First Thing Today (VIP) -- January 6, 2014

January 5, 2014 11:57 PM


MOSTLY FIRMER TONE OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are 1 to 4 cents higher through the July contract and slightly lower in new-crop contracts, while wheat futures are mostly 2 to 5 cents higher. The U.S. dollar index is holding near unchanged this morning.

BUSY SCHEDULE IN WASHINGTON THIS WEEK... As lawmakers return to Washington (Senate today and House on Tuesday), lingering 2013 issues are at the top of the early 2014 agenda, including the need for a Fiscal Year 2014 omnibus spending package, completed conference reports on the new farm bill and Water Resources Development Act (WRDA), a coming vote later on increasing the debt limit, a likely delayed focus on tax extenders (including biodiesel) and an election-tinged debate this week on extending expired jobless benefits. The Senate is also expected to vote today to confirm Janet Yellen as next chair of the Federal Reserve. On the ag front, USDA is scheduled to release a barrage of report data Friday, including its monthly Supply & Demand Report, the Annual Production Summary, the Quarterly Grain Stocks Report and Winter Wheat Seedings.

MOST OF THE KEY FARM BILL ISSUES HAVE BEEN DECIDED; FLOOR VOTES ON CONFERENCE REPORT LATER THIS MONTH... There are just a few lingering farm bill issues that will either be decided by farm bill conference principals, or via a coming meeting of all conferees. Some of the remaining issues include language on mandatory country-of-origin labeling (COOL) for meat and a provision that would bar states from setting animal welfare and production standards for out-of-state agricultural goods sold to their residents (King amendment). Food stamp funding cuts are expected to total around $8.8 billion over ten years, with some pilot projects and other language dealing with reform of the program. Sources say farm bill language should be released soon after those issues are dealt with -- if not before. Contacts expect coming budget scores of the bill from the Congressional Budget Office (CBO) will very likely understate the measure's cost and overstate its savings, due largely to baseline assumptions that will look out of date based on current outlook parameters.

UPDATE ON CHINA CORN, DDG REJECTIONS... China rejected a total of 601,000 MT of corn and corn by-products from the U.S. in 2013 due to the presence of an unapproved GMO trait, according to a Xinhua news agency report citing data from the General Administration of Quality Supervision, Inspection and Quarantine. More rejections of U.S. corn and dried distillers grains (DDGs) are expected as China has increased inspections for MIR 162 (Syngenta's Agrisure Viptera).

CHINA CONFIRMS MORE BIRD FLU CASES, BUT NOT WORRIED ABOUT AN OUTBREAK... Chinese officials confirmed two new human cases of H7N9 bird flu over the weekend, one in the eastern province of Zhejiang and the other in Shanghai. Meanwhile, samples taken from a live poultry market in Guangdong tested positive for H7N9. Despite the rising number of bird flu cases, Chinese health officials say the risk of a widespread outbreak of the bird flu virus remains low.

CHINA COTTON PLANTINGS SEEN DOWN NEARLY 9%... Chinese farmers are expected to plant 4.25 million hectares (10.5 million acres) to cotton this year, which would be down 8.9% from 2013, according to the latest survey by the China Cotton Association. But farmers are waiting on the Chinese government to announce its official cotton policy before finalizing planting decisions. Chinese officials have indicated China will abandon its cotton stockpiling program and switch to direct farmer subsidies.

WATCHING BOXED BEEF TRADE... After record cash cattle trade in the Plains last week, traders will watch the boxed beef market closely to see if there's enough strength to support additional strength in the cash market this week. Choice boxed beef prices are trading above $200 again, a level where retailer demand has waned in the past. If the boxed beef market doesn't show strength, it will be difficult for cattle futures and cash cattle prices to build on last week's gains.

LIMITED HOG MOVEMENT... Bitterly cold temps across the Midwest will limit hog movement to start the week. That could influence the cash hog market. While cash hog bids are expected to be steady at most Midwest locations today, packer demand could increase later in the week and push cash hog bids higher.

WEEKEND DEMAND NEWS... Oman tendered to buy 40,000 MT of Indian wheat.


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