pick up it may limit packers' willingness to pay steady to firmer prices for cash cattle this week.

Wholesale pork prices plunge... Sharp losses in bellies, loins and hams drove the pork cutout value $2.40 lower Tuesday. Though packers moved 323.55 loads of product on the day, there is some concern it's taking sharply lower prices to encourage better movement. That suggests the product market is still searching for a low.

Overnight demand news... Japan purchased 108,789 MT of milling wheat from its weekly tender, including 51,419 MT of U.S. supplies. Japan also purchased 29,550 MT of feed wheat and 33,510 MT of feed barley.