BEANS FIRMER, CORN LOWER AND WHEAT MIXED... As of 6:30 a.m. CT, corn futures are trading steady to 1 cent lower, soybeans are 6 to 11 cents higher, Chicago and Minneapolis wheat are mixed with a slight downside bias and Kansas City wheat is mixed with a slight upside bias. The U.S. dollar index is firmer this morning.
TEXAS WHEAT CROP UPDATE... Texas state statisticians report 49% of the winter wheat crop is rated "poor" to "very poor" as of Feb. 17. The crop has deteriorated since the last crop condition ratings on Nov. 26, 2012, when 40% of the Texas winter wheat crop was rated in the bottom two categories.
FARM GROUPS OPPOSE 'DISPROPORTIONATE CUTS' TO FARM PROGRAMS... Twelve national farm groups sent a letter to Senate Majority Leader Harry Reid (D-Nev.) on Tuesday opposing "disproportionate cuts to farm programs" as part of the recently introduced American Family Economic Protection Act advanced by Senate Democrats to avert cuts under the sequestration set to take effect March 1. The proposal would cut $27 billion dollars from agriculture spending via eliminating direct payments beginning with 2014 crops, however, the cuts would come entirely from commodity programs under Title 1 of the farm bill, a "lopsided approach" opposed by the farm groups. The groups noted the detrimental impact that cuts from only one aspect of agriculture programs could potentially have. The groups also highlighted concerns that cuts to farm programs in the bill were proposed not by Senate Ag Committee leaders, but by those on the Senate Budget Committee. The Senate Democratic-pushed plan will not pass both chambers of Congress and likely not even the Senate. Direct payments will be made for 2013 crops, although future congressional action relative to budget issues could slightly reduce those payments. In the new farm bill debate, it is widely expected that direct payments will be eliminated beginning with 2014 crops.
CHINA REPORTEDLY WANTS RACTOPAMINE-FREE ASSURANCE ON U.S. PORK... China appears poised to follow Russia relative to ractopamine as the country is advising that from March 1 forward, imports of U.S. pork will have to be accompanied by certification the product contains no residue of ractopamine, according to contacts. The U.S. Meat Export Federation also says the Chinese appear to be poised to put the requirement in place as of March 1. Indications are the move by the General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China (AQSIQ) is going to be couched as being a step to protect domestic consumer health. So far, there has been no notification posted by USDA’s Food Safety and Inspection Service (FSIS) on any changes relative to requirements to export U.S. pork to China. Key is whether the apparent ractopamine-free requirement is implemented by China and if so, if it includes edible offal. But the issue of ractopamine is starting to take on the appearance of being a longer-term issue that U.S. exporters may face in other markets.
RUSSIAN GRAIN CROP, EXPORT UPDATE... Russian grain production is likely to rebound to 90 MMT this year, but crop size won't be as big as the government expects, according to the head of the Russian Grain Union, as spring grain seedings aren't likely to be a big as the government anticipates. If production comes in around 90 MMT, he says it would leave around 20 MMT of grain for export in 2013-14.
STRONG START FOR BOXED BEEF MARKET... Boxed beef prices were 48 to 52 cents higher Tuesday, but more impressive was the 366 loads of product that packers moved on the day. Before traders will start to talk about a short-term low, however, the boxed beef market must string together multiple days of strength. And even then, it may be hard to get packers to raise cash cattle bids this week as cutting margins remain deep in the red.
STRONG PERFORMANCE FOR PORK PRODUCT MARKET TOO... The pork cutout value was $1.48 higher and packers moved a strong 101 loads of product Tuesday. That's the first hint of a potential short-term low in the pork product market, although with packer cutting margins still buried in the red, cash hog bids are expected to remain steady to weaker across the Midwest.
OVERNIGHT DEMAND NEWS... China has recently booked about 350,000 MT of U.S. wheat, 400,000 MT of Australian wheat and around 100,000 MT of Canadian wheat, according to trade sources. Japan canceled a tender to buy 120,000 MT of feed wheat and 200,000 MT of feed barley due to a lack of bids. Egypt tendered to purchase optional origin wheat. All bids received were reportedly for U.S. SRW wheat. Results of the tender will be known later this morning.