Bears have the advantage in quiet overnight session... Corn futures traded in a very narrow trading range overnight and as of 6:30 a.m. CT are around a penny lower. Soybean futures also saw a quiet overnight session and are currently trading mixed and near session highs. Wheat futures saw profit-taking overnight following yesterday's low-range close. SRW and HRW wheat are down 2 to 3 cents, while HRS wheat is split with nearbys down 2 cents and deferreds marginally higher. The U.S. dollar index is firmer this morning, while crude oil is marginally lower.
Obama stresses executive actions in State of Union address... President Barack Obama highlighted 12 executive actions in his 2014 State of the Union address, including raising the minimum wage for federal contractors and creating a new retirement savings account. He prodded Congress to restore the public’s belief in opportunity for all while vowing to act unilaterally whenever possible. He also wants to use executive power to try to narrow the wealth gap and speed recovery. He briefly called for immigration overhaul but spent more time urging a rise in the minimum wage. He vowed to veto new Iran sanctions legislation, ratcheting up the White House’s pressure on Congress to stay out of negotiations to halt Tehran’s pursuit of a nuclear weapon.
Some hefty taxpayer subsidies to farmers ahead via new farm bill, expected to be approved by the House today... Because of the fall in corn prices last year, growers this year could receive as much $50 per acre from the new Agriculture Risk Coverage (ARC) program, said University of Missouri Economist Pat Westhoff. That’s about twice the average amount of direct payments that corn growers received under the 2008 Farm Bill. The payment limit in the new bill — $125,000 for an individual and $250,000 per couple — means that even a very large Midwest farm could get an ARC payment for the entire operation. Under the 2008 Farm Bill, direct payments were limited to $40,000 per person and counter-cyclical payments were capped at $65,000.
CBO: Farm bill conference report reduces spending by $16.5 billion... The Congressional Budget Office projects direct spending from programs included in the farm bill conference agreement will total $956 billion over a 10-year span, with $756 billion of this (79.1%) stemming from nutrition programs. "CBO estimates that the conference agreement would reduce direct spending by $16.5 billion and increase revenues by $0.1 billion over the 2014-2023 period, relative to CBO's May 2013 baseline," the agency said. This compares to an estimate of $17.7 billion in reduced spending for the Senate-passed farm bill and the House-passed bill reducing spending by $51.8 billion. Commodity spending would be reduced by $14.3 billion over 10 years via elimination of direct payments, but crop insurance spending would increase by $5.7 billion. Nutrition spending would be cut by $8 billion, according to CBO.
Ethanol proponents got some negative news in the pending new farm bill... While some in the next-generation biofuel industry like the $881 billion in mandatory spending the farm bill would provide, it would block subsidies for ethanol blender pumps, a much needed infrastructure need if ethanol consumption is to expand. The Advanced Biofuels Association, which represents companies that make biomass-based versions of conventional fuels, not ethanol, said the bill would encourage "additional production capacity for advanced biofuels and stimulating development of new energy crops and nonfood feedstocks." The bill would provide $100 million in mandatory funding for Fiscal 2014 and $50 million a year more in 2015 and 2016 for the Biorefinery Assistance Program. Another $25 million a year is set aside for subsidizing energy crops through the Biomass Crop Assistance Program. The bill would mandate $50 million a year for the Rural Energy for America Program, which subsidizes energy efficiency measures and renewable-energy projects, but add the ban on funding blender pumps.
Ag attaché raises Brazilian bean crop projection... In a recent report, USDA's ag attaché in Brazil estimated the nation's 2013-14 soybean crop at 89.5 MMT, which compares to USDA's latest projection of 89 MMT. The report said increased plantings and better-than-expected yields among early maturing soybean varieties led to the higher projection. Also of note, the attaché's report projects soybean exports at a record-high 46 MMT, which compares to USDA's 44 MMT forecast. The report did, however, acknowledge "uncertainty persists in transportation logistics and global market prices."
Bird flu fears heighten as holiday approaches... News three members of a Chinese family contracted the H7N9 bird flu virus has heightened concerns about human-to-human spread, especially with the Chinese Lunar New Year celebration set to kick off Friday. Chinese officials recently closed live poultry markets in Zheijiang province where 49 H7N9 infections have been recorded, including 12 deaths. Meanwhile, Hong Kong's Department of Health announced the death of a 75-year old man who was infected with the virus. Since the virus emerged last year, Hong Kong health officials estimate there have been 254 incidences of the virus in humans.
Trade expects lower cash cattle prices... While light sales were noted in at $1 lower prices of $146 in Texas Monday, active cash cattle trade is not expected to get underway until late-week. But action in futures signals traders expect lower prices this week. Supporting such ideas are higher showlist numbers and a marked pullback in the boxed beef market yesterday. Choice cuts dipped $2.24 and Select plunged $3.39. As has been the trend, movement was light at 103 loads.
Product and cash market should support futures... Improvement in the product market along with ideas packers may pay up to secure supplies should support the lean hog market today. The pork cutout value rose 48 cents yesterday and movement improved to 378.57 loads. On the cash market side, frigid Midwest temps have made producers reluctant to market hogs. As a result, packers may be forced to raise bids as they work to secure needs for this weekend's kill. Packers are still enjoying strong profit-margins.
Overnight demand news... There is no overnight export activity to report.