First Thing Today (VIP) -- August 31, 2012

August 31, 2012 01:18 AM


WEAKER TONE THIS MORNING... As of 6:30 a.m. CT, corn futures are trading mixed to mostly lower, soybeans 3 to 7 cents lower, Chicago wheat mostly 7 to 8 cents lower, Kansas City wheat mostly 4 to 8 cents lower and Minneapolis wheat 2 to 5 cents lower. The U.S. dollar is weaker this morning amid expectations the European Central Bank will act again soon in an attempt to tackle the euro-zone debt problems. Investors are also awaiting Fed Chairman Ben Bernanke's address at the Jackson Hole Policy Symposium at 9:00 a.m. CT.

RUSSIA WON'T RESTRICT GRAIN EXPORTS... Following a meeting of Russian officials regarding the grain situation, the country's deputy prime minister says there are no plans to restrict grain exports even if exportable supplies are exhausted, although he didn't rule out market interventions in specific regions later in the year.. The ag ministry cut its official grain crop forecast to 70 MMT to 75 MMT after lowering it to 75 MMT last week and says there will be an exportable surplus of 10 MMT to 14 MMT in 2012-13. Russia has already exported 4.6 MMT of grain since the beginning of the 2012-13 marketing year on July 1.

CHINA WARNS AGAINST EXCESSIVE SPECULATION IN SOY MARKETS... China's top economic planner, the National Development and Reform Commission, met Thursday with major oilseeds processors to to express concern about soymeal prices and to warn them about excessive speculation in the market. This is the second such meeting this month, signaling Chinese officials are concerned with food inflation amid its slowing economy.

USDA FORECASTS RECORD U.S. AG EXPORTS AND IMPORTS... USDA projects fiscal 2013 ag exports at a record $143.5 billion, but also sees imports at a record $117 billion. The forecast trade balance shows a surplus of $26.5 billion, down $3.5 billion from the revised 2012 forecast of $30 billion. Of note, Canada is forecast to overtake China has top U.S. ag export destination in 2013.

U.S. CONFRONTS SEVERAL TRADE ISSUES ON BEEF AND COOL... Argentina has lodged a dispute against U.S. restrictions on imports of Argentine beef and other meat products, while a WTO dispute panel agenda today includes the lingering country-of-origin labeling (COOL) decision that Canada and Mexico won against the United States. The Argentine move may be in response to the U.S. and Japan last week filing complaints against Argentina with the WTO, alleging that its import licensing rules are protectionist because they discriminate against foreign goods. Argentina claims that the U.S. restrictions, applied on sanitary grounds, don't have scientific justification. "All U.S. measures relating to imports of Argentine products, including lemons and beef, are science-based and consistent with WTO requirements," a U.S. trade official said. Meanwhile, a WTO Dispute Settlement Body today will include a discussion on COOL issues. Canada and Mexico are getting frustrated over the lack of U.S. action to fulfill terms of the WTO ruling against the program. While U.S. officials have stated this will be part of the new farm bill, the timeline for that new legislation is murky. Canada and Mexico could seek permission to announce potential retaliatory action against the United States.

ECONOMIST EXPECTS RECORD LOSSES FOR HOG PRODUCERS... Purdue University ag economist Chris Hurt says pork producers could lose around $30 per head this summer and nearly $60 per head during the fourth quarter as continued herd liquidation drives down market hog prices and drought keeps feed prices historically high. This would exceed the previous record quarterly loss of $45 per head in the final quarter of 1998. Click here for more.

WAITING ON CASH CATTLE TRADE... Neither feedlots nor packers are in a hurry to end this week's cash cattle standoff, which suggests active cash cattle trade may not be seen until late today -- if at all. Most cattle traders still expect cash cattle prices to be steady to lower compared with last week's $120 to $121 trade in the Plains.

CASH HOGS CALLED STEADY/LOWER... Packer demand for cash hogs will remain limited ahead of the holiday weekend as market-ready supplies are plentiful and plants are running reduced kills around Labor Day. As a result, cash hog bids will remain steady to weaker across the Midwest.

NORMAL TRADING HOURS TODAY AHEAD OF HOLIDAY WEEKEND... Grain and livestock markets will trade normal hours today. All markets and government offices are closed Monday, Sept. 3, for Labor Day. Grain markets reopen at 7:00 p.m. CT on Monday.

OVERNIGHT DEMAND NEWS... Bangladesh tendered for 50,000 MT of optional origin wheat.


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