First Thing Today (VIP) -- December 27, 2012

December 27, 2012 12:37 AM
 

GOOD MORNING! Corn futures are currently trading near the bottom of their narrow, choppy overnight trading range with losses around 1 to 2 cents. Wheat futures saw similar trade in the overnight session and are now posting losses around 1 to 5 cents. Soybean futures have backed well off their overnight highs to trade choppy with nearbys around a penny higher. A weaker U.S. dollar index is limiting selling interest in grain futures and is encouraging light short-covering in beans.

HOME PRICES ON TRACK FOR FIRST YEARLY GAIN SINCE 2006... Home prices are on course to hit their first year-over-year gain since 2006, which would make 2012 the strongest performance for the sector since the housing crisis. Hitting that mark could give the real estate rebound a welcome jolt. Traders will watch today's New Home Sales report, in addition to jobless claims and consumer confidence data to gauge the strength of the U.S. economic recovery. But any enthusiasm about improvement in the housing sector will likely be curbed by the fiscal cliff stalemate.

GEITHNER WARNS U.S. WILL HIT ITS BORROWING LIMIT AT YEAR-END... U.S. Treasury Secretary in a letter Wednesday informed Congressional leaders the U.S. will reach its $16.4 trillion borrowing limit on Dec. 31, at which point the government will need to take "extraordinary measures" to free up cash. Geithner indicated that the uncertainty relative to the fiscal cliff makes it impossible for him to say with certainty how much time lawmakers have to raise the borrowing cap. According to the Treasury chief, the government has $200 billion in funds it can use to prevent default, which under normal conditions would give lawmakers about two months to hash out the details. But these are not ordinary times.

OBAMA SAID TO BE 'FURIOUS' ABOUT GOP ATTITUDES TOWARD FISCAL CLIFF AND DEBT LIMIT... The Senate returns later today, but it looks like the earliest the House could return is this weekend -- Speaker Boehner said he would call members back with 48 hours notice and no such notice has been issued yet. President Obama returns to Washington later this morning, and word is that he is "furious" about the lack of GOP overtures on fiscal cliff issues. As for the need to eventually increase the U.S. debt limit, Obama previously said he would not negotiate with Congress again over raising the ceiling, saying it is lawmakers' responsibility to authorize payments for debts the country has already accumulated. Without an increase, the U.S. would eventually default on its debt obligations, potentially sparking a financial crisis.

MISSISSIPPI RIVER TO CLOSE IN EARLY JANUARY... The Waterways Council yesterday reported that the U.S. Army Corps of Engineers on Monday advised them that the Mississippi River near Thebes, Illinois will likely reach water levels that will halt barge traffic by Jan. 3 or 4. Most shipping groups had been under the impression the river would remain open until mid-January.

SPAIN LIFTS CURBS ON ARGENTINE BIODIESEL... Spain lifted curbs on Argentine biodiesel imports after the Argentina asked the World Trade Organization to rule on the dispute. Spain had put import curbs on the country's biodiesel after Argentina took over a major energy company from a major Spanish oil company.

WEEKLY EXPORT SALES REPORT DELAYED... Due to Tuesday's Christmas holiday, export sales data for the week ended Dec. 20 is delayed until Friday morning.

TIGHT SHOWLIST & BOXED BEEF STRENGTH COULD SUPPORT FIRMER CASH CATTLE TRADE... Estimates show this week's showlist is about 32,000 head lighter than week-ago, with the bulk of the decline coming in Nebraska and Texas. This along with gains in boxed beef prices and a surge in movement could point to higher cash cattle trade this week, despite the fact packers are buying for another holiday-shortened week. Last week, cash cattle trade took place at mostly $126 to $127.

POSITIONING FOR H&P REPORT COULD LEAD TO CHOPPY PRICE ACTION... Positioning ahead of the Quarterly Hogs & Pigs Report Friday will likely pick up today. Pre-report expectations are for All Hogs and Pigs, Kept for Breeding and Kept for Marketing categories to come in around 99% of year-ago levels. Also helping to limit downside risk is steady to firmer cash hog bids as the winter storm event on the eastern Corn Belt has disrupted hog transportation this week, tightening supplies. The pork cutout value slid 16 cents yesterday, but that encouraged impressive movement of 116.75 loads.

OVERNIGHT DEMAND NEWS... Taiwan Sugar Corp. canceled a tender to import 23,000 MT of U.S. corn and 12,000 MT of U.S. soybeans for February through March delivery, citing high prices. Japan issued a simultaneous-buy-and-sell tender for 5,060 MT of food wheat for shipment Feb. 15. Bangladesh issued a tender for 50,000 MT of wheat.

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