First Thing Today (VIP) -- February 27, 2013

February 27, 2013 12:31 AM
 

GOOD MORNING!

CORN AND BEANS MIXED, WHEAT FIRMER... As of 6:30 a.m. CT, corn futures are narrowly mixed, old-crop soybeans are 5 to 8 cents higher while new-crop contracts are steady to lower, Chicago wheat is 3 to 6 cents higher, Kansas City wheat is 3 to 4 cents higher and Minneapolis wheat is 2 to 4 cents higher. The U.S. dollar index is under pressure.

FARM PROGRAM SIGNUP UPDATE... Ag Committee contacts believe any cuts in 2013 crop direct payments will not be conditioned on when a farmer signs up for the program. But Ag panel aides are nonetheless rechecking with USDA and others on this matter. Meanwhile, a strategy some farmers are using is to sign up for the DCP initially and waiting until the cutoff date of June 3 to decide on whether to enroll in ACRE.

EGYPT HAS ENOUGH WHEAT SUPPLIES TO LAST THROUGH MAY... Egypt has 2.3 MMT of wheat in strategic reserves, enough to last 95 days, according to the minister in charge of food supplies. While there have been questions recently about Egypt's financial and political state, officials say the government has priority financing for wheat imports.

GRAIN LOBBY: RUSSIAN GRAIN STOCKS TO REMAIN TIGHT EVEN WITH PRODUCTION INCREASE... Russia plans to start buying grain from producers in August or September as the government looks to replenish intervention stocks, according to the country's ag ministry. As a result, the head of Russia's grain production lobby says market grain supplies will remain tight through 2013-14 even if production rebounds to 95 MMT this year, as currently projected by the government.

JAPAN TO RAISE AVERAGE DOMESTIC WHEAT PRICE 9.7%... The average price at which Japan's government sells imported wheat to domestic mills will increase from 50,130 yen ($545) per ton to 54,990 yen ($600) per ton in the April-September period, according to the ag ministry. The ministry cited high U.S. wheat prices through December as the main reason for the increase.

RUSSIA GIVES SOME GROUND ON PESKY TRADE POLICY ISSUES, BUT NOT ON RACTOPAMINE... Russia is working to settle differences with the EU, the U.S. and other trading partners on several trade issues, with hopes of averting dispute proceedings through the WTO, the head of a Russian-led customs union said. Regarding the decision by Russia and its customs union partners to ban imports of U.S. beef, pork and turkey that have not been tested and certified as free from the feed additive ractopamine, Andrey Slepnev, Minister for Trade for the Eurasian Economic Commission (EEC), said that while the EEC has put into place harmonized sanitary and phytosanitary rules for the customs union, each member country retains the right to ban a product on health or safety ground without seeking the EEC Commission's approval. However, he said that the three EEC members joined the EU, China, India and many other nations in opposing a decision by the United Nations’ Codex Alimentarius last July to fix a global maximum residue level for ractopamine in meat, and that Codex rules allow member countries to apply higher standards provided there is sufficient scientific justification. The EEC originated from the Commonwealth of Independent States (CIS) customs union between Belarus, Russia and Kazakhstan.

MEXICO BIRD FLU SITUATION... Some 2.1 million chickens have been eradicated due to bird flu in the Mexican state of Guanajuato, including 519,000 egg-producing chickens, 900,000 birds being raised for meat and 722,256 breeding birds. Some 22 million head have been vaccinated and another 40 million doses are to be released soon. However, officials said the numbers eradicated pale in comparison to national flock totals of 140 million laying hens and 300 million meat birds, signaling a major rise in imports is unlikely. Mexico has been the top destination since 2010 for U.S. broiler exports, reaching 1.236 billion lbs., about 17% of total U.S. broiler exports in 2012. Mexico overtook Russia as the top destination for U.S. boiler exports in 2010.

BOXED BEEF PRICES SURGE, BUT MOVEMENT REMAINS SLUGGISH... Boxed beef prices were $1.42 (Choice) to $2.43 (Select) higher Tuesday, but packers moved only 166 loads of product on the day. While there are signs the product market is working on a short-term low, there isn't enough evidence yet to say a low is in place.

CASH HOGS TO REMAIN STEADY/LOWER... The winter storm that hit the Midwest will slow hog movement today. But that won't likely support the cash hog market as packers have this week's slaughter needs mostly secured. Cash hog bids are expected to remain steady to weaker across the Midwest.

OVERNIGHT DEMAND NEWS... South Korea purchased 60,000 MT of optional origin feed wheat. Japan bought 18,340 MT of feed wheat and 51,660 MT of feed barley.

 

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