First Thing Today (VIP) -- February 27, 2014

February 27, 2014 12:18 AM

Good morning!

Old-crop beans continue to rally... As of 6:30 a.m. CT, old-crop soybean futures are 1 to 7 cents higher with the March and May contracts leading gains, while new-crop futures are 1 to 2 cents lower. Corn futures are also 1 to 2 cents lower, while wheat futures are 1 to 6 cents lower with HRW contracts leading the decline.

Argentina approves more wheat exports... Argentina approved another 500,000 MT of wheat for export Wednesday, pushing 2013-14 export allowances to 1 MMT, according to an Argentine government source. The Argentine government has previously said it will allow 1.5 MMT of wheat exports in 2013-14 but was waiting to make sure production covered domestic needs before giving exporters the green light. The country's economy minister says "everything" that's not needed for domestic consumption will be exported.

China in talks to buy Nidera... State-owned COFCO, China's largest grain trading firm is reportedly in advanced talks to buy Dutch grain trading firm Nidera. The deal would provide China direct access to South American grain and soy supplies, with one Asian-based source telling Reuters the "aim" of the deal is soybeans.

China sues Ukraine over corn trade deal... China is suing Ukraine over the breach of a $3 billion loan-for-grain contract signed in 2012, according to ITAR-TASS news agency. The Russian news agency reported the State Food and Grain Corporation of Ukraine has used part of the Chinese loan to instead provide grains for Ethiopia, Iran, Kenya and Syria. Chinese importers have only received $153 million (180,000 MT) worth of Ukrainian corn.

GOP tax reform plan includes barge tax boost, repeal of biodiesel tax credit... A tax overhaul plan released late Wednesday by House Ways and Means Chairman Dave Camp (R-Mich.) would raise the diesel tax used to fund improvements to locks and dams but would permanently repeal tax credits used to subsidize biodiesel and cellulosic ethanol. The barge tax would be raised from 20 cents to 26 cents per gallon. The biofuel tax credits expired at the end of 2013, but supporters are pushing to get them revived as part of a separate tax extenders bill. The proposed tax reform measure would alter cash accounting rules -- businesses with gross receipts under $10 million a year could use the cash method of accounting, while larger companies would be required to use accrual accounting. However, farms would be exempt from the provision. Sole proprietors also could continue to use the cash method regardless of size. The draft makes tax code Section 179 expensing permanent at the levels from 2008-2009. Taxpayers would be able to expense up to $250,000 of investments in new equipment and property per year, with the deduction phased out for investments exceeding $800,000.

Fate of tax proposal: it has no chance of passing this year... Rep. Camp is term-limited as Ways and Means chairman. House Budget Chairman Paul Ryan (R-Wis.) is expected to succeed Camp. The proposal may not even reach the House floor in 2014. In the Senate, tax changes have taken a back seat to so-called tax extenders -- the dozens of deductions, credits and other provisions (including the biodiesel tax incentive) that expired at the end of 2014. Lawmakers said Camp is setting a context for the discussions moving forward.

Weekly export sales data out this morning... For the week ended Feb. 20, traders expect: corn sales between 475,000 and 775,000 MT; wheat sales between 300,000 and 500,000 MT; soybean sales between 400,000 and 800,000 MT; soymeal sales between 100,000 and 250,000 MT; and soyoil sales between 10,000 and 30,000 MT.

Russia to resume some U.S. pork imports March 10... Russia will resume imports of U.S. pork that are ractopamine-free on March 10, according to the country's health safety watchdog Rosselkhoznadzor. Russian officials had previously indicated the country would resume some U.S. pork imports next month, but hadn't given a specific date. Russia banned imports of U.S. pork in February 2013.

APHIS reopens comment period on imports of beef from Brazil... Stakeholders have an additional 60 days to comment on a USDA proposal that would allow imports of fresh beef from certain Brazilian states, according to an Animal and Plant Health Inspection Service (APHIS) Federal Register notice. Comments can be submitted until April 22 under the extension. Currently, the U.S. blocks beef from most of Brazil because of concerns regarding foot-and-mouth disease (FMD) -- a highly contagious disease affecting cloven-hoofed animals. The original comment deadline was Feb. 21, 2014. Eight senators recently urged USDA to extend the comment period. "Given the possible threat of products carrying FMD entering the U.S. and the highly contagious nature of the disease, we believe it is in the best interest of the Department to extend the comment period by another 60 days," the senators said.

Cash cattle trade sharply higher... Light cash cattle trade was reported at $152 in Nebraska and around $150 in Texas and Kansas Wednesday afternoon -- up $5 to $6 from last week. But many feedlots passed on those bids in hopes of even stronger cash prices as packers appear to need supplies.

Pork product market continues to strengthen... The pork cutout value was another 24 cents higher Wednesday and packers moved a strong 451.57 loads of cuts and trim. Despite high wholesale pork prices, retailer interest is showing no signs of slowing as pork is still cheap compared to beef.

Overnight demand news... Egypt tendered to buy at least one cargo of optional origin wheat with results expected later this morning.


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