First Thing Today (VIP) -- August 5, 2013

August 5, 2013 01:09 AM
 

GOOD MORNING!

CORN AND BEANS LOWER, WHEAT MIXED OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading 2 to 5 cents lower, soybeans are fractionally to 7 cents lower and all three wheat flavors are narrowly mixed. The U.S. dollar index is holding near unchanged after two-sided trade overnight.

NON-THREATENING WEATHER CONTINUES... Rains pushed across Minnesota overnight and are moving through north-central and northeast Iowa this morning. A second wave of rains is developing in South Dakota this morning and rain chances are expected to linger into Tuesday. Meanwhile, temps are forecast to remain below normal through the week. And the extended National Weather Service forecasts call for a continuation of the below-normal temps and normal to above-normal precip into mid-month.

CHINA TO AUCTION SOYBEAN RESERVES THIS WEEK... China will auction 500,000 MT of state-owned soybean reserves on Thursday, according to a notice from the National Grain Trade Center of Hefei. It's anticipated that the auction price will be above that of imports, which could limit demand for the state-owned beans.

CONGRESS LEAVES FOR LONG SUMMER BREAK... Lawmakers have headed for the exits and will not return until the week of September 9 as they take their annual five-week summer recess. Congress will not have much legislative time during September, with the House in session only 9 days and the Senate 16. Thus far this year, the Senate has been in session 96 days and out of session 53; for the House, 102 days in session and 47 out.

2012 FARM PRODUCTION EXPENDITURES, LAND VALUES RECORD-HIGH… U.S. farmers spent a record $351.8 billion on agricultural production in 2012, a 10.4% increase from 2011, according to the USDA Farm Production Expenditures Report. Crop farms accounted for the majority of production expenditures in 2012. These expenditures totaled $200 billion, increasing 17.4% from 2011. On the livestock side, farmers spent $152 billion, up 2.4% from 2011. The largest expenditure for livestock farms was feed, on which producers spent $54.4 billion in 2012. Meanwhile, U.S. farm real estate values averaged $2,900 per acre for 2013, up 9.4% from revised 2012 values, USDA said in their annual update on land values. As for cropland, those values increased $460 per acre (13%) to $4,000 per acre. That was led by an increases in the Northern Plains and Corn Belt regions, where average cropland values increased 25.0% and 16.1%, respectively, from the previous year. However, in the Southeast region, cropland values decreased by 2.8%.

BULLISH CASH CATTLE HOPES... Traders start the week with bullish cash cattle hopes after cash prices moved to $120 in the Plains late Friday, $1 above the bulk of the previous week's trade. While the cash market is showing signs that a seasonal low is in place, the boxed beef market is still struggling to put in a low. Until there are clear signs of a low in the product market, buying interest in futures will be limited, though the bullish cash cattle hopes should be enough for futures to favor the upside today.

CASH HOGS CALLED STEADY/FIRMER... Packers are expected to open the week with steady to firmer cash hog bids as they need slaughter supplies from mid-week forward and are working with strong margins. However, packers aren't expected to get too aggressive with cash bids as they expect hog supplies to start building seasonally.

WTO RULES CHINA LIMITS ON US POULTRY VIOLATE THEIR WTO COMMITMENTS… The World Trade Organization (WTO) has sided with the U.S. and ruled China's imposition of higher duties on chicken "broiler products" was unjustified under international trade rules and that China violated numerous WTO obligations in conducting its investigations and imposing anti-dumping (AD) duties and countervailing duties (CVD) on chicken imports from the United States. China's actions resulted in an 80% decline in U.S. chicken exports to China. This is being touted by U.S. officials as a win on this issue, which it is. However, the reality is that it won’t immediately shift China’s policies as they still have avenues to appeal the finding and that process can take months to be resolved. In addition, there’s always the potential that China might not shift their policies.

WEEKEND DEMAND NEWS... Jordan tendered to buy 100,000 MT of optional origin wheat and 100,000 MT of optional origin barley.

 

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