First Thing Today (VIP) -- April 9, 2013

April 9, 2013 01:32 AM


GRAINS MIXED WITH A DOWNSIDE BIAS OVERNIGHT...As of 6:30 a.m. CT, corn futures are trading narrowly mixed, soybeans are mostly 1 to 2 cents lower, Chicago wheat is 3 to 6 cents lower, Kansas City wheat is 1 to 4 cents lower and Minneapolis wheat is 1 to 2 cents lower. The U.S. dollar index is under pressure this morning.

CHINESE SOY, CORN IMPORT UPDATE... Chinese soybean imports are forecast to drop for the first time in nine years in 2012-13, according to China National Grain and Oils Information Center (CNGOIC). The state-run think-tank sees 2012-13 Chinese imports at 59 MMT compared to 59.2 MMT in 2011-12 and its prior forecast of 60 MMT. CNGOIC says concerns with bird flu and weak hog prices are expected to reduce soybean meal demand. Meanwhile, a survey of three major industry analysts by Reuters indicates the potential for record Chinese corn imports in 2013-14. The analysts expect China to import 6 MMT to 7 MMT of corn in 2013-14, up from 5.2 MMT in the current marketing year, amid the drop in prices, quality concerns with domestic supplies and spring planting delays. Chinese importers have already booked 1.3 MMT of U.S. new-crop corn.

HRW CCI DROPS AGAIN, SRW IMPROVES... When USDA's weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale), the HRW crop slipped another 3 points to 274, while the SRW crop improved 9 points to 371. The drop in the HRW CCI was due mostly to declines in Kansas and Texas. Ratings for all of the top seven SRW production states improved over the past week.

FARM BUREAU PROPOSAL FOCUSES ON STAX PROGRAM... As we reported in "Evening Report" last night, the American Farm Bureau Federation on Monday released its latest farm bill proposal. It would modify the STAX program, extending provisions to include five specialty crops: apples, potatoes, tomatoes, grapes, and sweet corn. Farmers producing corn, soybeans, wheat, cotton, rice, and peanuts would have access to the marketing loan and crop insurance provisions. These farmers could select between a target price program, which would be available for all commodities except cotton, and a stacked income protection program (STAX) to round out their safety net option. "While we would have liked to have provided a STAX program for all commodity programs under the same terms as those provided to cotton last year in the Senate bill, funding is insufficient to do so," Farm Bureau President Bob Stallman said. "There is far less money this year than last with which to secure an adequate safety net for the many family-owned farms that make up the bulk of America's agricultural system," Stallman said. Additional STAX modifications would: "reduce the crop insurance premium subsidization to 70% from 80%; not offer the multiplier option; not offer a harvest price option; allow STAX to be based on yield or revenue at the discretion of the producer; and allow purchase only as a buy-up policy with a 10% to 25% deductible rather than also providing for a stand-alone policy." In addition, STAX payments would not be made until the county average revenue or yield fell by 10% from the historic amount, according to the proposal. The federation would like to see a future STAX program cover all crops.

USDA CONTINUES TO REVIEW SUGAR-FOR-ETHANOL FEEDSTOCK PROGRAM... The Obama administration will decide in the coming weeks whether to attempt to temper low prices in the U.S. sugar market by buying surplus sugar and selling it at a loss to ethanol makers. "‘We’re doing it because it’s the law,’ USDA Secretary Tom Vilsack said Monday. The tonnage purchased "is still not decided,’"he said. Observers believe USDA needs to have a program in place by June to divert sugar from the market so prices would rise. The 2008 Farm Bill directs USDA to make surplus sugar available to ethanol makers. Vilsack said USDA will make a decision "following a review of all circumstances."

CHINESE INFLATION EASES MORE THAN ANTICIPATED... China's consumer price index (CPI) was up 2.1% from year-ago in March compared to a 3.2% rise in February. Food prices rose 2.7%, while non-food prices were up 1.8%. China's producer price index (PPI) declined 1.9% compared to a 1.6% drop in February.

LOWER BOXED BEEF PRICES INSPIRE SLIGHTLY MORE MOVEMENT... Packers moved a decent 177 loads of beef to open the week, but it took lower prices to encourage slightly improved retailer buying compared with recent Mondays. Until packers are able to actively move beef at higher prices, traders' concerns with beef demand won't be eased.

CASH HOGS CALLED STEADY/FIRMER... Packer demand for cash hogs was better than expected Monday given negative cutting margins, suggesting plants are short-bought on slaughter supplies for the week. As a result, cash sources are looking for cash hog bids to be steady to firmer across the Midwest again today. But if margins don't improve, packer demand for cash hogs is likely to ease later in the week.

OVERNIGHT DEMAND NEWS... South Korea purchased 55,000 MT of optional origin feed wheat. Japan is seeking 120,108 MT of wheat in its weekly tender.


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