First Thing Today (VIP) -- January 21, 2014

January 21, 2014 12:13 AM

Good morning!

Beans pressured by Argentine rains... Soybean futures are under heavy pressure to start the week as rains and cooler temps are providing relief from heat and dryness in Argentina. As of 6:30 a.m. CT, soybean futures are trading 10 to 20 cents lower, corn is 1 to 2 cents lower and wheat futures are fractionally to 2 cents higher. The U.S. dollar index is firmer this morning.

Farm bill principals still working on country-of-origin labeling language... While a new dairy policy program without supply management means the farm bill is all but completed pending legal writing and final scoring, several loose ends covering crop subsidy caps and country-of-origin labeling (COOL) remain. The four farm bill principals will likely decide those rather than holding a meeting of the 41 conferees, sources inform. Some are pushing a modified North American label for COOL, without a U.S.-origin label, but some pro-COOL farm group lobbyists are opposed. Others want to take the route the recent spending bill provided on COOL -- but this time insist that USDA wait on this issue until the WTO has decided a pending case on the USDA COOL rule filed by Canada and Mexico.

The House and Senate are on a one-week recess and will return Jan. 27... The Senate agenda ahead includes work on an extension of unemployment insurance benefits and a flood insurance bill (S 1926). The FY 2014 omnibus spending measure, which President Obama signed into law Jan. 17, included language to postpone for several months some of the flood insurance rate hikes triggered by reforms passed in 2012. The Senate bill delays those reforms for four years. Passage of the bill is expected, as the measure has bipartisan support. Release of new farm bill conference report language (HR 2642) is expected sometime during the week of Jan. 27, with votes in the House and Senate chambers either the last week of January or the first full week of February. Also possible is action on a final conference agreement on water resources (WRDA).

China officially ends soybean, cotton stockpiling... As expected, China will end its stockpiling program for soybeans and cotton in 2014 in favor of direct subsidies to farmers, which is a more market-oriented approach. The Chinese government will continue to stockpile corn, sugar and rapeseed. Meanwhile, China's vice premier says the government will increase subsidies to support agriculture production growth.

Chinese bird flu reportings rising... Another 23 human cases of H7N9 bird flu were reported in China in recent days, according to the World Health Organization (WHO), adding to 24 reportings of the disease last week. Many of the human bird flu cases had contact with poultry, though WHO officials say the source of the disease is still under investigation. Despite the increase in bird flu cases, Chinese officials have not recommended travel restrictions during the upcoming Lunar New Year celebration.

China's economic growth slows in Q4, but better than expected... China's economy grew at a 7.7% clip over year-ago in the final quarter of 2013, which was down from 7.8% growth in the third quarter, but a tick better than expected. For all of 2013, China's GDP came in 7.7% above the previous year, which was the slowest growth rate for the country in 14 years. Meanwhile, December industrial growth was slower than expected at 9.7% above year-ago.

Trade partners unlikely to offer major concessions until President Obama has backing of Congress re: TPA... A group of Democratic lawmakers are skeptical of trade promotion authority (TPA) and of okaying new trade accords. International trade negotiators have warned that ambitious negotiations for Pacific Rim (TPP) and transatlantic deals (U.S.-EU trade talks) will make little progress until a deeply divided U.S. Congress decides whether to give the Obama administration fast-track negotiating authority. In an interview with the Financial Times, Ildefonso Guajardo Villarreal, Mexico’s economy minister, said governments involved in the 12-country Trans-Pacific Partnership talks, in which it is a member, were unlikely to offer any significant concessions until Obama had the backing of Congress. "We have to wait until we really get a better sense of how things evolve [on Capitol Hill]. From a negotiating point of view... things will go along slowly until that happens," Guajardo Villarreal said, although he believes the Obama administration would eventually secure fast-track authority. "If they are able to send a strong signal of support from Congress that will make it easier for us to finish the deal."

Surge in wholesale beef prices continues... Choice boxed beef prices surged $4.85 and Select boxes were $5.13 higher Monday. While product movement was light at only 99 loads yesterday, the surge in wholesale beef prices is showing no signs of slowing. Therefore, feedlots will be looking for the cash market to build on its record runup.

Cash hogs called mostly steady, some firmer... Cash hog bids are expected to be steady at most Midwest locations today, though some firmer bids are possible as plants are working with highly profitable margins. With some plants closed yesterday, some packers are thought to be short-bought on slaughter supplies, which could also support cash hog bids.

Weekend demand news... South Korea bought 60,000 MT of U.S. corn and 118,000 MT of optional origin feed wheat. Japan purchased 49,935 MT of Canadian wheat. Iran purchased at least 50,000 MT of Brazilian corn. Algeria tendered to buy 50,000 MT of optional origin milling wheat. Chinese importers are reportedly seeking U.S. and Australian wheat for spring shipment. India tendered to export 60,000 MT of wheat.


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