First Thing Today (VIP) -- February 3, 2014

February 2, 2014 11:59 PM

Good morning!

Light overnight trade... As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are fractionally to 2 cents lower in old-crop contracts and around 4 cents lower in new-crop contracts, SRW wheat futures are around a penny higher, while HRW and HRS wheat futures are fractionally lower. The U.S. dollar index is mildly weaker this morning.

Senate farm bill conference report vote and CBO budget update key items ahead in Washington... A widely expected Senate approval of the 2014 farm bill vote (HR 2642) on Tuesday, the unveiling of an updated Congressional Budget Office (CBO) baseline, budget outlook hearings and a confirmation vote for Sen. Max Baucus (D-Mont.) to be U.S. ambassador to China are the key focus items of the week ahead in Washington. On the economic report front, more manufacturing updates arrive to open February, but the primary focus will be Friday’s January jobs report. For agriculture, the key update will be Thursday's Weekly Export Sales Report with a focus, as usual, on Chinese corn and soybean activity.

USTR: U.S. trade deals remain on track, despite Senate Majority Leader Reid's opposition... The Obama administration is convinced it can secure congressional backing for several trade agreements even after Senate Majority Leader Harry Reid (D-Nev.) said he would oppose fast-track trade legislation for any agreements, U.S. Trade Representative Michael Froman told the Financial Times newspaper. Froman said he was sure the support of Congress could be achieved, and that both negotiations (Trans-Pacific Partnership and the U.S.-EU trade agreement proposal) remained "very much on track" for the time being. He said moving a trade bill or a trade agreement through Congress is "a marathon, not a sprint." That refrain usually comes in Washington when something is going to take longer to a lot longer than its supporters want.

China's manufacturing sector slumps in January... China's official purchasing managers' index (PMI) slipped to a six-month low of 50.5 last month from 51.0 in December amid weaker domestic and foreign demand. While the growth pace of the manufacturing sector slowed last month, the official data didn't signal contraction within the sector that was conveyed in HSBC's data last week.

Russian grain exports up 28.5%... From July 1 through Jan. 26, Russia has exported 17.327 MMT of grain, up 28.5% from the same period in 2012-13, according to official data from the Russian government. Wheat exports account for 13.1 MMT of the total, while corn exports stand at 1.99 MMT.

Cattle Inventory Report lacks market-moving data... Last Friday's Cattle Inventory Report showed the U.S. cattle herd contracted for a seventh consecutive year but that heifers are being retained to rebuild the herd. But the report lacked strong market-moving data and should have a limited impact on cattle futures today. The longer-term outlook for the cattle market remains bullish as supplies will remain tight.

Cash cattle traded lower... Cash cattle traded at $145 to $146 in the Plains late Friday, which was $2 to $4 lower than the previous week. Given the sharp drop in cash cattle and boxed beef prices last week, traders have negative cash cattle expectations this week.

Cash hogs called mostly steady, some firmer bids possible... Packers are expected to open the week with steady cash cattle bids at most Midwest locations. But it wouldn't be surprising to see some firmer bids as packers are working with strong margins and they will likely try to get as many hogs to town as possible ahead of the snowstorm that's forecast for Tuesday and Wednesday.

Weekend demand news... Exporters reported no tenders or purchases.


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