First Thing Today (VIP) -- January 10, 2014

January 10, 2014 12:03 AM
 

Good morning!

Quiet overnight trade ahead of USDA's reports... Traders are awaiting USDA's January crop reports later this morning, which is likely to keep price action quiet through 11 a.m. CT. But given the amount and magnitude of data USDA will release, there could be some fireworks after the reports. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents lower, soybeans are fractionally to 3 cents higher and wheat futures are narrowly mixed. The U.S. dollar index is anchored near unchanged this morning.

Barrage of USDA reports this morning... In addition to its monthly Supply & Demand Report, USDA will release its Annual Crop Production Summary, Quarterly Grain Stocks Report and Winter Wheat Seedings Report at 11:00 a.m. CT. Traders are expecting USDA to slightly increase its corn and soybean crop estimates from November. Slightly bigger 2013-14 carryover projections for corn and soybeans are also expected, while the wheat ending stocks forecast is expected to decline slightly from last month. In the Quarterly Grain Stocks Report, traders are anticipating near-record first-quarter corn and soybean use to be reflected. And winter wheat seedings are expected to be up around 600,000 acres from 2013.

Stabenow says 'would be a shame' if House speaker 'tried to stop farm bill' at this point... High-level politics have clearly entered an already lengthy farm bill debate -- a debate that is now in its fourth calendar year, having begun via an attempt in 2011 to attach itself to a failed Super Committee process. Senate Ag Chairwoman Debbie Stabenow (D-Mich.) said there would likely be movement on the bill during the week of Jan. 13, after the dairy issue is resolved. She believes it could even be passed by one chamber next week and cleared by the other chamber before the end of the month. A disagreement over the dairy supply management program continues to delay the final report. The dairy issue includes House Agriculture Committee Ranking Member Collin Peterson (D-Minn.), who supports language in the Senate bill that would include supply management for dairy, and House Speaker John Boehner (R-Ohio), who is against supply management. Boehner even wrote a "Dear Colleague" letter in June outlining his objections. "It would be a shame if the Speaker tried to stop the farm bill at this point, after getting it to this point," said Stabenow, who said she had put forth a compromise on the dairy program and was confident something would be worked out. "We are so close. We need to resolve this difference in perspective, and there is a big difference in cost, and we will. We will resolve it. There's some possible compromises," Stabenow said. "What we need are people of goodwill to be willing to compromise and get to yes."

Record-large Chinese soybean imports... China imported 7.4 MMT of soybeans in December, according to official customs data, which was the highest monthly total ever. December soy imports surged 22.7% from November and 25.6% from year-ago. For all of 2013, China imported a record 63.38 MMT of soybeans, up 8.6% from year-ago. Meanwhile, China's trade surplus narrowed to $25.6 billion in December, which was well short of expectations as export growth slowed and imports rose more than expected.

Slight slower jobs growth expected... The U.S. economy likely added 196,000 non-farm payrolls in December, according to a Reuters survey of economists. That would be slightly below the previously reported jobs gains of 203,000 in November. The unemployment rate is expected to remain at 7%.

Hatch wants case-by-case review before any tax incentives are extended... Senate Finance Committee ranking member Sen. Orrin Hatch (R-Utah) said the panel needs time to examine the tax breaks on a case-by-case basis to determine which to renew, an indication some say Republicans are not inclined to simply revive all the expired provisions retroactively. That means a delayed timeline on whether or not the expired biodiesel tax incentive will again be retroactively extended.

Canadian canola growers shooting for 40% output boost by 2025... Canadian canola growers are aiming to boost output of the oilseed to 26 MMT by 2025, a level which would be 40% higher than the 2013 output, according to targets released by the Canola Council of Canada. The goal is being planned for via increased yield as opposed to increased area. The Canola Council is targeting an average yield of 52 bu. per acre in 2025 compared to 40 bu. per acre in 2013. From 2006 to 2013, Canada managed to double canola output -- 9 MMT in 2006 compared to 18 MMT in 2013.

Federal investigation sought into safety of crude-by-rail shipments... Senate Energy Chairman Ron Wyden (D-Ore.) and Transportation Chair Jay Rockefeller (D-W.Va.) are seeking a federal investigation into the safety of crude-by-rail shipments, following several recent accidents. The two sent a letter asking the departments of Energy and Transportation to review the volumes and composition of growing crude shipments, along with the adequacy of safety rules. The issue is coming up in quarterly earnings conference calls, since railcar builders who make the tankers could get a big boost from a federal crackdown on some car types from which oil has leaked and caught fire. A runaway oil train accident that killed 47 in Quebec last July has been followed by other wrecks but no fatalities in Alabama, North Dakota and New Brunswick.

Still waiting on cash cattle trade... There's still an air of uncertainty with the cash cattle market as traders wait on trade to begin in the Plains, though most expect steady to firmer prices compared with last week's $137 trade in the Plains. Surging boxed beef prices support the steady-to-firmer cash cattle expectations, though packers are working with negative margins and they have been reluctant to raise cash bids in the past when beef movement has slowed, as it has this week.

Pork plants looking to make up for downtime... Pork plants are planning to run a moderately actively kill on Saturday as they look to make up for downtime caused by inclement weather earlier this week. While some plants are still in need of hogs for Saturday, most are focused on next week's kills. Some hogs that were supposed to be delivered this week were pushed back due to poor weather and road conditions.

Overnight demand news... South Korea purchased 60,000 MT of U.S. corn. Taiwan bought 54,800 MT of U.S. wheat. Jordan tendered to buy 100,000 MT of optional origin wheat.

 

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