First Thing Today (VIP) -- August 6, 2012

August 6, 2012 01:44 AM


RAINS PRESSURE GRAIN AND SOY FUTURES... Weekend rainfall was heavier than expected. Additionally, there are scattered rains in the outlook for the first half of this week. That pressured grain and soy futures overnight, especially soybeans. As of 6:30 a.m. CT, soybean futures are trading 16 to 25 cents lower, corn 4 to 7 cents lower, Chicago wheat 2 to 5 cents lower, Kansas City wheat 4 to 6 cents lower, while Minneapolis wheat is 2 to 4 cents higher. The U.S. dollar index is firmer this morning after two-sided trade overnight.

RFS WILL CONTINUE IN MARKET, GOV'T FOCUS.... The issue of the ethanol mandates in the Renewable Fuels Standard (RFS) will continue as a discussion point in Washington, with interagency meetings on tap between EPA, USDA, the Department of Energy and others. A review of the RFS mandates will not be completed soon, contacts advise, and expectations are that more than one USDA Crop Production Report will be needed before any decision is made.

CHINESE BEAN DEMAND EXPECTED TO SLOW... Chinese soybean imports are likely to fall to 4.5 MMT in August and to less than 4 MMT in September and October, according to state-run China National Grain and Oils Information Center. Through the first half of the year, soybean imports averaged 4.84 MMT per month.

PRIVATE FIRM CUTS RUSSIAN CROP FORECAST... Drought conditions in key growing regions in Russia, especially the Volga River valley, caused consulting firm SovEcon to lower its total grain and wheat forecasts for the country. SovEcon now expects Russia's total grain crop to total 72 MMT to 75 MMT compared to 78.5 MMT to 81.5 MMT previously. Wheat production is seen at 40.5 MMT to 43 MMT versus 46 MMT previously.

CHINA CENTRAL BANK STILL BEING WATCHED... The People's Bank of China (PBOC) said in a release published Sunday that it would strengthen the fine-tuning of monetary policy in the second half of this year. A release posted on the PBOC site and reported on by the Xinhua News Agency said that monetary policy should play a counter-cyclical role in the country's economy and credit policies will be improved to shore up the development of the real economy. The PBOC also continued to stress that monetary policy must be more forward-looking, targeted and effective.

BERNANKE HIGHLIGHTS WASHINGTON WEEK AHEAD... Congress has left Washington for the August recess and won't return until September 10. The main focus will be on two appearances by Fed Chairman Ben Bernanke -- today and Tuesday -- the first since the Federal Open Market Committee (FOMC) meeting last week with no change in Fed policy and since the employment data Friday which showed more jobs were added last month than economists expected. Markets will focus on Bernanke's tone relative to the data behind as they continue to hope for some additional action by the Fed to help the U.S. economy.

FOCUS ON BOXED BEEF TRADE... If the cash cattle market is going to build on last week's $4 to $5 higher prices, the boxed beef market must continue to strengthen. As a result, that will be cattle traders' primary focus as they form cash cattle opinions for the week.

CASH HOGS CALLED MOSTLY STEADY... Most packers are expected to offer steady prices for cash hogs to open the week as they gauge available supplies against needs. While most plants are working with margins near breakeven, cash sources aren't expecting them to offer firmer cash hog prices unless they get into a situation where they need late-week supplies.

WEEKEND DEMAND NEWS... Saudi Arabia bought 290,000 MT of wheat.


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