First Thing Today (VIP) -- January 3, 2014

January 3, 2014 12:36 AM
 

GOOD MORNING!

MILD SHORT-COVERING OVERNIGHT... Grain and soybean futures saw some corrective trade overnight and as of 6:30 a.m. CT the bean market has retraced 1 to 9 cents of yesterday's hefty losses. The corn market is fractionally to a 2 cents higher, while the wheat market is steady to a penny higher in most contracts across all three flavors. The U.S. dollar index is favoring the downside this morning, as are crude oil futures.

USDA REPORT STUDY SEEN THIS MONTH…The study of USDA reports like Grain Stocks and Supply/Demand should be completed this month, according to sources. USDA officials were briefed on a draft of the study being compiled by University of Illinois economists (at the request of Chief Economist Joe Glauber) and some "additional issues" were being explored. Some suggest, however, those additional issues were not significant but may have been more clarifications than anything. But the report’s conclusion may be disappointing. Indications are the researchers still may not have answered the question they were tasked: Why have trade expectations for some of these key USDA updates not matched the actual data released?

GENERAL MILLS TO START MAKING SOME CHEERIOS WITHOUT GMOs... General Mills has announced the company will soon start marketing its regular Cheerios cereal with a label stating they are "Not Made with Genetically Modified Ingredients." Oats, the primary ingredient, are not a GMO crop but the firm has started to make the cereal without GMO corn starch or sugar. Anti-GMO forces are hailing the move, crediting it to a social media campaign on the topic. General Mills said the process started about a year-ago. The cereal maker said they still believe in the safety of GMOs. Key now will be whether any other cereal makers follow suit.

USDA MAKES FLEXIBLE SCHOOL LUNCH GUIDELINES PERMANENT... USDA has announced that it will make temporary guidelines allowing more flexibility with the National School Lunch Program permanent via a final rule. The original rules of the 2010 Healthy Hunger-Free Kids Act drew criticism from food providers, schools, parents, state governments and lawmakers that complying with USDA's maximum grain and meat allotments was expensive and left children hungry. The more flexible guidelines, which will now become permanent, will allow providers of school lunches to ignore these maximum limits on grain and meat portions and require instead minimum limits. Today's final ruling from USDA includes the following total calorie recommendations for meals: 550-650 calories for kindergarten through fifth grade; 650-700 calories for grades six through eight; 750-850 calories for grades nine through 12.

WEEKLY EXPORT SALES REPORT OUT THIS MORNING... For the week ended Dec. 26, traders expect: corn sales between 650,000 and 850,000 MT; wheat sales between 350,000 and 550,000 MT; soybean sales between 500,000 and 800,000 MT; soymeal sales between 50,000 and 100,000 MT; and soyoil sales between 10,000 MT and 40,000 MT.

ICAC FORECASTS RECORD GLOBAL COTTON ENDING STOCKS FOR 2013-14... The International Cotton Advisory Committee (ICAC) has lowered its forecast for global cotton inventories at the conclusion of the 2013-14 crop year (July 31) to 19.78 MMT, which is down 540,000 MT from its December projection but still a record level. This would be roughly a 2 MMT increase from the previous season. The association expects global cotton production will decline 1.09 MMT from the year prior to 25.75 MMT thanks to lower cotton acres in China. ICAC also expects world consumption to increase in 2013-14, though it cautions that "a small gain in cotton prices" could limit this increase. It projects world demand will increase slightly from 23.34 MMT in 2012-13 to 23.76 MMT in 2013-14.

CASH CATTLE MARKET NOTCHES NEW HIGHS... The live cattle market hit yet another all-time record high on the weekly continuation chart yesterday on expectations for higher cash cattle trade again this week. Expectations proved correct and trade got underway at record-setting prices of $135 to $137 in Texas and Kansas, which compares to trade at $132 to $134 for the Southern Plains last week. Strong price gains for the boxed beef market this week along with the fact that processors returned from the holidays in need of cattle for their first full week of slaughter in two weeks spurred the higher cash trade. Yesterday, however, both cuts of beef softened slightly and movement slowed to just 98 loads. Futures are trading in line the lower end of this week's cash action, which could lead to profit-taking today.

ARE HOGS WORKING ON A SEASONAL LOW?... Strong gains in lean hog futures to start the year despite sharp gains in the U.S. dollar index spurred talk a seasonal low may be in the works. The cash hog market was steady to $1 higher yesterday as frigid temps deterred producers from transporting hogs. Traders were also encouraged by a surge in pork movement Tuesday, though the product market moderated Thursday -- the pork cutout value slid 16 cents and movement slowed to a still respectable 351.39 loads. Followthrough buying today after yesterday's upside gap would be a strong signal lean hogs have bottomed.

OVERNIGHT DEMAND NEWS... Algeria has tendered for 50,000 MT of optional origin milling wheat. Egypt's General Authority for Supply Commodities (GASC) tendered for an unspecified amount of wheat from optional origins. Egypt has only bought wheat from the EU or Black Sea since returning to the global market in July.

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