First Thing Today (VIP) -- January 14, 2014

January 14, 2014 12:36 AM

Good morning!

Corn and wheat lower, beans firmer overnight... As of 6:30 a.m. CT, corn futures are trading around 2 cents lower, soybeans are 1 to 5 cents higher and wheat futures are steady to 1 cent lower in most contracts. The U.S. dollar index is holding near unchanged this morning.

Massive omnibus spending bill for FY 2014 has several ag-related items of note... One of them regards country of origin labeling (COOL). An explanatory statement that accompanies the spending bill complains about the high cost of implementing the rule released by USDA and warns that the new regulations won't satisfy Canada's and Mexico's concerns about the COOL program. The language "strongly" recommends USDA delay implantation of new regulations for COOL while the World Trade Organization (WTO) considers a challenge to the law. "If the complainants do prevail, industry may be forced to change their labels and practices once again, and the nation will suffer the conic impact" of $2 billion in retaliatory trade actions, the statement said.

Other items in the $1.012 trillion spending package... The spending bill includes language that would renew a ban on horse slaughter and provides funding for USDA's NASS to carry out four Current Industrial Reports formerly compiled by the U.S. Census Bureau that have not been issued since 2012 due to budget constraints.The funding level provided will allow USDA's NASS to resume or begin compilation of these reports at the frequency levels assumed in Fiscal year 2012. NASS is directed to resume all of these reports immediately upon enactment of the omnibus measure. That means there is a high probability that NASS will now resume several key reports that had been suspended, including the mid-year Cattle Inventory Report. The Census reports that NASS would start working on include fats and oilseed data which includes soybean crush and corn oil extraction, wheat grind and cotton stocks and use data. The bill would prevent the Grain Inspection, Stockyards and Packers Administration from issuing new rules for farmers who raise poultry and livestock under contract that was intended to give them additional legal protections in their dealings with processors. The language is different from a provision in the House farm bill (HR 2642) that would repeal contract rules that major livestock groups and packing houses say go too far.

USDA’s Vilsack hails China GMO action, but it is not the action many sought... China has acted to renew GMO registrations for several crops, a development USDA Secretary Tom Vilsack told reporters at the American Farm Bureau Federation (AFBF) convention left him "hopeful" on the matter that has seen U.S. corn be rejected by China. "These were renewals, so it's not new, but it's comforting to the companies who had been waiting for quite some time for this," Vilsack said. "These renewals had been sitting on the desks of ministers for some time so that was a positive step." But despite the China move, Vilsack would not suggest a timeline when the current issue with MIR 162 (Syngenta's Agrisure Viptera) that China has not approved would be rectified. "Their systems need to be upgraded and they're facing political issues and we just need to be patient," he said.

China finds bird flu in chicken flock... Chinese authorities confirmed an outbreak of H5N1 bird flu in a chicken flock in the central province of Hubei. Authorities have quarantined the area around the infected farm and culled 46,800 chickens. Meanwhile, a second human death due to bird flu was reported in Hong Kong.

Russian grain exports top 2012-13... Since July 1, Russia has exported 16.384 MMT of grain, according to official export statistics. That's more than the 15.589 MMT of grain the country exported in all of 2012-13. The ag ministry expects grain exports to total around 20 MMT for the 2013-14 marketing year. Meanwhile, Ukraine's ag minister raised the country's 2013-14 grain export forecast by 1 MMT to 33 MMT.

Wholesale beef prices continue to surge... The string of record boxed beef prices continued today as Choice boxes surged another $1.96 and Select was $3.18 higher. While surging boxed beef prices and lower showlist estimates suggest higher cash cattle prices are possible again this week, traders sense a short-term top is close as February live cattle futures are trading well below the bottom end of last week's cash range.

Hog market still searching for a low... Traders are reluctant to actively bid up for cash hogs as the pork product market is struggling to put in a low and marketings are picking up amid improved weather. With cash fundamentals not strengthening, buying interest in lean hog futures is limited. Until there's proof of a seasonal low in the cash and product markets, the upside will be limited to short-covering in hog futures.

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


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