First Thing Today (VIP) -- February 13, 2014

February 13, 2014 12:34 AM

Good morning!

Corn and beans firmer, wheat mixed this morning... As of 6:30 a.m. CT, corn futures are around a penny higher, soybeans are mostly 7 to 8 cents higher, SRW wheat futures are 1 to 2 cents higher, while HRW and HRS wheat futures are narrowly mixed. The U.S. dollar index is under heavy pressure this morning.

Heavy snowfall in Washington, DC forces closure of federal offices... Weather events have already postponed congressional hearings, including today's previously scheduled appearance of Fed Chairwoman Janet Yellen before the Senate Budget panel, which some media report will occur on Friday. It is unclear whether the storm-related closure will affect the release of weekly export sales, but a delay of this data cannot be ruled out.

Weekly export sales scheduled for this morning... For the week ended Feb. 6, traders expect: corn sales between 800,000 and 1.2 million MT; wheat sales between 450,000 and 750,000 MT; soybean sales between 600,000 and 950,000 MT; soymeal sales between 150,000 and 300,000 MT; and soyoil sales between 10,000 and 50,000 MT.

Deere official predicts retroactive reinstatement of expense deduction, but at lower level... John Deere said Wednesday it expects U.S. tax breaks that helped accelerate sales of farm equipment in recent years to be reinstated later this year, but at a reduced level. Farmers and other business owners were able to deduct up to $500,000 from their taxable income by spending up to $2 million a year on equipment. Farmers were able to further reduce their federal income taxes by claiming an extra-large depreciation allowance on new equipment purchases. But this depreciation program expired at the end of 2013 and the deduction limit plunged to $25,000 a year. "We continue to expect that we'll have an extension of both the bonus depreciation" and the deduction, said Tony Huegel, Deere's investor-relations director, during a conference call with analysts to discuss the company's fiscal first-quarter results. Of note, Huegel said he expects the deduction level to be raised to about $250,000, or half the previous level. But he predicted the renewal of the tax breaks by Congress probably won't happen until later in the year. He said the benefits likely would be applied retroactively to equipment investments made throughout 2014. But depending on the timing of an extension, farmers may run out of time to order and receive new equipment to qualify for the tax breaks in 2014. Plunging U.S. farm income estimated by USDA for 2014 is why some analysts predict a tempered impact on machinery sales even if the tax benefits are increased.

Scientist: China needs to allow GMO corn production... To meet its food security strategy amid rising demand, China needs to allow the domestic production of GMO corn, according to Huang Dafang, professor at the Biotechnology Research Institute of the Chinese Academy of Agricultural Sciences (CAAS), and formerly on the biosafety committee at the Ministry of Agriculture. He says corn is the GMO crop the Chinese "most urgently need to develop."

Firm revises EU wheat export forecast... Private firm Strategie Grains raised its EU soft wheat export forecast for 2014-15 to 21.7 MMT from 26.5 MMT last month amid prospects for better global demand. That would still be 2.6 MMT lower than its export forecast of 24.3 MMT for the current marketing year. The increased export forecast came despite a modestly lower EU wheat production projection from the firm.

Wholesale beef prices continue to drop... Choice boxed beef prices dropped another $1.09 and Select was 53 cents lower yesterday as the price slide continues. Falling wholesale beef prices suggest cash cattle prices will likely decline this week, but there were reports of feedlots passing on steady $141 cash bids in the Plains Wednesday. This week's cash cattle trade remains uncertain.

Strong performance in pork product market... The pork cutout value was $1.41 higher Wednesday amid sharp gains in loins and bellies and packers moved a strong 501.41 loads of product on the day. A strengthening pork product market should keep the cash hog market supported as packers are working with strong margins.

Overnight demand news... South Korea tendered to buy 55,000 MT of optional origin corn.


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