PRICE STRENGTH OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading mostly 3 to 5 cents higher, soybeans 9 to 16 cents higher, Chicago wheat 6 to 8 cents higher, Kansas City wheat 3 to 6 cents higher and Minneapolis wheat 1 to 6 cents higher. The U.S. dollar index is firmer this morning.
TWO MORE GOVERNORS SEEK RFS CORN MANDATE CHANGE... North Carolina Gov. Beverly Perdue and Arkansas Gov. Mike Beebe have joined governors from Maryland and Delaware in asking EPA to reduce the mandate for corn ethanol under the Renewable Fuels Standard (RFS). "We've gone ahead and filed our letter. We'll see how it goes," Beebe spokesman Matt DeCample told Reuters. EPA "should reject Governor Perdue's waiver request out of hand," the Renewable Fuels Association (RFA) said in a statement. "While this drought has caused stress in many agricultural communities, it has not caused the kind of widespread economic harm that is the threshold for EPA to act." USDA Sec. Tom Vilsack has argued that a waiver is premature because refiners have a backlog of RFS credits, or RINs, that they can use to comply with their usage quotas. Last week, the governors of Maryland and Delaware wrote EPA in support of a plea from the livestock industry to the agency to waive the RFS on its own.
PESTS INVADE CHINA'S CORN CROP... China's corn crop is facing its worst pest infestation in a decade with up to 10% of the crop impacted, according to the ag ministry. The ministry says 3.3 million hectares (8.15 million acres) of corn in the provinces of Heilongjiang, Jilin, Liaoning, Hebei and Inner Mongolia have been affected by army worms, with 430,000 hectares (1.06 million acres) facing a "serious" attack. Meanwhile, state-run China National Grain and Oils Information Center cut its 2012 Chinese corn crop estimate by 500,000 MT to 197 MMT, which would still be record production and 2.2% higher than year-ago.
CHINESE SOY DEMAND EXPECTED TO SLOW... High prices amid tight global supplies are squeezing crush margins for Chinese soy processors, which is likely to slow demand for soybeans in coming months. According to a Reuters story citing three trade sources, China's fourth quarter soybean imports are likely to be capped at 12 MMT compared to 15 MMT during the same period last year.
RUSSIA CROP, EXPORT UPDATE... Private firm SovEcon lowered its 2012 Russian grain crop forecast to a range of 70 MMT to 74 MMT from 72 MMT to 75 MMT previously, although no changes were made to the wheat production estimate. More importantly, the firm says if Russia aggressively exports grain over the coming months it's exportable supply could be chewed through by November. SovEcon forecasts grain exports at 2.5 MMT to 3 MMT for August and September.
BEEF PRICES CONTINUE TO SURGE, BUT DEMAND LAGS... Boxed beef prices were $2.32 to $2.42 higher Tuesday, but packers moved only 151 loads of product amid the sharply higher prices. The dramatic slowdown in boxed beef movement suggests Labor Day purchases are about complete and the product market is likely near a short-term top.
PORK MARGINS STRENGTHENING... The pork cutout value was 67 cents higher Tuesday and packers moved a solid 99 loads of product on the day. Combined with lower cash hog bids this week, packers are now cutting solidly in the black. That won't be enough to firm up cash hog bids today, but if packer margins continue to improve, it should limit price pressure in the cash hog market despite seasonally building hog supplies.
OVERNIGHT DEMAND NEWS... Exporters reported no tenders or purchases.