First Thing Today (VIP) -- December 11, 2013

December 11, 2013 12:29 AM



MILD STRENGTH IN GRAINS OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are 2 to 3 cents higher, SRW wheat futures are 3 to 4 cents higher, while HRW and HRS wheat futures are 1 to 2 cents higher. The U.S. dollar index is holding near unchanged this morning.

CHINA REJECTS ANOTHER CARGO OF U.S. CORN... China rejected a 59,100 MT cargo of U.S. corn due to the presence of MIR 162 (Syngenta's Agrisure Viptera), which is not approved for import into the country, according to quarantine officials. More rejections are expected as there are nearly 2 MMT of U.S. corn currently en route to China. The "reason" for the rejections may be that China has more domestic corn on hand, as China National Grain and Oils Information Center now forecasts this year's crop at a record 217.7 MMT. In yesterday's December Supply & Demand Report, USDA left its Chinese corn crop forecast at 211 MMT.

BUDGET NEGOTIATORS REACH TWO-YEAR DEAL; HOUSE VOTE FRIDAY, SENATE NEXT WEEK... Key features of the bipartisan plan: (1) $1.012 trillion budget for Fiscal Year 2014; (2) $85 billion in total savings over ten years; (3) $63 billion in sequester relief over two years, split evenly between defense and non-defense budgets; (4) $23 billion in net deficit reduction over ten years; and (5) Does not include unemployment insurance extension, but does include federal employee pension pay-ins.

BUDGET ACCORD INCLUDES DEFICIT-REDUCTION PROVISIONS... Savings would be found by adjusting military retirement benefits, increasing airline security fees and upping Pension Benefit Guarantee Corporation premiums, along with a host of other small measures. The deal requires federal workers to pay more into their pensions – a contentious development for some Democrats. The key vote will be Friday in the House. The deal will likely need considerable Democratic support to pass the GOP-controlled House. House Republicans have repeatedly challenged their leaders on budget deals, and some are likely to argue for bigger spending cuts.

NO FARM BILL BEFORE JANUARY; SENATE NIXES EXTENSION... Farm bill conference negotiators met Tuesday for an hour, with Senate Agriculture Chairwoman Debbie Stabenow (D-Mich.) saying the goal is to have a final conference committee meeting in early January "and move very quickly to pass the bill." USDA Sec. Tom Vilsack has assured Stabenow there would be no increase in milk prices in January, even though permanent law for dairy kicks in with the new year if there is no extension of existing programs. "It's my judgment, at least through the end of January, we're not in a place where dairy prices are affected at all," Stabenow said. Earlier on Tuesday, she and Senate Majority Leader Harry Reid (D-Nev.) ruled out taking up a short-term extension. House Agriculture Chairman Frank Lucas (R-Okla.) said he would file a bill to extend existing farm programs until Jan. 31, but said it was primarily a safety measure to consider in January in case the talks bog down. "My intent is to see how the CBO (Congressional Budget Office) scores come in this week, how much progress we continue to see working together. If it appears that it is possible to be ready to go on the floor that first week in January, then I would be very hesitant about bringing the (extension) bill to the floor," Lucas said. Work on the commodity title has slowed because the CBO analyst responsible for making cost estimates was stuck in New Jersey due to the snow storm. Farm bill negotiations, especially at the staff level, will likely continue next week, even though the House is out of session as of late morning, Dec. 13. Stabenow said budget scores could be ready to allow some kind of deal in principle by the time the Senate leaves for Christmas on Dec. 20 and that could allow a conference meeting after the holiday recess ends on Jan. 7.

RUSSIAN WHEAT EXPORTS DOWN SHARPLY FROM YEAR-AGO... Through the first 10 months of this calendar year Russia has exported 10.52 MMT of wheat, according to official customs data. That's down 26.5% from last year's exports of 14.31 MMT for the same time period.

FRANCE FARM OFFICE RAISES FRENCH WHEAT EXPORT FORECAST... FranceAgriMer raised its French wheat export forecast to 18.95 MMT from 18.26 MMT previously. The bulk of that increase is in wheat exports outside of the European Union, with that forecast raised 600,000 MT to 11.8 MMT.

BOXED BEEF MOVEMENT IMPROVES... Packers moved an improved 198 boxes of beef Tuesday as prices eased slightly. But with showlist numbers up across the Plains except for Kansas and packers working with negative margins, beef movement still likely isn't strong enough to encourage packers to raise cash cattle bids. Unless boxed beef movement surges, cash cattle bids are likely to come in steady to lower compared to last week's $132 trade.

WEATHER NOT SUPPORTING CASH HOG MARKET... Weather remains inclement across the Midwest, but that's not slowing hog movement enough to support the cash hog market. Given plentiful market-ready supplies and record hog weights, packers aren't having to dip into their strong margins to get supplies to fill out slaughter runs. Cash hog bids are expected to remain steady to weaker across the Midwest today.

OVERNIGHT DEMAND NEWS... Taiwan is seeking 23,000 MT of U.S. corn and 12,000 MT of U.S. soybeans. Egypt tendered to buy at least one cargo of Russian wheat, with results of the tender to be announced later this morning.


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