First Thing Today (VIP) -- April 3, 2014

April 3, 2014 01:36 AM

Good morning!

Firmer tone overnight... Grain and soybean futures bounced back from Wednesday's losses overnight. As of 6:30 a.m. CT, corn futures are trading 3 to 5 cents higher, soybeans are 6 to 9 cents higher and wheat futures are fractionally to 2 cents higher. The U.S. dollar index is modestly firmer this morning.

Banks tighten payments for Russian, Ukrainian grain trade... Western banks are tightening payment procedures for Russian grain exporters amid geo-political unrest and concerns about sanctions against Russia. Swithun Still, director of Russia- and Ukraine-focused grains trader Solaris Commodities, told Reuters banks are cutting down on "pre-financing" and paying only once there is proof grain is aboard a vessel. Meanwhile, there is some speculation tighter restrictions could influence the planting of this year's grain crops in Ukraine, as the country imports about half of its yearly grain seed needs. But Ukraine's Minister of Agrarian Policy and Food says producers have plenty of seed to complete grain plantings.

Senate Finance panel today to markup tax extenders measure... New Senate Finance Chairman Ron Wyden (D-Ore.) today leads a markup of legislation to end the impasse over temporary tax breaks that expired at the start of the year, but the draft measure would leave behind 10 of the 55 provisions. Included in the retroactive, two-year extension (through 2015) is the lapsed biodiesel tax incentive, and Section 179 expensing that is so important to farmers. The Finance Committee will approve the extenders, but key will be when the full Senate and especially the House takes up the topic. Most sources continue to signal the finish line on this issue will not come until after the November elections, during a lame-duck session of Congress.

Vilsack appears today before House Ag Committee... USDA Secretary Tom Vilsack will be the key witness during a House Ag panel hearing to review the "State of the Rural Economy." He will likely again update on the progress of implementing the 2014 Farm Bill, likely beginning with the coming signup for the livestock disaster programs. USDA's next major task is to help communicate the new farm bill options and provisions to farmers. Included in that educational effort is some $3 million being made available to educational institutions. USDA is reviewing which land grant colleges and others will get that funding, but it is widely expected to go to the University of Illinois, Ohio State University, Texas A&M University, among others.

Weekly export sales out this morning... For the week ended March 27, traders expect: corn sales between 850,000 and 1.15 million MT; wheat sales between 200,000 and 400,000 MT; soybean sales between 0 and 200,000 MT; soymeal sales between 100,000 and 200,000 MT; and soyoil sales between 0 and 30,000 MT.

FAO raises world cereal grains forecast, lowers wheat... The Food and Agriculture Organization of the United Nations (FAO) raised its 2013-14 global cereal grains production estimate to 2.521 billion MT, up 6 MMT from its previous forecast. The rise comes despite a 2-MMT cut to its global wheat crop forecast, which now stands at 702 MMT. Meanwhile, FAO's world food price index averaged 212.8 in March, up 4.8 points from February and the highest reading since May 2013. Sugar and grains led the world food price gains, while only the dairy price index declined last month.

Dairy farmers concerned about administration's methane strategy... A House Energy and Commerce hearing Wednesday included questions on methane strategy. It was noted that some dairy farms fear the White House’s climate strategy could eventually force producers to install methane digesters. "No one at this point that I know of is talking about anything in the regulatory context," said EPA Administrator Gina McCarthy. The Obama administration would like to see farms install the equipment, which convert manure emissions to electricity, but only as part of a voluntary, "collaborative process" to reduce methane emissions, McCarthy said. But Rep. Lee Terry (R-Neb.) told McCarthy that "when farmers hear voluntary they know it’s followed up with mandatory." Farms with no more than 300 cows couldn’t afford the equipment, he said.

China unveils another mini-stimulus package... The latest package is an attempt to stabilize slowing growth and maintain confidence in its economy. The announcement comes even as the government looks to reform the economy so that it relies less on the state sector. The program includes selling 150 billion yuan ($24.6 billion) in bonds for railway construction, improved housing for the low paid, and tax relief for struggling small companies.

Wholesale beef prices stabilize... After dropping sharply the three previous days, boxed beef prices firmed yesterday, though movement remained light at 151 total loads. While the boxed beef market showed signs of stabilizing yesterday, traders continue to look for cash cattle prices to be steady to weaker than last week's trade.

Wholesale pork market remains strong, but demand concerns are surfacing... The pork cutout value was 92 cents higher to a record $132.52 and packers moved a strong 446.37 loads of product Wednesday. With pork still cheap compared to beef, retailers haven't backed away yet despite record prices, though there is concern that could happen soon. And it appears packers have stopped actively chasing hogs with higher cash hog bids.

Overnight demand news... Exporters reported no tenders or purchases.


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