PRICE PRESSURE OVERNIGHT... Grain and soy futures were firmer early in overnight trade but were unable to hold gains and are under pressure this morning. As of 6:30 a.m. CT, corn futures are trading mostly 9 to 12 cents lower, soybeans mostly 9 to 22 cents lower, Chicago wheat mostly 20 to 23 cents lower, Kansas City wheat 14 to 20 cents lower and Minneapolis wheat around 13 cents lower. The U.S. dollar index is near unchanged in light and choppy trade this morning.
HOUSE LEADERS PULL FARM BILL EXTENSION FROM AG DISASTER AID BILL... In a widely expected move on Tuesday, House GOP leaders yanked a one-year extension of the farm bill from a bill (HR 6228) linked with ag disaster aid focused on livestock producers and instead will vote Thursday only on the ag disaster package. Without Democratic support, especially from House Agriculture Committee ranking member Collin Peterson (D-Minn.), it had been clear there would not be enough Republican votes to garner the 218 needed for the bill's passage. Peterson linked his support to getting a commitment from House Speaker John Boehner or another top GOP leader that the farm bill extension would lead to a new farm bill conference with the Senate. The most likely strategy ahead for a new farm bill is that it will be dealt with in the post-election, lame-duck session, even though Ag Committee leaders and members will continue to push for a more accelerated timeline and could likely discuss various compromises between the two bills.
FOMC MEETING CONCLUDES THIS AFTERNOON... Economists are not expecting any major announcements in terms of additional economic stimulus from the Fed this afternoon. Most feel the more likely scenario is for QE3 to be announced is following the Sept. 12-13 Federal Open Market Committee (FOMC) meeting when Fed Chairman Ben Bernanke holds his next quarterly press conference.
CHINESE PMI DISAPPOINTS... China's official purchasing managers' index (PMI) came in at 50.1 for July. While that signals there's very modest expansion (figure above 50) by China's largest manufacturers, the reading was an 8-month low and down from 50.2 in June. Meanwhile, the final HSBC PMI came in at 49.3. Although that was the highest reading since February, it was lower than the preliminary reading of 49.5 and signals China's small manufacturers are still in contraction (reading below 50). The disappointing PMI data suggests China will come with more pro-growth monetary policy measures to boost economic activity.
UPDATE ON RUSSIA'S EXPORTABLE GRAIN SUPPLIES... Russian Prime Minister Dmitry Medvedev said Tuesday Russia would retain its exportable grain surplus without giving specific figures. A Russian government source told Reuters the country will have an exportable grain surplus of 12 MMT to 17 MMT, with wheat supplies accounting for 11 MMT to 15 MMT of that total, depending on how this year's crop finishes. The state weather forecasting agency says temps will remain above normal for all of Russia's major production regions during August, signaling crops will remain under drought stress.
HOT TEMPS TO CUT UKRAINE CORN CROP... Temps across Ukraine are expected to be hotter than normal in August, which will trim the country's corn crop, according to the head of the state weather agency. She now forecasts Ukraine's corn crop at 20 MMT "at best" compared to a prior estimate of 21 MMT and sees total grain production around 43 MMT.
FRANCE RAISES WHEAT CROP ESTIMATE... France's farm ministry now estimates the country's wheat production at 36.7 MMT, up from 35.9 MMT in July. While rains boosted crop prospects, there are some concerns on with crop quality, according to the farm ministry. Wheat production is forecast to rise 7.9% from last year's output of 33.8 MMT.
BOXED BEEF MARKET CONTINUES TO STRENGTHEN... Boxed beef prices were 20 to 31 cents higher Tuesday and movement improved to 202 total loads. While the boxed beef market hasn't been overly impressive this week, most cattle traders feel packers will eventually pay higher prices than last week's $114 trade for cash cattle in the Plains.
CASH HOGS SEEN STEADY/LOWER... Packer demand for cash hogs is expected to be limited as most plants have the bulk of this week's supplies secured and are working to improve margins. As a result, cash hog bids are expected to be steady to lower across the Midwest.
OVERNIGHT DEMAND NEWS... Algeria purchased 400,000 MT to 500,000 MT of wheat -- likely French origin. Saudi Arabia tendered for 275,000 MT of wheat.