First Thing Today (VIP) -- February 4, 2014

February 4, 2014 12:11 AM

Good morning!

Two-sided price action in grain/soy futures... As of 6:30 a.m. CT, corn, soybean and wheat futures are narrowly mixed. The U.S. dollar index is modestly firmer this morning.

Last Senate vote on farm bill today; overwhelming approval expected... The Senate on Monday voted 72-22 to invoke cloture, or limit debate, on the conference report accompanying the farm bill (HR 2642). The measure would authorize nearly $1 trillion for agricultural programs and nutrition assistance for the next five years. A vote on sending the legislation to the president is scheduled for 1:15 p.m. CT today. The House adopted the conference report last week, 251-166, two days after it was unveiled.

CBO updated baseline due today... The Congressional Budget Office (CBO) today will release an updated budget baseline that will not show new budget projections for the new farm bill but instead projections of an extension of existing farm policy. Of note will likely be lower commodity price projections and how those would impact estimated farm program spending, particularly for corn. Those could signal that future CBO baseline updates would mean initial estimates of the cost of the 2014 farm bill were too low for commodity program payouts.

Bearish Canadian grain stocks report expected... Record production and logistic problems moving the hefty crops caused Canadian grain stocks as of Dec. 31 to swell well above year-ago. Traders are expecting all wheat stocks to come in at 28.9 MMT and canola stocks at 12.3 MMT, based on the average pre-report guesses. That would represent record canola stocks and the highest wheat stockpiles in 22 years as of the end of December.

Plains wheat crop conditions continue to deteriorate... Texas state statisticians rate the winter wheat crop 41% "poor" to "very poor," which is an increase of four percentage points from last week, while 19% of the crop is rated "good" to "excellent," which is down four percentage points from last week. Crop conditions also declined in Kansas and Oklahoma. In Kansas, 20% of the crop is rated "poor" to "very poor" while 35% is rated "good" to "excellent." That's up 14 percentage points in the bottom two categories and down 23 points in the top two categories from last month. In Oklahoma, 24% of the winter wheat crop is now rated "poor" to "very poor" while 36% is "good" to "excellent" -- up 16 percentage points in the bottom two categories and down 27 points in the top two categories from last month.

Wholesale beef prices continue to plunge... Choice boxed beef prices dropped $3.40, while Select beef plunged $5.43 Monday as the market continues to pull back from recent record highs. Despite the sharp price drop, packers moved only 122 loads of product, signaling the market has not yet gotten back to what retailers consider "value" levels.

Pork cutout firms... The pork cutout value firmed 56 cents yesterday despite a 62-cent drop in hams and $1.49 decline in ribs. With the pork cutout at $89.05, pork is cheap compared to beef, but retailer interest is showing signs of slowing around this price level.

Overnight demand news... South Korea purchased 65,000 MT of U.S. corn and 65,000 MT of optional origin feed wheat. Japan tendered to buy 312,816 MT of wheat in its weekly tender. India tendered to sell 200,000 MT of wheat.


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