First Thing Today (VIP) -- August 1, 2013

August 1, 2013 01:34 AM
 

GOOD MORNING!

GRAINS MOSTLY WEAKER OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading 3 to 4 cents lower, August soybeans are firmer, while new-crop contracts are steady to 1 cent lower and all three wheat flavors are mixed with a slight downside bias. The U.S. dollar index is sharply higher this morning.

SENATE PANEL TO HOLD FALL HEARING ON RFS... The Senate Environment and Public Works (EPW) Committee will hold a hearing this fall on the Renewable Fuel Standard (RFS). The announcement raises the prospect that changes to the RFS mandate could be ahead, but beginning in 2014. EPW Chairwoman Barbara Boxer (D-Calif.) told CQ Roll Call that the hearing this fall will be on the issues surrounding the targets for corn ethanol and cellulosic biofuels. "We’ll probably take a look at the whole issue but we don’t have any intention of changing it right now," she said of the RFS. Sen. Jim Inhofe (R-Okla.) said changes to the targets could pass the Senate if they were attached to some kind of must-pass legislation, such as a continuing resolution. "The only way it’s going to happen is to have it come from the House and it’s on something that everybody does want. We have to see if that strategy works." Members on the House Energy and Commerce Committee are working on legislation to overhaul the rule.

BRAZIL BUYS U.S. WHEAT, SHOPPING FOR MORE... Brazil has purchased around 400,000 MT of U.S. HRW wheat over the past week and is shopping for more, export sources told Reuters. Brazil is turning to the U.S. to fill wheat needs as a lack of supplies has halted exports from Argentina and a recent frost destroyed some of the Brazilian crop.

UKRAINE RAISES GRAIN CROP, EXPORT FORECASTS... Ukraine's ag ministry estimates grain production this year to be record-large at 57.1 MMT, which is up from its prior forecast of 53 MMT to 54 MMT and well above 46.2 MMT last year. The ministry forecasts 2013-14 grain exports to reach 28 MMT, up 2 MMT from its prior forecast and 5 MMT higher than 2012-13. Of that total, the ag ministry expects wheat exports of 9 MMT and corn exports of 16 MMT.

CHINA COTTON RESERVE SALES FALL SHORT OF TARGET... China sold 3.7 MMT of state-owned cotton reserves from January through July, according to state stockpiler China National Cotton Reserves Corp., which is short of its 4.5-MMT target. An analyst with Shanghai JC Intelligence Co. says China still has over 10 MMT of state cotton reserves.

MIXED VIEW FROM CHINESE MANUFACTURING DATA... China's official purchasing managers' index (PMI) for July rose to 50.3 from a reading of 50.1 in June, according to the National Bureau of Statistics. New orders increased 0.2 points last month, suggesting improved demand for Chinese goods domestically and abroad. Meanwhile, the final HSBC PMI for July dropped to an 11-month low of 47.7 from 48.2 in June. The HSBC new orders sub-index contracted for a fourth consecutive month, signaling slowed demand.

WEEKLY EXPORT SALES OUT THIS MORNING... For the week ended July 25, traders expect: corn sales between 475,000 and 875,000 MT; wheat sales between 500,000 and 700,000 MT; soybean sales between 400,000 and 800,000 MT; soymeal sales between 125,000 and 275,000 MT; and soyoil sales between 0 and 20,000 MT.

2013 CROP INSURANCE PAYOUTS AT $1.357 BILLION... Indemnities for 2013 crops reached $1.357 billion as of July 29, with 2012 indemnities at a record $17.372 billion, according to Risk Management Agency (RMA) data. The level of net acres insured for 2013 continues to lag the pace seen for 2012 at this point a year ago -- 193.497 million net acres insured for 2013 versus 215.487 million in 2012. But payouts are already nearly double where 2012 stood at this point last year. Wheat is so far the biggest component of the 2013 losses at $871 million, already above the current level for 2012 of $759 million. The lag in data is a reflection of the delays seen to start the 2013 growing season.

BOXED BEEF ACTION REMAINS SLUGGISH... Packers saw boxed beef movement rise to 213 total loads Wednesday, but the improved movement came amid lower prices. With the boxed beef market still sputtering, buying interest will remain limited in live cattle futures as traders wait to see if cash cattle prices will firm this week.

PORK PRODUCT MARKET FIRMS AGAIN... The pork cutout value was another 40 cents higher Wednesday and movement improved to 401.5 loads on the day. A firming product market is strengthening pork cutting margins, but packers aren't expected to raise cash hog bids. Cash sources expect cash hog bids to steady at most Midwest locations again today.

OVERNIGHT DEMAND NEWS... Japan purchased 178,212 MT of wheat in its weekly tender, including 121,300 MT of U.S. supplies (of which 89,579 MT were U.S. western white wheat). Japan bought 1,000 MT of feed wheat out of a tender for 120,000 MT of feed wheat and 200,000 MT of feed barley. South Korea passed on a tender to buy 55,000 MT of optional origin food-grade corn due to quality concerns.

 

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