GRAINS EASE FROM OVERNIGHT GAINS... Grain and soy futures got off to a solid start overnight, but buying interest is fading. As of 6:30 a.m. CT, corn futures are trading fractionally to 1 cent higher, soybeans are mixed with a slight upside bias, Chicago wheat is fractionally to 2 cents higher, Kansas City wheat is 1 to 2 cents higher and Minneapolis wheat is mixed. The U.S. dollar index is firmer this morning.
IMMIGRATION REFORM, DEBT LIMIT, SANDY AID AND KEY ECONOMIC REPORTS ON TAP THIS WEEK... The Senate is in session while the House is out this week. On top of the agenda is aid to Hurricane Sandy victims which will be approved in the Senate. That chamber should also take up a House-passed bill that suspends the debt limit ceiling officially until May 18 but more likely into late July/early August. Immigration reform will be the topic of a bipartisan Senate proposal this week, and President Obama will lay out his proposal Tuesday in a Las Vegas, Nevada speech. On the economic report front, key will be Wednesday's FOMC announcement and Friday's Employment Report. USDA on Friday will release its twice-yearly Cattle Inventory Report.
CHINESE OFFICIALS SIGNAL FOOD SELF-SUFFICIENCY NO LONGER POSSIBLE... China's pursuit of self-sufficiency in food production is no longer feasible as an increasing population and rapid urbanization are increasing food demand, according to Chen Xiwen, director of the Chinese Communist Party's top policy-making body for rural affairs. He says, "During the process of urbanization, we must pay attention to modern agricultural development and to farm product supplies, but of course, we certainly cannot pursue self-sufficiency." Han Jun, the head of the rural department of the Development Research Center, a government think-thank, said last week, "For a country with 1.3 billion people, it is impossible to rely on ourselves to guarantee all farm products supplies. To ensure grain security and supplies of major farm products does not mean that we should go back to the way of self-sufficiency." He said China should loosen controls over corn imports and rely more on global markets for cotton, sugar and soybeans.
SENS. HARKIN, CHAMBLISS WILL NOT SEEK REELECTION IN 2014... Both senators (Harkin, D-Iowa, and Chambliss, R-Ga.) were important Senate Ag Committee members, but both will still be around in the coming push for a new farm bill this year. Chambliss is a spirited supporter of southern crops, and has taken a recent focus on renewable fuel programs that he says need reformed. Harkin listed his age and "time to go" as reasons for his coming retirement, while Chambliss cited the lack of progress on key items in Washington as one of the reasons he will not seek reelection.
RUSSIAN GRAIN EXPORTS SLOW AMID TIGHT SUPPLIES... Russian 2012-13 grain exports stand at 13.87 MMT as of Jan. 25, with wheat accounting for more than 10 MMT of that total, according to the Institute of Agricultural Market Studies (IKAR). The export pace has slowed dramatically since December due to tightening domestic supplies. In fact, we reported last week Russia may consider lifting its duty on grain imports.
UKRAINE GRAIN UPDATE... Ukraine is experiencing favorable winter weather, which could lead to a 20% to 30% increase in winter grain yields, according to the head of the state weather center. He indicates most of the key grain regions are covered by snow and therefore protected from winterkill damage. As of Jan. 17, the ag ministry said 92% of the winter grains crop was in good or satisfactory condition. Meanwhile, the ag ministry says Ukraine has exported 15.8 MMT of grain (5.99 MMT of wheat, 7.6 MMT of corn and 1.98 MMT of barley) as of Jan. 25, a 46% increase from year-ago.
JAPAN PANEL APPROVES AGE LIMIT SHIFT FOR U.S., CANADIAN BEEF... An advisory panel for the Japanese Health Ministry today approved a plan to raise the age limit on imports of U.S. and Canadian beef to 30 months and under from the current 20 months and under. Japan's Health Minister last week signaled the trade shift would take effect Feb. 1 if the advisory panel approved the plan. The move would make up to 90% of U.S. beef eligible to be shipped to Japan. But negotiations are still ongoing over what would happen in the event of a violation of the new rules and the details still have to be spelled out to U.S. exporters before they can start shipping beef under the new rules, according to contacts.
CATTLE FUTURES SHOULD FIND SUPPORT FROM COF REPORT... Last Friday's Cattle on Feed Report showed all three categories on the bullish side of the average pre-report guesses. As a result, cattle futures are expected to open the week solidly higher. The bullish report data should confirm a short-term low in the cattle market.
CASH HOGS CALLED STEADY/FIRMER... Most pork plants are thought to be short-bought on supplies for the week and icy roads will slow hog movement across parts of the Midwest. Therefore, packers are expected to pay steady to firmer prices for cash hogs to start the week despite working with cutting margins that are deep in the red.
WEEKEND DEMAND NEWS... Jordan tendered for 100,000 MT of optional origin wheat. Bangladesh tendered for 50,000 MT of optional origin wheat.