First Thing Today (VIP) -- February 19, 2013

February 19, 2013 12:14 AM


BEANS SHARPLY HIGHER, CORN AND WHEAT MIXED... As of 6:30 a.m. CT, soybean futures are 19 to 21 cents higher in old-crop contracts, while new-crop contracts are 11 to 12 cents higher. Corn and wheat futures are narrowly mixed this morning. The U.S. dollar index is holding near unchanged.

ANOTHER DISAPPOINTING ARGENTINE RAIN EVENT... Rains forecast for dry areas of Argentina over the weekend proved to again be disappointing. Only spotty rains were seen through the key production states of Buenos Aires, Cordoba, Sante Fe and Entre Rios. The next chance for meaningful precip is this weekend. Traders fear more crop losses and are building premium into the market to start the week.

MOSTLY QUIET WEEK IN WASHINGTON... Both the House and Senate are out for the President's Day break and return next week. But agriculture will be focused on USDA's Annual Outlook Forum that will be held Thursday and Friday near Washington, DC. The main focus will be on the overall ag outlook from USDA Chief Economist Joe Glauber and the more-detailed commodity outlooks on Friday morning. USDA will also update the forecast of the value of FY 2013 U.S. ag exports. The key focus on the balance sheet data will be on how it differs from the budget-related Longterm Baseline Projections issued last week.

JOHANNS WON'T SEEK REELECTION IN 2014... In a major and surprising development, popular Nebraska Republican Sen. Mike Johanns, who was expected to easily win a second term in 2014, announced Monday he would not seek reelection. "With everything in life, there is a time and a season. At the end of this term, we will have been in public service over 32 years," Johanns wrote in an email to constituents co-signed with his wife, Stephanie. "Between the two of us, we have been on the ballot for primary and general elections 16 times and we have served in eight offices. It is time to close this chapter of our lives." Despite Johanns' announcement, Republicans are heavily favored to hold the open seat. The person most likely to seek a possible run, contacts advise, is Nebraska Gov. Dave Heineman, who is term-limited from seeking re-election in 2014. The state has three Republican congressmen --Jeff Fortenberry, Lee Terry and Adrian Smith --with observers already speculating Fortenberry could seek the post. Johanns is a member of the Senate Ag Committee.

SIGNUP FOR 2013 FARM PROGRAM BEGINS TODAY AND RUNS THROUGH AUG. 2... Direct payments will be continued for the 2013 crop year as part of the 2008 Farm Bill extension. Eligible producers need to enroll in the Direct and Countercyclical Program (DCP) to receive 2013 direct payments. Payment rates and eligibility requirements for 2013 will remain the same as in 2012. Payments will be made on 85% of the eligible crop base acres. Direct payments will be made in October 2013 and there will be no advance payments. Payment limits and adjusted gross income criteria will apply to 2013 direct payments. It's still possible Congress could reduce the level of direct payments for 2013 as part of budget reduction package in the next few months by lowering the payment percentage.

ACRE ENROLLMENT DECISION AHEAD... Producers enrolled in the Average Crop Revenue Election (ACRE) program as part of the 2008 Farm Bill have the option to opt out of the ACRE program for the 2013 crop year. Previously, producers were required to remain in ACRE through the 2012 crop year, once they enrolled in the program. Enrollment in the ACRE program requires a 20% reduction in the level of direct payments. Farm operators currently enrolled in ACRE will have until June 3, 2013, to decide if they want to continue in ACRE for the 2013 crop year or opt out of the program. Similarly, producers who have not previously been in ACRE will have the option to enroll in ACRE for the 2013 crop year. Due to the increased crop prices in recent years, ACRE guarantees for corn and soybeans are likely to be significantly higher for 2013 than in previous years. ACRE payments for 2013 are based on the USDA average crop prices for corn and soybeans from Sept. 1, 2013, to Aug. 30, 2014, and not on current price levels.

INDIA PROPOSES PRIVATE SALES OF GOV'T WHEAT STOCKS... Four Indian ministers have proposed to let private firms export up to 5 MMT of government wheat stocks as the country tries to clear out excess supplies ahead of the new-crop harvest, a food ministry official told Dow Jones newswire. Currently, only state-run firms have been allowed to export up to 4.5 MMT of government wheat stocks. Indian officials say the government plans to buy a record 44 MMT of wheat from producers this year.

WAITING FOR A LOW IN CHOICE BEEF... Choice boxed beef prices continue to drop, signaling prices aren't low enough to attract active retailer buying. Until the product market signals it has found value, packers will be reluctant to raise cash cattle bids and buying interest will be limited in live cattle futures.

CASH HOGS CALLED STEADY/LOWER... Pork plants continue to work with cutting margins that are deep in the red. As a result, cash hog bids are expected to be steady to weaker across the Midwest today. But with a major winter storm coming the second half of the week, packer demand for cash hogs may be a little better than anticipated in some locations.

WEEKEND DEMAND NEWS... Japan is seeking 99,846 MT of wheat in its weekly tender. Tunisia tendered to buy 67,000 MT of optional origin durum wheat. India tendered to export 35,000 MT of wheat.


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