First Thing Today (VIP) -- January 24, 2013

January 23, 2013 11:57 PM


FOLLOWTHROUGH SELLING IN GRAINS... As of 6:30 a.m. CT, corn futures are trading mostly 3 to 4 cents lower, soybeans are 8 to 14 cents lower and wheat futures are mostly 3 to 4 cents lower at all three exchanges. The U.S. dollar index is firmer this morning.

RUSSIA TO CONTINUE ACTIVE GRAIN INTERVENTION SALES... Russia plans to sell around 3 MMT of intervention stocks by the end of the 2012-13 marketing year on June 30 in an attempt to ease domestic prices, according to the ag ministry. The ministry says since Oct. 23 it has sold 1.885 MMT of grain via intervention sales and there are 3.33 MMT of grain remaining in government storage.

EU PROPOSES IMPORT DUTY ON U.S. ETHANOL... The European Union (EU) is proposing to put an import duty on U.S. ethanol (reportedly 9.5%) to offset state subsidies, according to reports. Further, the proposal is aimed at all ethanol, not specific ethanol producers as has typically been the case. The Office of the U.S. Trade Representative expressed "disappointment" at the EU proposal and U.S. ethanol groups Growth Energy and the Renewable Fuels Association issued a statement blasting the proposal. It's not clear what subsidies the EU is targeting since the blender credit has already been removed.

CHINESE MANUFACTURING SECTOR CONTINUES TO STRENGTHEN... China's HSBC flash purchasing managers' index (PMI), which measures activity by small and medium sized manufacturers, hit a 2-year high of 51.9 in January, up from a final reading of 51.5 in December. The sub-indices for output, new orders and employment all improved, with the output sub-index moving to a 22-month high.

RUSSIA THREATENS TO BLOCK U.S., CANADIAN FRESH/CHILLED BEEF & PORK OVER RACTOPAMINE... Russia’s state veterinary service Rosselkhoznadzor is now warning Russia may ban imports of chilled beef and pork due to its rules against the import of meat containing ractopamine. The head of Rosselkhoznadzor Sergey Dankvert says concerns now are greatest relative to chilled meat as those imports are likely to reach consumers prior to results of tests conducted by labs in Russia. This won’t likely have a major impact on U.S. beef or pork exports, as the U.S. Meat Export Federation notes that only a limited amount of U.S. product moves to Russia chilled, and that is primarily beef that is a relatively new segment and is going in via air. Still, this adds another friction point between the U.S. and Russia.

CATTLE MARKET STILL SEARCHING FOR A LOW... Feedlots in Texas and Kansas moved cattle at $122 Wednesday, $3 below the bulk of last week's cash trade in the Plains. Cattle futures shook off the lower cash trade and closed mostly higher, however, suggesting traders sense the cash market should bottom soon. Before that can happen, however, the boxed beef market must put in a low. Choice boxed beef prices dropped to the lowest level since early October on Wednesday, signaling there's resistance to current prices.

CASH HOGS CALLED MOSTLY STEADY... Cash sources are expecting packers to pay steady prices for cash hogs at most Midwest locations again today. But with most plants having already secured the bulk of this week's slaughter needs and cutting margins remaining in the red, demand for cash hogs could decline and lead to some weaker cash hog bids.

WEEKLY EXPORT SALES REPORT DELAYED... Due to Monday's government holiday, export sales data for the week ended Jan. 17 is delayed until Friday morning.

OVERNIGHT DEMAND NEWS... Japan purchased 118,787 MT of wheat in its weekly tender, including 52,512 MT of U.S. supplies. Taiwan tendered for 78,670 MT of U.S. wheat. India tendered to export 150,000 MT of wheat.


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