First Thing Today (VIP) -- December 7, 2012

December 7, 2012 12:35 AM


VARIED PRICE TONE THIS MORNING... As of 6:30 a.m. CT, corn futures are trading 1 to 3 cents lower, soybeans 3 to 5 cents higher, Chicago wheat mostly 2 to 4 cents lower and Kansas City and Minneapolis wheat mixed. The U.S. dollar index is firmer this morning.

SHARP SLOWDOWN IN JOBS GROWTH EXPECTED... The U.S. economy likely added 93,000 non-farm payrolls in November, according to the average guess of economists polled by Reuters. That would be a sharp reduction from the addition of 171,000 non-farm payrolls in October, due in part to impacts from Hurricane Sandy. The unemployment rate is expected to hold steady at 7.9%.

RUSSIA TO HIT U.S. BEEF, PORK IN RESPONSE TO U.S. TRADE BILL PROVISION... Senate passage of the measure to give Permanent Normal Trade Relations (PNTR) to Russia drew a positive response from USDA Secretary Tom Vilsack at the Farm Journal Forum, cosponsored by Informa Economics. But trade sources noted that Russia is poised to negatively impact shipments of some U.S. beef products (tongue, liver and some other products) and pork products, citing ractopamine as the reason. Trade contacts noted that the inclusion of human rights provisions in the PNTR plan could well be the reason for Russia's trade restrictions as the country had warned that if the U.S. approved that version of the trade measure, it would harm relations and potentially prompt a response from Moscow. This again underscores the dangers of lawmakers attaching other measures to trade legislation.

BUNDESBANK CUTS GROWTH FORECASTS, WARNS OF RECESSION... Germany's Bundesbank released updated economic forecasts, cutting its outlook for GDP to 0.4% in 2013, and warned of the potential that the euro-zone's economic powerhouse could slip into recession. "There are even indications that economic activity may fall in the final quarter of 2012 and the first quarter of 2013," the central bank said. The downbeat German forecast came just a day after the European Central Bank trimmed its outlook for the euro-zone.

STILL WAITING ON CASH CATTLE TRADE... Bids and asking prices remain far apart in the Plains, suggesting active cash cattle trade won't likely be seen until late today. Most cash sources are expecting cash cattle trade to come in at least $1 lower than the $125 to $126 prices feedlots got for cattle last week.

PORK MARGINS CONTINUE TO DROP... The combination of a 67-cent decline in the pork cutout value Thursday and mostly steady cash hog bids pushed packer cutting margins deeper into the red. With margins falling and an abundant supply of market-ready hogs, cash sources anticipate near-term pressure on the cash hog market.

OVERNIGHT DEMAND NEWS... South Korea purchased a total of 52,200 MT of U.S. wheat in two tenders. Taiwan bought 60,000 MT of Brazilian corn. Japan tendered for 47,000 MT of milling wheat, 36,000 MT of food-grade barley and 2,000 MT of malting barley.


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