First Thing Today (VIP) -- August 30, 2013

August 30, 2013 01:34 AM
 

GOOD MORNING!

CAUTIOUS PRE-HOLIDAY TRADE... Based on overnight price action, traders are looking to take profits on newly established long positions in soybeans and maintain their bearish stance in corn ahead of the holiday weekend. While there is some hope for "relief" in the forecast for next week, temps are expected to remain above normal and virtually no meaningful precip is expected. As of 6:30 a.m. CT, corn futures are trading 4 to 5 cents lower, soybeans are mostly 12 to 15 cents lower and wheat futures are narrowly mixed.

DESPITE REPORTS, BUDGET/DEFICIT TALKS HAVE NOT BROKEN DOWN... Media reports are noting that Thursday's meeting between White House officials and GOP senators on budget-related issues led to a "collapse" in the process. That is an overstatement. The real action will take place shortly after lawmakers return to Washington Sept. 9. Still, White House officials insist that eliminating tax breaks for the rich is essential to any major budget agreement.

HOUSE FARM BILL STRATEGY MURKY... Apparently there is no firm House farm bill strategy, despite a lawmaker earlier this week saying even if the House defeats a food stamp spending bill, House farm bill conferees will be announced. House Republican leaders said that they are still considering how to proceed with legislation establishing federal farm and food aid policy after news reports suggested that top leadership had settled on a strategy. During a stop in North Dakota on Wednesday, House Majority Leader Eric Cantor (R-Va.) said that he still expected the House to take up the food stamp portion of the legislation and that it "will reflect the reform agenda that we’ve been about in the nutrition program." Local news reports said Cantor said the House would pass the food stamp portion of the legislation in September and that House GOP leaders would then appoint members of a conference committee to negotiate a final version of the bill with the Senate. The Washington Post reported that when asked for clarification, "Cantor aides said the local news reports incorrectly characterized the leader’s plans."

DEMAND FOR CHINESE STATE-OWNED SOYBEANS INCREASES... China sold 393,600 MT of state-owned soybeans out of 496,343 MT put up for auction this week (79.3%) at an average price of 4,080 yuan ($662) per ton. The state-owned beans were purchased by inland crushers and food companies that only process domestic soybeans, so there should be little impact to imports despite the improved demand.

CHINA MAY SCRAP COTTON STOCKPILING PROGRAM... China's National Development and Reform Commission has completed a draft plan to end the country's cotton stockpiling program and potentially switch to a subsidy-based policy for farmers and is seeking input from the industry. In addition, China's textile manufacturers are asking the government to end licensing controls on cotton imports and abolish sliding-scale import taxes on cotton.

HOLIDAY TRADING SCHEDULE... Grain and livestock markets will observe normal trading hours today ahead of the extended, holiday weekend. All markets and government offices are closed, Monday, Sept. 2, for Labor Day.

STILL WAITING ON CASH CATTLE TRADE... The wait for cash cattle trade in the Plains continues as packers have thus far shown limited interest in bidding for cattle and feedlots appear content to wait for higher cash bids to surface. Given cash market uncertainty and the upcoming three-day holiday weekend, action in the live cattle market is likely to be muted.

HOGS RALLY DESPITE FUNDAMENTAL WEAKNESS... The cash hog and pork product markets are weakening amid seasonally building hog supplies, but fall- and winter-month lean hog futures rallied sharply Thursday. With those contracts already trading well below the cash index, traders are ignoring the fundamental weakness -- for now.

OVERNIGHT DEMAND NEWS... Japan purchased 43,582 MT of Canadian, Australian and French milling wheat.

 

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