CORRECTIVE GAINS OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading 3 to 4 cents higher, soybeans are 10 to 14 cents higher and all three wheat flavors are 1 to 3 cents higher. The U.S. dollar index is weaker this morning.
CHINA JULY SOY IMPORTS RECORD-LARGE... China imported a record 7.2 MMT of soybeans in July, according to official customs data. That was up 3.9% from June imports and 22.7% greater than year-ago. For January through July, Chinese soy imports totaled 34.7 MMT, down 0.7% from year-ago. China National Grain and Oils Information Center forecasts August Chinese soybean imports to slip to 6.02 MMT and says September and October imports could be around 5 MMT.
LIGHT DEMAND FOR CHINESE SOY AUCTION... China sold only 89,928 MT of state-owned soybeans from its initial auction -- 17.9% of the amount offered for sale -- at an average price of 3,894 yuan ($640) per MT. The Chinese government offered 237,700 MT of 2009 soybeans and 263,320 MT of 2010 soybeans for sale as it attempts to rotate stocks ahead of the new-crop harvest this fall.
CHINESE EXPORTS, IMPORTS REBOUND IN JULY... China saw its trade surplus narrow to $17.8 billion in July from a surplus of $27.2 billion in June as growth in imports exceeded the rise in exports. Chinese exports rose 5.1% last month, while imports firmed 10.9%. The data is getting a bullish read as it signals improved demand after Chinese exports and imports surprisingly slumped in June.
WEEKLY EXPORT SALES OUT THIS MORNING... For the week ended Aug. 1, traders expect: corn sales between 600,000 and 1 million MT; wheat sales between 500,000 and 750,000 MT; soybean sales between 550,000 and 1.05 million MT; soymeal sales between 150,000 and 375,000 MT; and soyoil sales between 0 and 25,000 MT.
VILSACK: FARM BILL STALEMATE MIGHT WORSEN U.S.-BRAZIL TRADE ISSUES... USDA Secretary Tom Vilsack suggested that a continued stalemate over farm bill legislation could lead Brazil to retaliate against U.S. exports. The U.S. government has been paying Brazil $147 million a year to temporarily settle a trade challenge the Brazilians won against U.S. cotton subsidies. Brazil is taking the money in exchange for holding off on $830 million a year in tariffs it can impose against U.S. imports by a WTO ruling on U.S. cotton subsidies. Under the agreement, the $147 million in payments would continue until a new farm bill changed cotton programs. The payments are supposed to continue until Congress replaces the subsidies, but Vilsack told key officials in Brazil this week that the monthly installment in September would be cut in half due to the budget sequester and that he had no authority to make further payments after the federal fiscal year ends Sept. 30 -- although some sources signaled Vilsack has authority to make payments in 2014 via Commodity Credit Corporation (CCC) payouts. The Brazilians "expressed some concern that without a payment and an adequate payment in September and no farm bill, we leave them very little wiggle room or option in terms of how to deal with this situation," Vilsack said. Vilsack added that the Brazilians reminded two senators who accompanied him on the trip, Senate Ag Chairwoman Debbie Stabenow (D-Mich.) and Rep. Roy Blunt (R-Mo.), of the retaliatory measures authorized by the World Trade Organization case won by Brazil.
TYSON TO HALT PURCHASES OF CATTLE FED BETA-AGONISTS... Tyson Foods announced Wednesday that as of Sept. 6 it will suspend purchases of cattle fed the feed additive zilpaterol (Zilmax). Tyson said it was concerned about recent cases of cattle being delivered to its plants with difficulty walking or being unable to move. "We do not know the specific cause of these problems, but some animal health experts have suggested that the use of the feed supplement Zilmax, also known as zilpaterol is one possible cause. Our evaluation of these problems is ongoing but as an interim measure we plan to suspend our purchases of cattle that have been fed Zilmax," Tyson said in a statement. Tyson also said the ban is "not a food safety issue."
FRIDAY CASH CATTLE TRADE APPEARS LIKELY... Bids and asking prices remain far apart in Plains' cash cattle negotiations. As a result, it's unlikely there will be any movement on cash cattle trade today, and if there is, it's likely to be light sales unless packers raise cash bids. Given strong overnight gains in cattle futures, traders are expecting firmer cash prices compared with last week's $119 to $120 trade in the Plains.
PORK MARKET CONTINUES TO STRENGTHEN... The pork cutout value was only 6 cents higher Wednesday, but packers moved a strong 483.5 loads of product on the day. The pickup in pork movement despite the recent rise in price suggests retailers may be gearing up for late-summer pork features, especially since boxed beef movement has been lackluster. Despite the drop in boxed beef prices, pork is still comparatively cheap.
OVERNIGHT DEMAND NEWS... Japan purchased 175,277 MT of wheat in its weekly tender, including 83,062 MT of U.S. supplies. Japan purchased 52,590 MT of feed wheat and 39,795 MT of feed barley in a tender for 120,000 MT of wheat and 200,000 MT of barley. South Korea bought 30,000 MT of Indian soymeal.