GOOD MORNING! Grain and soy futures did not trade overnight due to the Christmas holiday. These markets will open with the start of the open outcry session at 9:30 a.m. CT. The U.S. dollar index chopped around unchanged overnight and is currently favoring the downside.
FISCAL CLIFF FOCUS LATE THIS WEEK AS OBAMA RETURNS TO WASHINGTON... President Obama will return to Washington on Thursday, cutting his Christmas vacation in Hawaii short, and will be in place on Thursday to talk to Senate Democratic leaders about the next step regarding fiscal cliff issues. Both the Senate and House will return on Thursday. Obama late last week called for a scaled-back approach to avoid tax increases on 98% of American taxpayers -- lawmakers could pass a measure that extends current tax rates on the first $250,000 of household income, as Democrats have endorsed.
The president did not detail what would be in the coming Democratic-pushed plan, but possibilities include unemployment benefits for 2 million Americans, and at least a six-month plan to avoid automatic budget cuts that will go into effect if Congress and the White House cannot come up with another plan. Other fiscal cliff issues include a scheduled increase in the payroll-tax rate, estate tax issues and the need to prevent the alternative minimum tax, known as the AMT, from hitting an additional 30 million households for the 2012 tax year.
Senate Majority Leader Harry Reid (D-Nev.) is reportedly working on a fiscal cliff package, but Senate Republican leader, Mitch McConnell of Kentucky, has given no indication that his members would not seek to block a deal that includes tax increases. However, the big hurdle is the Republican-led House, where a bloc of conservatives has ruled out any tax increases whatsoever.
CHINA TO EASE AG EXPENSES TO REIN IN FOOD PRICES... While inflation in China appears to be under control, the country's vegetable prices surged 6.9% over the past week and pork prices rose 0.7%, according to the country's Ministry of Commerce. As food prices make up a third of the consumer price index, a key measure of inflation, China is taking steps to lower the water and electricity prices to keep production and transportation costs in check for ag goods, thus reining in food prices. China will also lower highway toll cuts for ag good transportation and will extend an exemption of value-added tax to include fresh meat and eggs. Currently, it applies only to vegetables. In November, inflation rose to 2% from 1.7% the month prior.
INDIA'S CABINET RAISES WHEAT EXPORT LIMIT... India's finance minister has indicated the country's federal cabinet has raised its 2013 wheat export limit to 2.5 MMT from 2 MMT earlier this year, due to surplus government stocks. India also indicated it will raise its purchasing price for wheat by 5.1%. The country's wheat stocks were at 37.6 MMT as of Dec. 1, which compares to a target of 11 MMT.
OPEC TO EARN RECORD $1.05 TRILLION IN 2012 IN OIL REVENUES... OPEC, the Organization of the Petroleum Exporting Countries, is set to earn a record $1.05 trillion this year in net oil export revenues, according to the U.S. Energy Department. In 2011, OPEC raked in more than $1 trillion in net oil export revenues for the first time ($1.03 trillion), the Energy Department says. As a consequence, Americans will pay the highest average price ever for gasoline this year. The U.S. average for a gallon of regular gasoline in 2012 will be $3.63 a gallon. The 2012 average breaks the old record, set last year, of $3.53 a gallon.
USDA FOOD PRICE FORECAST UPDATE... On Monday we reported the food price forecasts from USDA’s Economic Research Service (ERS) provided conflicting signals about the change in food prices for 2012. We have received clarification that the forecast for all food in 2012 is now 2.25% to 2.75%, which aligns with recent monthly updates. ERS is also keeping its forecast for 2013 at an increase of 3% to 4%.
SOFTER DEMAND COULD WEIGH ON CATTLE... Live cattle futures are at a premium to last week's higher cash cattle trade. This could set the stage for lower cash cattle trade this week as packer demand typically softens this time of the year, especially as they are preparing for another holiday-shortened kill schedule and their cutting margins remain in the red.
HOLIDAYS CONTINUE TO LIMIT CASH HOG BUYING INTEREST... Lean hogs on Monday benefited from ideas pork demand will improve at the start of the new year. But buying interest to wrap up the week could be limited as packers are thought to be well supplied for this week and next week they will again be preparing for a holiday-shortened week.
OVERNIGHT DEMAND NEWS... There are no overnight exports or tenders to report.