First Thing Today (VIP) -- April 7, 2014

April 7, 2014 01:18 AM

Good morning!

Corn weaker, beans and wheat firmer to start the week... As of 6:30 a.m. CT, corn futures are trading mostly 1 to 2 cents lower, soybeans are 1 to 6 cents higher and wheat futures are mostly 3 to 6 cents higher. The U.S. dollar index is weaker this morning.

Fiscal 2015 budget, tax extenders the focus of Congress this week... As Congress looks to the 17-day spring break at the end of the week, lawmakers will focus on the Fiscal Year 2015 budget, which begins Oct. 1, via hearings and a House debate on a budget resolution that stands no chance of being taken up by the Senate. Meanwhile, a House panel on Tuesday has a hearing on lapsed tax extenders, including biodiesel. The Senate Ag Committee will hold a hearing on advanced biofuels and will also take a vote on nominees for the Commodity Futures Trading Commission (CFTC). USDA will release its first winter wheat crop condition ratings of the spring this afternoon. That data will show crop deterioration from last fall after a harsh winter and amid ongoing drought in HRW country. On Wednesday, USDA will update its domestic and global Supply & Demand projections.

Rains again disappoint in the driest HRW areas... Portions of the Southern Plains got scattered rains over the weekend, but rainfall totals and coverage were very light across the driest areas of West Texas and in the panhandles of Texas and Oklahoma. Forecasts indicate more scattered rains are likely today into early Tuesday, with any rains again likely to favor eastern areas of the region. Hot and dry conditions are then expected through Friday before rain chances increase by the weekend, though prospects for meaningful rains for western areas of the region are very limited.

Brazilian soybean shipment arrives at U.S. Gulf... A shipment of Brazilian soybeans from the Port of Santos arrived at the U.S. Gulf on Saturday. This is just one shipment of what is expected to be near-record soybean imports into the U.S. for the 2013-14 marketing year as end-users deal with tight domestic supplies. It's uncertain if this was a cargo that was originally sold to China and then resold to U.S. buyers amid slackened Chinese demand.

Russian grain exports stay strong... Russia exported 2.015 MMT of grain last month, including 1.296 MMT of wheat and 593,000 MT of corn, according to the country's ag ministry. From July 1 to April 2, Russian grain exports totaled 20.847 MMT, up 47.3% from year-ago. Wheat exports so far in the 2013-14 marketing year stand at 15.377 MMT and corn exports total 3.106 MMT.

China sets 2014 cotton target price... The Chinese government set its target price for cotton sales this year at 19,800 yuan (around $3,200) per ton, according to the National Development and Reform Commission. This is the first year China is using a target price that will pay farmers a subsidy if they sell their cotton below the target price. In the past, China has used a stockpiling program where it buys cotton for state reserves from farmers. China is estimated to be holding around 60% of global cotton stocks in state reserves.

Vilsack talks about PEDV in U.S. pigs... USDA Secretary Tom Vilsack discussed the ongoing porcine epidemic diarrhea virus (PEDV) in some U.S. pigs on the Iowa Press television program this weekend. Vilsack said, "There are challenges no question and you have mentioned the pig virus [PEDV], which is a big, big deal and a concern for all of us, and we are really focused on trying to provide producers with the best information on how to minimize the losses. We’re working through our Ames laboratory and trying to figure out how we might be able to create a vaccine for this. But obviously it is worrisome." Regarding a potential vaccine, Vilsack said, "Well, it could happen any day or it could be quite a while, quite a ways away. This is a virus that started in Europe and China, it’s been around for quite some time. It came to the U.S., it spread very quickly. We think we have some of the best practices in terms of mitigating the consequences but we haven’t quite figured out what causes it or how to stop it."

USDA 'willing to comply' with Chinese request for testing, certification of hogs to China... A spokesman for the USDA's Animal and Plant Health Inspection Service said the agency "is both capable and willing" to comply with China's new requirement for testing and certification. But, he said, the government also would "continue to work with the Chinese" to try to eliminate the requirement. The matter concerns China imposing tougher restrictions for imports of live pigs from the U.S. amid concerns about PEDV. China asked USDA to conduct testing and provide certification that live hogs come from herds that are free of PEDV.

Wholesale beef prices under pressure... The drop from recent all-time highs in wholesale beef prices extended Friday, with Choice and Select cuts both sharply lower. If wholesale beef prices continue to decline, traders will anticipate pressure on cash cattle prices again this week. But live cattle futures are already trading well below the cash market, which may help limit selling pressure.

Cash hogs called steady/weaker... Packers are expected to open the week with steady to weaker cash hog bids across the Midwest amid weakened demand. Instead of actively competing for cash hogs with firmer bids, some pork plants have reduced hours amid tightening supplies and weakening margins.

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


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