First Thing Today (VIP) -- December 20, 2012

December 20, 2012 12:36 AM
 

GOOD MORNING!

MORE PRICE PRESSURE OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading 4 to 8 cents lower, soybeans 6 to 9 cents lower, Chicago wheat 13 to 16 cents lower, Kansas City wheat mostly 7 to 9 cents lower and Minneapolis wheat fractionally to 4 cents lower. The U.S. dollar index is modestly weaker this morning.

FISCAL CLIFF END ZONE STILL MURKY, COULD TAKE UNTIL EARLY 2013 TO SETTLE... President Obama and House Speaker Boehner had dueling press conferences Wednesday, with the result being no progress in ongoing fiscal cliff negotiations. The House today will vote on two fiscal cliff-related bills, with the outcome on one of them uncertain. The Senate will not vote on similar measures and Obama has said he would veto any bill that simply extends tax rates to those earning under $1 million. It looks like lawmakers will return to Congress after Christmas and before 2013 and thus the end zone on these contentious issues yet this year cannot be ruled out. If not, lawmakers have until noon on Jan. 3 to work out a compromise before fiscal cliff issues take effect. Meanwhile, Fitch Ratings warned the U.S. would probably experience a second downgrade if tax and spending issues aren't solved by year's end.

OPTIONS MULLED TO MOVE 2008 FARM BILL EXTENSION... House Ag Chairman Frank Lucas (R-Okla.) is reviewing options for moving an extension of the 2008 Farm Bill as odds tumble for completing a five-year farm bill during this session of Congress. An extension would give lawmakers additional time to produce a multi-year bill in the new 113th Congress if the two Agriculture committees cannot produce a compromise or cannot find a vehicle to which they can attach an agreement now. Lucas is planning to mark up a farm bill Feb. 27 if there is no final bill in the lame-duck session, said Rep. Collin Peterson (D-Minn.), ranking member on the committee. If there is no action on extending the 2008 Farm Bill, permanent law will take effect. Starting Jan. 1, dairy price support levels would double from current levels to nearly $39 per cwt. of milk under 1949 law. Although USDA Secretary Tom Vilsack has stated he would carry out permanent law details, there is a way to avoid acting right away if USDA chooses to use the Commodity Credit Corporation (CCC) Charter Act to propose rules to implement permanent law, sources signal.

UKRAINE ALLOWS MORE WHEAT EXPORTS... Ukraine will allow an additional 300,000 MT of wheat exports, which exporters can buy from the state-run intervention fund, according to Agriculture Minister Mykola Prysyazhnyuk. Ukraine exported 5.7 MMT of 2012-13 wheat as of Dec.18, with an additional 106,000 MT loaded on ships and another 119,000 MT at ports waiting to be shipped.

BANK OF JAPAN EASES MONETARY POLICY AGAIN... The Bank of Japan eased monetary policy again by expanding its asset-buying program for a third time in four months, this time by 10 trillion yen ($120 billion) to 101 trillion yen ($1.2 trillion). This was widely anticipated as incoming premier Shinzo Abe tries to deliver bolder steps to beat deflation.

CHINA SHOULD WORK TO BUILD DOMESTIC DEMAND... China should focus on boosting domestic demand to promote improved economic growth in the new year given global economic headwinds, according to the Development Research Center. To achieve greater economic growth, the State Council's policy think-tank says China must maintain proactive, pro-growth fiscal policy and cut taxes.

WEEKLY EXPORT SALES REPORT OUT THIS MORNING... For the week ended Dec. 13, traders expect: corn sales between 250,000 and 550,000 MT; wheat sales between 450,000 and 650,000 MT; soybean sales between 650,000 and 850,000 MT; soymeal sales between 200,000 and 300,000 MT; and soyoil sales between 20,000 and 40,000 MT.

CLIMATE CHANGE PART OF TOP OBAMA AGENDA FOR NEXT FOUR YEARS... President Obama, in an interview for Time magazine's Person of the Year award, said the economy, immigration, climate change and energy would be at the top of his agenda for the next four years. The interview took place before the fatal shootings at Sandy Hook Elementary School in Newtown, Connecticut, an incident that has pushed gun control to a top spot on Obama's agenda.

CASH CATTLE UNCERTAINTY BUILDS... While most cash sources expect steady to firmer prices compared with last week's $124 to $125 trade, the winter storm that blasted much of the Central Plains and Midwest adds uncertainty to the cash cattle market. So far, only very light cash sales have been seen, with the volume not heavy enough to be considered a true barometer of what to expect from remaining cash sales. Given inclement weather and limited packer demand, this week's sales volume could be light.

HOG TRANSPORTATION WILL BE SLOWED BY WINTER STORM... The strong winter storm will limit hog transportation today and possibly Friday. With packers unable to get many hogs to town and holiday-shortened slaughter schedules the next two weeks, packers are not likely to aggressively pursue cash hogs the remainder of the week.

OVERNIGHT DEMAND NEWS... A South Korean firm purchased 55,000 MT of U.S. or South American corn. Another South Korean firm tendered for up to 210,000 MT of optional origin corn (excluding U.S. corn due to price) and up to 70,000 MT of feed wheat. South Korea also tendered for 25,000 MT of non-GMO soybeans for 2014 delivery. Japan buys 121,026 MT of wheat in its weekly tender, including 91,266 MT of U.S. supplies. Ethiopia tendered for 36,000 MT of optional origin milling wheat.

 

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