First Thing Today (VIP) -- January 18, 2013

January 18, 2013 12:13 AM
 

GOOD MORNING!

FIRMER TONE IN GRAINS... As of 6:30 a.m. CT, corn futures are trading 1 to 4 cents higher, soybeans are mostly 6 to 8 cents higher, Chicago wheat is mostly 2 to 4 cents higher, while Kansas City and Minneapolis wheat are mostly 1 to 2 cents higher. The U.S. dollar index is firmer this morning.

IMPROVED MARGINS FUELING CHINESE SOYBEAN BUYS... Chinese crush margins have recently turned positive, according to China National Grain and Oils Information Center (CNGOIC), triggering a flurry of Chinese soybean purchases. CNGOIC says Chinese crushers booked 1.8 MMT to 1.98 MMT of U.S. and South American soybeans last week to cover needs for February and March, compared to normal needs of 1.2 MMT. Strong soybean meal demand for animal feed and a seasonal pickup in soyoil demand ahead of the Lunar New Year celebration are supporting crush margins.

CHINESE ECONOMIC GROWTH TOPS EXPECTATIONS... China's fourth quarter gross domestic product (GDP) was +7.9% compared to +7.4% in the third quarter, which snapped a string of seven consecutive quarters of slowed growth. For all of 2012, GDP was +7.8%, the slowest pace since 1999, although that topped expectations for 7.7% growth. Chinese officials predict "stable" economic growth this year.

CHINA RELEASES FINAL 2012 PRODUCTION FIGURES... China's National Bureau of Statistics pegs 2012 grain production at at record 589.57 MMT, the ninth straight year of increased output and a 3.2% increase from 2011. Corn production was record large at 208.12 MMT, a 7.4% increase from 2011. Chinese pork production rose 5.6% to 53.35 MMT in 2012 with total meat production up 5.4% to 82.21 MMT.

NAS REPORT RAISES QUESTIONS ON SNAP EFFECTIVENESS... A report by the National Academy of Sciences (NAS) is raising questions about the Supplemental Nutrition Assistance Program (SNAP), saying it does not account for barriers faced by program users in terms of finding affordable, nutritious food. Further, the NAS report says there is a 16-month lag between the government assessment of food costs and when it adjusts benefits. The report also says changes such as consumers purchasing more value-added foods as opposed to basic ingredients and unprocessed foods need to be addressed. In response, USDA says it would "thoroughly review" the report and use it to set the agenda for future SNAP program research.

BPI SEEKS TO RETURN LFTB CASE BACK TO STATE COURT... Beef Products Inc. has filed court papers to return its suit against ABC News over lean finely textured beef (LFTB) to state court, saying two other companies were involved -- BPI Technology Inc. and Freezing Machines Inc. ABC has sought to have those two firms dismissed from the case as well as the entire lawsuit. BPI argues the matter should be returned to the state in which they are seeking $400 million in damages from ABC because of news reports. One factor in the BPI push could be that damages could be tripled under a South Dakota law.

CATTLE FUTURES DUE FOR A BOUNCE... Recent heavy price pressure has left live cattle futures oversold and the big premium they once held to the cash market has been mostly erased. While bears have short-term momentum, the market is due for a bounce and given the tight supply situation, further downside risk should be limited.

LIMITED DEMAND FOR CASH HOGS... Packer demand for cash hogs will be limited ahead of the weekend as many plants are closed Monday for Martin Luther King Jr. Day and packers are working with weak margins. Cash hog bids are expected to be steady at most locations, although some weaker bids may develop.

MARKETS AND GOV'T OFFICES CLOSED MONDAY... Grain and livestock markets are closed, along with government offices on Monday, Jan. 21, for Martin Luther King Jr. Day. As a result, there will be no Pro Farmer updates that day. Grain and livestock markets will trade normal hours today ahead of the extended weekend.

OVERNIGHT DEMAND NEWS... Japan purchased 120,000 MT of feed wheat and 200,000 MT of feed barley.

 

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