First Thing Today (VIP) -- January 28, 2014

January 28, 2014 12:39 AM

Good morning!

Corn mixed, beans and wheat firmer this morning... As of 6:30 a.m. CT, corn futures are trading narrowly mixed, soybeans are fractionally to 1 cent higher in old-crop contracts and around 4 cents higher in new-crop contracts, SRW wheat futures are 4 to 5 cents higher, HRW wheat futures are 2 to 4 cents higher and HRS wheat futures are steady to 1 cent higher. The U.S. dollar index is firmer this morning.

State of the Union message... President Barack Obama at 8 p.m. CT will deliver the annual State of the Union message to a joint session of Congress in the U.S. House chamber. Obama is expected to signal he'll use executive authority to move items on his agenda forward if there is no agreement found with Congress. Initially, Obama will use that authority to implement a hike in the minimum wage for workers on new federal contracts, setting it at $10.10 per hour. Obama will also talk of the need for immigration reform, trade agreements with other countries and boosting infrastructure spending. In addition, he is expected to call on Congress to pass a farm bill, an extension of unemployment insurance benefits, changes to patent law and manufacturing proposals, and he is also seen proposing tax incentives for certain small businesses.

Farm bill conference report agreed to... Leaders of the House and Senate Ag Committees late Monday released a conference report on the Agricultural Act of 2014 -- the farm bill. The measure covers 2014-2018 crops and makes several changes to U.S. commodity programs among other provisions. While there was much attention in the final hours of the process on issues relative to some controversial items such as Country of Origin Labeling (COOL), there appears to have been little change. The bill would save $23 billion over 10 years, with nutrition program spending reduced about $8 billion, commodity and crop insurance programs would be trimmed by a net $13 billion and conservation program spending would be reduced $6 billion over 10 years. Dairy policy would not include voluntary supply management and would direct USDA to buy dairy products when the difference between milk prices and production costs falls below $4 per cwt., and it would reinstate the Milk Income Loss Coverage (MILC) program. Adjusted gross income limitations would now be a single limit of $900,000. No change in COOL is contained in the bill, but a study is ordered to be done by the Office of the Chief Economist on the cost of impact of implementing USDA's May 24, 2013, final rule. The House is expected to take the measure up prior to departing for policy retreats Wednesday, with the Senate signaling they would take up the measure during the current three-week work period.

Hong Kong temporarily suspends live poultry imports from China... After finding H7N9 bird flu in a batch of chickens imported from the southern Chinese province of Guangdong, Hong Kong has suspended live poultry imports from mainland China for 21 days. Hong Kong has also begun culling 20,000 chickens in an attempt to prevent the spread of the disease. Authorities also ordered the temporary closure of the wholesale poultry market, where the virus was discovered, for cleaning and disinfecting.

Firmer wholesale beef prices to start the week... Boxed beef prices halted their two-day mini-slide yesterday as Choice beef was 78 cents higher, while Select beef was 81 cents higher. But with showlist estimates steady to higher than week-ago in the Plains, especially in Nebraska, traders question whether packers will raise cash cattle bids again this week, even if the wholesale beef market strengthens. The big discount cattle futures already hold to the cash market should limit selling pressure, however, even if the cash market softens.

Cash hogs called steady/firmer... The combination of inclement weather and a $1.50 rise in the pork cutout value Monday should be enough to keep cash hog bids steady to firmer at most Midwest locations today. Given hog movement slowdowns due to the weather, many pork plants are in need of hogs for the second half of the week.

Overnight demand news... Egypt tendered for at least one cargo of optional origin wheat with results coming later this morning. Japan is seeking 179,343 MT of U.S. and Australian wheat in its weekly tender.


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