First Thing Today (VIP) -- February 13, 2013

February 13, 2013 12:26 AM


MORE PRESSURE ON GRAINS... As of 6:30 a.m. CT, corn futures are trading 4 to 8 cents lower, soybeans are mostly 9 to 11 cents lower, Chicago wheat is mostly 6 to 7 cents lower, Kansas City wheat is mostly 4 to 6 cents lower and Minneapolis wheat is mixed. The U.S. dollar index is under pressure this morning.

GOP LEADERS WILL LIKELY ALLOW MARCH 1 SEQUESTER CUTS, BUT TALKS WILL CONTINUE... Senate Majority Leader Harry Reid (D-Nev.) and House Speaker John Boehner (R-Ohio) will meet later this week on the sequester. GOP leaders have already stressed they would oppose any replacement plan that calls for tax increases. Many observers believe the impact of the $85 billion in automatic cuts won’t be felt right away, particularly because the Office of Management and Budget has said federal workers will be given 30 days’ notice before furloughs that may result from sequester. Negotiations will continue after any sequester takes place. Meanwhile, the Congressional Budget Office director says a sequester cut delay would boost 2013 GDP 0.6%, and create 750,000 jobs.

RUSSIAN GRAIN UPDATE... Russian Ag Minister Nikolai Fyodorov says purchase volumes for government reserves will be dependent on carryover stocks and crop prospects, which will be clearer in May/June. He says Russia is seeking to have government grain stocks between 4.8 MMT and 10 MMT.

FRENCH FARM OFFICE RAISES WHEAT STOCKS FORECAST AMID SLOWER USE... French soft wheat stocks are now forecast to be 2.42 MMT at the end of 2012-13, according to FranceAgriMer, up from its prior estimate of 2.29 MMT. The French farm office cites a drop in expected exports within the EU and lower domestic farm use as reasons for the higher stocks forecast. French wheat exports within the EU were cut 260,000 MT to 6.9 MMT, while exports outside of the bloc were left unchanged at 10 MMT. The forecast for 2012-13 corn ending stocks is 2.75 MMT versus 2.77 MMT last month.

IEA LOWERS GLOBAL OIL DEMAND OUTLOOK... Global oil demand this year is expected to decline from levels previously expected due to slower global economic growth despite improvements in the U.S. and China, according to the International Energy Agency (IEA). The group now sees oil consumption at 840,000 barrels per day (bpd), down 90,000 bpd from its previous forecast. Earlier this week, OPEC and the U.S. Energy Information Administration (EIA) both raised their 2013 global oil consumption forecasts. OPEC also sees oil use at 840,000 bpd, while EIA forecasts consumption at 1.05 million bpd.

CASH CATTLE PRICES DROP... Initial cash cattle sales in Texas and Kansas were reported Tuesday at $123 -- $2 below the bulk of last week's cash trade. Most feedlots are still hoping for cash bids around the $125 prices received last week, but with packer margins deep in the red, it's unlikely they will be willing to raise bids much from yesterday's levels.

PORK MARKET STRENGTHENS, BUT... The pork cutout value was 93 cents higher and packers moved a strong 124.08 loads of product Tuesday. That's encouraging, but all of the price strength was in hams, while all other cuts were lower. As a result, it's premature to say yesterday's price action signals a short-term low in the product market.

OVERNIGHT DEMAND NEWS... South Korea tendered for up to 195,000 MT of optional origin corn, excluding U.S. supplies, and up to 70,000 MT of U.S. or Canadian feed wheat. Japan canceled a tender for 120,000 MT of feed wheat and 200,000 MT of feed barley due to a lack of bids.


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