First Thing Today (VIP) -- August 14, 2013

August 14, 2013 01:24 AM


CORN MODESTLY FIRMER, BEANS AND WHEAT LOWER OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading steady to 1 cent higher, soybeans are 9 to 13 cents lower, SRW wheat futures are 1 to 2 cents lower, HRW futures are 1 to 3 cents lower and HRS wheat futures are steady to 1 cent lower. The U.S. dollar index is anchored near unchanged this morning.

REFINERS PETITION EPA TO REDUCE 2014 RENEWABLE FUEL BLENDING REQUIREMENT... The American Fuel and Petrochemical Manufacturers (AFPM) and the American Petroleum Institute (API) on Aug. 13 petitioned EPA to reduce the Renewable Fuel Standard (RFS) next year to keep ethanol usage at just under 10% of total gasoline consumption. EPA must respond to the petitions within 90 days. EPA said it would consider reducing the 2014 renewable fuel standard volume requirements for 2014 to avoid hitting the blend wall when it issued its long overdue renewable fuel standard final rule for 2013 on Aug. 6. EPA acknowledged in the 2013 final rule that there is little demand for higher blends such as gasoline containing 15% ethanol (E15) and 85% ethanol (E85), which has effectively capped the amount of renewable fuel petroleum refiners and importers can blend into the gasoline supply. The refiners' proposal would lower the overall mandate for renewable fuels by 3.35 billion gallons from the scheduled target of 18.15 billion gallons. The advanced biofuel portion of the RFS is scheduled to rise from 2.75 billion gallons this year to 3.75 billion in 2014, under the 2007 energy law. AFPM and API are proposing to reduce the target to 1.92 billion gallons next year. That reduction would discourage imports of Brazilian sugarcane ethanol, which qualifies as an advanced biofuel because of its greenhouse gas reduction. Additionally, the industry said EPA's cellulosic ethanol blending requirement should "reflect actual production." The statute requires 1.75 billion gallons of cellulosic ethanol in 2014, but actual production has lagged far behind Congress's projections. Only 73,271 gallons of cellulosic biofuel have been produced in 2013 as of July 7, according to EPA. The petroleum groups are not asking EPA to reduce the requirement to blend 1 billion gallons of biodiesel into the fuel supply. Ethanol groups called the waiver request unnecessary.

PETERSON TO STABENOW: 'THERE WILL BE TARGET PRICES AND THEY WILL BE BASED ON PLANTED ACRES'... Rep. Collin Peterson (D-Minn.), ranking member on the House Ag Committee, spoke Tuesday at the Minnesota Ag Leadership Conference that we attended and participated in. "We're not giving up on getting a new farm bill passed," Peterson said, but he added, "I'm not sure how we get this done" due to food nutrition issues pushed by House Majority Leader Eric Cantor (R-Va.). As for a coming House-Senate conference, Peterson said he told Senate Ag Chairwoman Debbie Stabenow (D-Mich.) that "there will be target prices" in the Title I safety net program and "they will be based on planted acres not to exceed base acres." Of note, Peterson said the conference could agree to $6 billion to "no more than $8 billion" in cuts to food stamp funding. That would be well below the $40 billion mark House Republicans are expected to vote on shortly after they return from summer recess the week of Sept. 9. Peterson said despite Stabenow's remarks about no further extension of the 2008 Farm Bill, that is a viable option and if so, he would want it to go into 2015. "And if any extension would reduce direct payments, that would be like writing a new farm bill, so that won't be easy to get, has to be a straight extension," Peterson said. When we asked him if he was categorically seeking reelection in 2014, Peterson said, "I'm out seeking funds and...GOP right-wingers have made me mad."

RUSSIA CUTS GRAIN FORECAST... Russia's grain crop will not exceed 90 MMT due to unfavorable weather, according to the latest forecast from the country's ag ministry. That's down from the ministry's prior forecast of 90 MMT to 94 MMT. Despite the downgrade, Russian grain production will be up sharply from the 71 MMT produced last year.

CHINESE COTTON IMPORTS DOWN SHARPLY... Chinese cotton imports dropped 16.6% in July to 338,000 MT, according to the National Development and Reform Commission citing customs data. For the first seven months of this year, cotton imports of 2.75 MMT are down 20.5% from year-ago.

BULLISH CASH CATTLE HOPES... With showlist numbers down from week-ago and packers having raised cash cattle bids late in the week the last three weeks, traders are expecting at least $122 for cash cattle in the Plains. But with packers slow to establish cash cattle bids, active cash trade is not expected until late in the week.

PORK MARKET REBOUNDS... After a poor start to the week on Monday, the pork product market rebounded with a modest 3-cent gain yesterday and movement improved to 382.6 loads. That should be enough to keep cash hog bids steady to firmer across the Midwest as packers are working to fill slaughter runs amid profitable margins.

OVERNIGHT DEMAND NEWS... South Korea purchased 68,000 MT of U.S. or South American corn. South Korea also tendered to buy another 55,000 MT of corn from any origin and 73,300 MT of U.S. wheat.


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