First Thing Today (VIP) -- January 16, 2014

January 16, 2014 12:16 AM

Good morning!

Mixed to firmer price action in grain and soy futures overnight... As of 6:30 a.m. CT, corn futures are trading fractionally higher in most contracts, soybeans are 3 to 6 cents higher and wheat futures are narrowly mixed. The U.S. dollar index is holding near unchanged this morning in light and choppy trade.

Farm bill update: Dairy solution potentially found… A dairy policy proposal that does not contain any type of supply management appears to be gaining traction in the farm bill debate. House Ag Committee Chairman Frank Lucas (R-Okla.) developed the plan and said, "Nobody’s said ‘no’ so far, and in the world I operate in, it’s a miracle." Details are not yet available, but Lucas said it would provide a "rational market" for dairy farmers and sources advise it would include flexibility to adjust gross margin insurance coverage and premiums to avoid budget costs if milk production becomes excessive.

Farm bill update: Crop subsidy issues still in play… At the same time a dairy policy compromise appears to be gelling, the issue of defining "actively engaged" for farm program participation currently focuses on those who qualify for the management-only option. There will be reform in that definition, contacts advise, with a goal of developing a "rational" but strong enough definition to prevent current abuses. USDA could also be instructed to further study the topic and offer suggestions as well.

Farm bill update: Timeline becoming clearer… Expectations are now that a farm bill draft will not be released before Congress exits for the week-long Martin Luther King Jr. Day recess. Work would likely start the week of Jan. 27 with a vote possible yet that week or the week of Feb. 3.

Ministry raises China January soy import forecast... China's Ministry of Commerce now expects the country to import 4.61 MMT of soybeans in January based on imports the first half of the month. That's nearly double the ministry's previous forecast of 2.37 MMT.

China faces trade hurdles this year... Tepid global economic growth, rising costs and building competition from other emerging economies will provide challenges for China on the trade front this year, according to the Ministry of Commerce. Without giving specifics, a ministry source says the country will continue to take supportive measures to help exporters. Despite the hurdles, the China Academy of Social Sciences forecasts 8.2% growth for Chinese exports and imports this year, up from combined growth of 7.6% last year.

India likely to allow more wheat exports... With a record wheat crop expected this year and bulging stockpiles, India's government is expected to authorize more wheat exports soon. A government source told Reuters a decision on additional wheat exports is likely in March.

Firm trims EU wheat forecast, raises corn crop... Private firm Strategie Grains trimmed its 2014 EU soft wheat crop forecast to 137.7 MMT from 138 MMT previously, mostly due to reductions in the United Kingdom crop. The firm raised its 2014-15 EU corn crop forecast to 64.8 MMT from 64.7 MMT previously.

Weekly export sales report out this morning... For the week ended Jan. 9, traders expect: corn sales between 300,000 and 550,000 MT; wheat sales between 350,000 and 600,000 MT; soybean sales between 750,000 and 1.05 million MT; soymeal sales between 50,000 and 150,000 MT; and soyoil sales between 0 and 35,000 MT.

Light cash cattle trade Wednesday... Some cash cattle moved at a record $141 to $142 in Kansas and Texas yesterday, up around $2 from last week, though most feedlots continued to hold out for even higher bids. With boxed beef prices continuing to surge and packer margins in the black, there seem to be good odds packers will push cash bids even higher.

Pork cutout slips, but movement improves... The pork product market failed to build on Tuesday's price gains as the cutout value dropped $1.19 yesterday, but packers moved a strong 513.09 loads of product. With wholesale beef prices at record levels and continuing to surge, there's incentive for packers to buy pork for winter features.

Overnight demand news... South Korea purchased 70,000 MT of U.S. corn and 65,000 MT of optional origin feed wheat. Japan purchased 105,019 MT of wheat in its weekly tender, including 49,756 MT of U.S. wheat. Japan also bought 42,740 MT of feed wheat and 29,505 MT of feed barley. Egypt tendered for at least one cargo of optional origin wheat with results expected later this morning. Tunisia tendered to buy 117,000 MT of soft milling wheat, 109,000 MT of durum and 75,000 MT of feed barley -- all optional origin.


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