First Thing Today (VIP) -- January 11, 2013

January 10, 2013 11:52 PM


CORN AND BEANS LOWER, WHEAT MIXED... As of 6:30 a.m. CT, corn futures are trading mostly 1 to 3 cents lower, soybeans are mostly 7 to 13 cents lower and wheat futures are narrowly mixed at all three exchanges. The U.S. dollar index is mildly firmer this morning.

BARRAGE OF JANUARY CROP REPORTS OUT THIS MORNING... USDA will release its Supply & Demand Report, Annual Crop Production Summary, Quarterly Grain Stocks Report and Winter Wheat Seedings at 11 a.m. CT. Much of the pre-report attention has been on the final production estimates for the 2012 U.S. corn and soybean crops. But it could be Dec. 1 stocks, especially corn stocks, which is the key market mover. Quarterly corn stocks have consistently produced major surprises the past two-plus years.

CHINESE INFLATION ACCELERATES... China's December consumer price index (CPI) came in 2.5% higher than year-ago, which was a seven-month high and a half point higher than the November CPI. The rise in consumer prices was driven mostly by food prices, which were 4.2% above year-ago. Non-food prices rose 1.7% last month. For all of 2012, China's CPI rose 2.6%. While consumer prices are rising, the producer price index declined 1.9% from year-ago last month. Meanwhile, China's 2012 GDP was likely 7.7% and growth is forecast at 7.5% this year, according to comments from the deputy head of the National Development and Reform Commission in state-run Xinhua news.

KC FED’S GEORGE: THERE’S A POTENTIAL LAND PRICE BUBBLE BUILDING, BUT... KC Federal Reserve President Esther George is a voting member on the Federal Open Market Committee (FOMC) for 2013 and made her first remarks of the year Thursday in Kansas City. And the topic of land values came up. "Prices of assets such as bonds, agricultural land, and high-yield and leveraged loans are at historically high levels. A sharp correction in asset prices could be destabilizing," George said. She observed that there’s a lot of "bidding" that is boosting land values. "We continue to see high land values," she said in response to a question. However, she acknowledged the current situation does not mirror the last land-value bubble that popped in the 1980s as "what we don't see yet is the same extent of leverage coming in behind these ag land purchases."

CASH CATTLE TRADE LOWER... Cash cattle activity picked up at $126 in Texas and Kansas Thursday. That's down $2 from last week and from light sales earlier this week. With cash bids falling and many feedlots not in desperate need of moving cattle, showlists may not be completely cleaned up.

PORK MARKET FIRMS, BUT MARGINS STILL NEGATIVE... The pork cutout value was 49 cents higher and packers moved a strong 109.5 loads of product Thursday. Despite the product market strength, packer margins are still in the red. As a result, cash hog bids are expected to remain steady to weaker to close out the week.

OVERNIGHT DEMAND NEWS... South Korea purchased 55,000 MT of optional origin feed wheat (excluding Chinese origin) and 39,500 MT of Australian wheat. Japan purchased 121,188 MT of Australian wheat in its weekly tender. Israel bought 135,000 MT of corn (likely Argentine or Ukrainian) and 30,000 MT of feed wheat (likely South American). Indonesia purchased one cargo of Australian wheat. Ethiopia tendered for 40,000 MT of optional origin milling wheat.


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