First Thing Today (VIP) -- August 26, 2013

August 26, 2013 12:59 AM


STRONG PRICE GAINS OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading 14 to 19 cents higher, soybeans are mostly 44 to 55 cents higher, SRW wheat is 9 to 12 cents higher, HRW wheat is 9 to 10 cents higher and HRS wheat is 6 to 9 cents higher. The U.S. dollar index is mildly firmer this morning.

FORECAST CALLS FOR OPPRESSIVE HEAT, DRYNESS... Forecasts show very hot and dry conditions across the Corn Belt this week with heat advisories in effect for some areas. With some crops already showing moisture stress, the hot and dry forecast is price-supportive as traders are factoring in yield loss. The National Weather Service computer-generated forecast for Aug. 31-Sept. 4 calls for the above-normal temps to continue, though the outlook shows above-normal precip over northern and eastern areas of the Corn Belt.

LAWMAKERS HAVE TWO MORE WEEKS OF SUMMER RECESS... The approaching Labor Day holiday means lawmakers’ summer break is winding down and will last only another two weeks before they return to Washington. Pending issues ahead include a separate food nutrition funding bill in the House, a new farm bill conference, immigration reform in the House and budget issues including a continuing resolution measure and an eventual increase in the debt limit. Key economic reports this week include today's Durable Goods report and Thursday's important update on Gross Domestic Product, along with weekly jobs claims. Two Federal Reserve officials will speak later in the week -- ahead of the FOMC meeting Sept. 17-18. For agriculture, Tuesday’s farm income update will provide another look from USDA on how drought has impacted farmers and whether the situation will continue to impact farm income in 2013.

USDA MAKES NO CHANGES TO FOOD PRICE FORECASTS... The Consumer Price Index (CPI) for all food increased 0.1% from June to July, increased 0.1% from May to June, and is now 1.4% above the July 2012 level, and USDA economists made no changes to their outlooks for food price inflation for a 1.5% to 2.5% rise in 2013 and 2.5% to 3.5% in 2014. While ERS said the 2012 drought did not have the impact they expected on food prices, they warned that a "resurgence of the drought in key agricultural areas or other severe weather events could potentially drive up food prices beyond the current forecasts."

CATTLE ON FEED PRICE-SUPPORTIVE... Last Friday's Cattle on Feed Report showed all three categories on the friendly side of pre-report guesses, with the most bullish being the Placements category. As a result, cattle futures are expected to open the week with a firmer tone. Traders are still waiting on final sales numbers from last week's cash cattle trade, which extended late into Friday.

CASH HOGS CALLED STEADY/WEAKER... Packers are expected to open the week with steady to weaker cash hog bids across the Midwest as they are bought ahead on slaughter needs. Strong cutting margins, however, should keep packers from aggressively lowering cash hog bids.

WEEKEND DEMAND NEWS... Saudi Arabia purchased 720,000 MT of EU, North American, South American or Australian wheat. Israel tendered to buy up to 110,000 MT of corn, 75,000 MT of feed wheat and 20,000 MT of barley -- all optional origin. South Korea passed on a tender to buy up to 60,000 MT of optional origin feed wheat.


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