First Thing Today (VIP) -- December 30, 2013

December 30, 2013 12:41 AM


GRAIN & SOYBEAN MARKETS UNDER PRESSURE TO START THE WEEK... Corn and soybean futures faced pressure overnight as traders are reacting to weekend rain in Argentina. As of 6:30 a.m. CT, corn futures are mostly 2 cents lower. Nearby soybean contracts are posting losses of 6 to 8 cents, which is near the bottom of the market's overnight trading range. Wheat futures are taking their cue from the corn market, with SRW wheat 2 to 3 cents lower, HRW 3 to 4 cents lower and HRS posting fractional to 2-cent losses.

HOLIDAY-SHORTENED WEEK AHEAD... Wednesday's flip of the calendar to 2014 will have markets around the globe shuttered for a portion of the week, keeping trade volumes relatively light. For data ahead, U.S. updates on housing and manufacturing along with manufacturing data from China will be key along with late-week appearances by U.S. Fed officials. The House and Senate remain out of Washington this week but the Senate is expected to quickly focus on the expired emergency unemployment benefits when members return to Washington the week of Jan. 6.

RAINS FALL IN ARGENTINA, BUT STRESSFUL WEATHER AHEAD... Some dry areas of Argentina saw significant rain over the weekend, but these were accompanied by high temps. There are additional chances of scattered showers for the country over the next several days, but temps are expected to remain high, stressing the crop. South American weather updates will be key this week as traders ready for year-end.

U.S. AG ATTACHÉ: MEXICAN IMPORT DUTIES WILL NOT APPLY TO U.S. PRODUCTS... As we suspected, Mexico's decision to restore import tariffs on white corn and sorghum will NOT apply to U.S. products due to the North American Free Trade Agreement (NAFTA), according to a USDA attaché in the country. The attaché's report cited "official sources" from Mexico's government as indicating that the import duties will not apply to countries with whom Mexico has free trade agreements. In fact, the attaché says the U.S. may actually benefit from the new import duties as a result.

RUSSIAN WHEAT PRODUCTION UP 37% FROM 2012... Russia's wheat harvest rebounded by 37% in 2013 to 54.4 MMT, according to a report by Russia's ag minister. Last year, poor weather resulted in a crop of just 39.7 MMT. However, production is still below the country's 2011 crop of 59.4 MMT. The ministry reports that the overall grain harvest so far amounts to 96.9 MMT in bunker weight, also up sharply from 75.1 MMT in 2012.

TURKEY SURPASSES CHINA AS THE TOP BUYER OF U.S. COTTON... Turkey has moved past China to become the No. 1 buyer of U.S. cotton, according to Friday's Weekly Export Sales Report. So far this marketing season, Turkey has bought nearly 1.72 million running bales (RB) of cotton, while China has purchased 1.42 million RB. Turkey is working to make up for a crop shortfall in Turkey and Uzbekistan, while China has increased its purchases of yarn, which is taxed at a lower rate, at the expense of raw cotton.

STRONG GAINS IN CASH CATTLE... The live cattle market is expected to benefit from an impressive performance in the cash cattle market on Friday as active trade took place mostly around $134 in Texas and at $132 to $133 in Kansas; this compares to cash action at $130 the week prior. Nebraska also saw sharply higher trade at $134 to $136. This week's prices were record highs for some regions. However, futures are already in line with these prices, which could limit any bullish reaction. Frigid Midwest temps this week could give feedlots an edge in cash negotiations again this week.

BULLISH REPORT DATA TO BOOST HOGS... Traders will have a friendly Quarterly Hogs & Pig Report to digest today as USDA pegged the Dec. 1 U.S. hog inventory at 65.940 million head, which was roughly 368,000 head below the average pre-report trade guess. In addition, USDA made major bullish revisions to past data since December 2011. But somewhat tempering this bullish news is a $2.33 plunge in the pork cutout value on Friday, with bellies down $10.51. But the softer prices did spur an uptick in movement to 351.10 loads. Traders will remain on-watch for signs the product and cash market are working on seasonal lows.

WEEKEND DEMAND NEWS... There is no export activity to report.

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