First Thing Today (VIP) -- August 29, 2012

August 29, 2012 01:15 AM


PRICE STRENGTH OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading mostly 7 to 9 cents higher, soybeans 9 to 14 cents higher, Chicago wheat 6 to 12 cents higher, Kansas City wheat 4 to 13 cents higher and Minneapolis wheat 6 to 10 cents higher. The U.S. dollar index is also firmer this morning.

ISAAC MAKES LANDFALL... Hurricane Isaac is slowly moving inland along the Gulf Coast, dumping heavy rains and producing high winds. The path of Isaac missed many of the oil rigs and refineries in the Gulf, but it will take days to get operations fully back up and running once the storm passes. Grain traders are concerned with potential negative impacts to crops as the storm's remnants push further inland.

FAPRI UPDATES BASELINE PROJECTIONS TO REFLECT DROUGHT IMPACT... Continuation of the 2008 Farm Bill and no change in RFS mandates key underlying assumptions in updated analysis by the Food and Agricultural Policy Research Institute (FAPRI) to its long-term baseline projections to reflect info available as of mid-August. Key projections: Corn prices average $8.10 per bu. for 2012, exceeding last year’s record by about 30%. Higher corn prices contribute to steep reductions in corn domestic use, exports and carryover stocks. Soybean prices average $16.27 per bu., resulting in sharply reduced levels of soybean crush and exports. Wheat prices increase to $8.42 per bushel, in spite of record 2012 U.S. yields. Ethanol production declines by 10% for the 2012-13 corn marketing year; higher ethanol prices contribute to sharply reduced ethanol exports and increased imports, but domestic ethanol consumption declines by just 2%. Looking to 2013, FAPRI keeps corn acreage near the 2012 peak, and soybean and wheat acreage both increase. Cotton acreage declines in 2013 due to weak cotton returns relative to competing crops. If weather conditions allow a return to more normal growing conditions and trendline yields in 2013, the result could be a sharp reduction in crop prices.

EUROPEAN COMMISSION ORDERS CUSTOMS TO REGISTER IMPORTS OF U.S. ETHANOL... The EU ordered its customs officials to register imports of U.S. ethanol, underscoring the threat of EU tariffs on the shipments. The step, part of an inquiry into whether U.S. ethanol producers receive trade-distorting government aid, would allow the EU to impose duties retroactively. Nine months ago, the EU opened a probe into whether U.S. ethanol manufacturers receive government subsidies that harm European competitors. The bloc also began a separate investigation into whether U.S. producers sell ethanol in the EU below cost, a practice known as dumping.

RUSSIA HARVEST UPDATE; EXPORT NEWS AWAITED... Russia's average grain yield is down 27% to 1.92 MT per hectare, according to the ag ministry. To date, the country has harvested 53.4 MMT of an expected 75 MMT of grain. Meanwhile, traders are anxiously awaiting a Friday meeting of Russian officials when the grain situation will be addressed.

CHINA WHEAT STOCKPILES SWELL... China Grain Reserves Corp. has stockpiled 23.2 MMT of wheat and 3.57 MMT of rapeseed, according to the State Grain Administration. The stockpiling program started in June to support domestic prices as the guaranteed price fell below market prices. The wheat stockpiles represent about 20% of China's production.

ANOTHER SLUGGISH DAY OF BOXED BEEF TRADE... The boxed beef market followed up Monday's weak showing with another sluggish performance yesterday. Boxed beef prices were 7 to 23 cents lower Tuesday and packers moved only 135 loads of product on the day. With the product market struggling this week and packers buying cattle for a shortened slaughter schedule next week, signs point toward lower prices compared with last week's $120 to $121 cash trade in the Plains.

PACKERS MOVE A LOT OF PORK, BUT AT SHARPLY LOWER PRICES... Packers moved 136.25 loads of pork Tuesday, but it came amid a $1.46 drop in the cutout value. With pork product prices under pressure and an abundant supply market-ready hogs, packers have no incentive to actively pursue cash hogs.

OVERNIGHT DEMAND NEWS... Japan bought 10,710 MT of feed wheat and tendered for 120,000 MT of feed wheat and 200,000 MT of feed barley. Saudi Arabia tendered for 550,000 MT of optional origin wheat. An Indian firm tendered to sell 35,000 MT of government wheat stocks.


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Spell Check

8/29/2012 02:21 AM

  Driving across Eastern CO, on I-76, unirrigated corn looked awful, irrigated looked mixed. Beans horrible. Eastern NB along I-80 pretty much the same. Can't tell much at 65 mph, but having driven this route many times, this drive confirms the worst for me.

8/29/2012 02:22 AM

  Driving across Eastern CO, on I-76, unirrigated corn looked awful, irrigated looked mixed. Beans horrible. Eastern NB along I-80 pretty much the same. Can't tell much at 65 mph, but having driven this route many times, this drive confirms the worst for me.


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