First Thing Today (VIP) -- January 24, 2014

January 24, 2014 12:24 AM

Good morning!

Price pressure overnight... As of 6:30 a.m. CT, corn futures are trading around 2 cents lower, soybeans are 5 to 13 cents lower and wheat futures are mostly 3 to 4 cents lower. The U.S. dollar index is weaker this morning.

Farm bill timeline slipping on unresolved issues... Indications are that the goal of filing the farm bill conference report this weekend and holding a vote on the House floor prior to President Obama's State of the Union message to Congress Jan. 28 is starting to slip. Issues on Country of Origin Labeling (COOL) and GIPSA are apparently still being debated with some indicating a public session of the conference committee is being sought for Monday by Senate Ag Committee Chairwoman Debbie Stabenow (D-Mich.). Other contacts suggest the farm bill principals may still try to work out an agreement on COOL and GIPSA, with a goal of finalizing the conference report yet Monday evening. If that were to happen, sources expect a vote on the House floor would come as the final action for the chamber Jan. 29 before they depart for a House Republican retreat. However, if no agreement can be found nor a public session be held, the timeline for completing the bill slips into the first week of February.

EPA to reconsider 2013 cellulosic ethanol target... Environmental Protection Agency (EPA) Administrator Gina McCarthy Thursday notified oil industry representatives that the agency will reconsider the 2013 targets for cellulosic ethanol production, saying the groups had satisfied the criteria to bring a reconsideration of the levels. EPA set the mandate for 2013 at 6 million gallons but indications are the industry is poised to produce only 1 million gallons of the fuel made from gasses, trees and crop waste. The American Petroleum Institute (API) said the cost of meeting the mandate would be some $2.2 million. This suggests the agency may well have to revisit their proposed 2014 levels for cellulosic ethanol production as well. EPA is currently taking public comments on their 2014 Renewable Fuel Standard (RFS) plans through Jan. 28.

Groups ask Syngenta to suspend sales of unapproved GMO corn... The National Grain and Feed Association (NGFA) and North American Export Grain Association (NAEGA) have asked Syngenta to suspend commercial use of its Viptera corn seed in the U.S. until China has granted regulatory approval. In a letter to Syngenta, the groups said, "NAEGA and NGFA are gravely concerned about the serious economic harm to exporters, grain handlers and, ultimately, agricultural producers" caused by the Chinese rejections of U.S. corn and dried distillers grain shipments containing Viptera (MIR 162). The planned launch of Duracade corn by Syngenta this year "risks repeating and extending the damage. Immediate action is required by Syngenta to halt such damage," the groups said. The groups are also asking farmers to "evaluate these issues" when making planting decisions this year. Meanwhile, China is widely expected to keep rejecting U.S. corn shipments containing MIR 162. The next review of the unapproved GMO trait is at the end of March at the ag ministry's biosafety annual meeting. After that, the next review would be in June. Chinese quarantine authorities told Reuters potential rejections could top the volume that has already been turned back (around 600,000 MT), without giving a specific figure.

China plans to expand grain output 8% by 2020... China plans to expand its grain production by 50 MMT by 2020, according to the director of planting management at the country's ag ministry. He says the plan calls for the country to establish 67 million hectares (165.5 million acres) of high-quality farmland, though he gave little detail on how that would be accomplished. The country also plans to increase seed technology and limit impacts from natural disasters through technological advances.

Weekly export sales report out this morning... For the week ended Jan. 16, traders expect: corn sales between 250,000 and 650,000 MT; wheat sales between 300,000 and 600,000 MT; soybean sales between 300,000 and 625,000 MT; soymeal sales between 100,000 and 250,000 MT; and soyoil sales between 0 and 30,000 MT.

Cattle on Feed Report will remind of tight supplies... The tight supply of market-ready cattle is widely known, but this afternoon's Cattle on Feed Report will be yet another reminder. The average pre-report guess pegs On Feed down 6% from year-ago. December Placements are expected to come in 1.9% under year-ago, through there's a nearly 11-point spread on the range of pre-report guesses. Marketings are expected to be up 2.2% from year-ago.

PEDV moves north of the border... Authorities have confirmed the first two cases of porcine epidemic diarrhea virus (PEDV) in Canada. One of the discoveries was on a hog farm in Middlesex Co. in Ontario, while the other was at a slaughter facility northeast of Montreal, Quebec. Ontario and Quebec are Canada's top two hog production provinces. PEDV has killed an estimated one to four million pigs in the United States.

Record runup in wholesale beef prices halted... Boxed beef prices had strengthened for 14 consecutive days, with the last 10 resulting in new highs. But that impressive string came to an end yesterday as Select beef dropped 51 cents and Choice values fell $1.50. Focus now is on how far wholesale beef prices slide on the correction and at what level retailer demand perks up, as movement has been slow during the price surge.

Bigger Saturday hog kill planned... Packers are expected to increase Saturday's hog kill as some plants were closed earlier this week for Martin Luther King Jr. Day while a couple of plants were shuttered due to poor weather. Given strong margins, packers are trying to push as many hogs through kill runs as possible, though poor weather and road conditions are making their task more difficult.

Overnight demand news... Israel purchased 90,000 MT of U.S. or Black Sea corn. Libya bought 30,000 MT of Baltic Sea wheat. India tendered to export 120,000 MT of wheat.


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