First Thing Today (VIP) -- December 12, 2012

December 12, 2012 12:15 AM


MILD FOLLOWTHROUGH SELLING OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans 7 to 9 cents lower and wheat futures are fractionally to 2 cents lower in Chicago and Kansas City. Minneapolis wheat is the exception, trading mostly 1 to 2 cents higher. The U.S. dollar index is under pressure this morning.

FOMC MEETING WRAPS UP THIS MORNING, BERNANKE PRESS CONFERENCE THIS AFTERNOON... The Fed is widely expected to announce it is replacing the expiring Operation Twist program with another bond-buying initiative following the conclusion of the Federal Open Market Committee (FOMC) meeting around 11:30 a.m. CT. Fed Chairman Ben Bernanke will follow the FOMC meeting with his quarterly press conference at 1:15 p.m. CT.

DON'T FOCUS TOO MUCH ON NEGATIVE FARM BILL COMMENTS... House Ag Chairman Frank Lucas (R-Okla.) in a story on Politico, a political news site, has turned negative on farm bill issues and a timeline. But this is the typical Washington game of upbeat, then downbeat, ahead of a deadline. Farm bill talks are closely tied to the fiscal cliff issues, and we all know those will not take real focus until later this month -- even after Christmas, but before year's end. Meanwhile, talk about U.S. farm policy reverting to 1949 permanent legislation is another scare tactic designed to give farm-state lawmakers leverage to get a new farm bill completed. The threat of sky-high milk prices if the permanent legislation would be implemented (very unlikely) in 2013 is at hand. Now it's time for those farm-state lawmakers to use any such leverage.

EPA RELEASES GHG ANALYSIS IN APPROVING SORGHUM AS ETHANOL FEEDSTOCK... EPA has issued a supplemental determination to release its lifecycle greenhouse gas (GHG) analysis of grain sorghum used as a feedstock to produce ethanol under the RFS program. EPA says ethanol made from grain sorghum at dry mill facilities that use natural gas for process energy meets the lifecycle greenhouse gas emissions reduction threshold of 20% compared to the baseline petroleum fuel it would replace, and therefore qualifies as renewable fuel. Also, grain sorghum ethanol produced at dry mill facilities using specified forms of biogas for both process energy and most electricity production, has lifecycle GHG emission reductions of more than 50% compared to the baseline petroleum fuel it would replace, and that such grain sorghum ethanol qualifies as an advanced biofuel under the RFS Program, according to EPA.

U.S. AG EXPORTS, TRADE SURPLUS RECORD-HIGH IN OCTOBER... The value of U.S. ag exports hit a record $14.651 billion in October, and the resulting ag trade surplus of $6.384 billion was also a record mark based on data going back to October 1975. The trade surplus passed the prior record mark of $5.779 billion set in November 2010 while the previous high-water mark on the value of U.S. ag exports was $13.324 billion in March 2011.

CHINESE EDIBLE OIL IMPORTS SURGE, CORN IMPORTS DROP SHARPLY... China is forecast to see its edible oil imports rise 27% this year to 8.33 MMT, including 1.7 MMT of soyoil, according to state-run China National Grain and Oils Information Center (CNGOIC). Through the first 11 months of this year, Chinese edible oil imports stand at 7.33 MMT, up 26% from year-ago. The think-tank forecasts Chinese 2012-13 corn imports to fall be 54% from 2011-12 to 2.4 MMT. CNGOIC expects no corn imports now until after April 2013, depending on domestic and import prices.

UKRAINE EXPORT UPDATE... Ukraine has exported 12.78 MMT of grain through Dec. 11, up 71.3% from year-ago, based on data from the country's ag ministry. Wheat exports stand at 5.65 MMT and there are another 178,000 MT of wheat at ports ready for shipment.

INDIA TO DECIDE BY MONTH-END ON ADDITIONAL WHEAT EXPORTS... India will make an decision on whether to allow an additional 2.5 MMT of wheat exports from government stocks by the end of December, according to the country's farm secretary. Government sources have previously said the additional exports will be allowed, but there has been no official announcement yet.

FRANCE FARM OFFICE RAISES NON-EU WHEAT EXPORT FORECAST... FranceAgriMer now forecasts French wheat exports outside of the European Union (EU) at 10 MMT, up 500,000 MT from its previous outlook. The French farm office cut wheat exports within the EU by 500,000 MT to 7.3 MMT.

BOXED BEEF PRICES SURGE... Boxed beef prices surged $1.74 (Select) to $2.12 (Choice) Wednesday. While movement was relatively light at 189 loads and packer cutting margins remain deep in the red, the strong boxed beef price gains give traders some hope of steady to firmer cash cattle trade this week.

PORK MARGINS FULLY ABOVE BREAKEVEN AGAIN... After cutting in the red for the past couple weeks, packers have seen margins move back above breakeven. While the cash hog market is expected to remain under pressure as market-ready supplies are plentiful, a continued firming of packer margins would limit pressure on the cash market.

OVERNIGHT DEMAND NEWS... South Korea purchased 238,000 MT of South American and South African corn, but passed on a tender for up to 70,000 MT of feed wheat. South Korea also purchased 195,000 MT of non-GMO soybeans (185,000 MT of U.S. origin), 110,000 MT of Brazilian soybeans and tendered for 48,100 MT of U.S. wheat. Japan purchased 21,530 MT of feed wheat and 31,030 MT of feed barley and tendered for another 120,000 MT of feed wheat and 200,000 MT of feed barley.


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