First Thing Today (VIP) -- January 7, 2013

January 7, 2013 12:22 AM


FIRMER TONE THIS MORNING... Grain and soy futures were supported by short-covering overnight following recent heavy price pressure. As of 6:30 a.m. CT, corn futures are trading 1 to 4 cents higher, soybeans 6 to 11 cents higher, Chicago and Minneapolis wheat 3 to 4 cents higher and Kansas City wheat 1 to 4 cents higher. The U.S. dollar index is modestly firmer this morning.

USDA REPORTS THE FOCUS THIS WEEK... The focus for grain markets this week is USDA's January reports on Friday. Traders will spend the first four days preparing for the barrage of reports and then Friday reacting to the data. In addition to the monthly Supply & Demand Report, USDA will also issues its Annual Production Summary, Quarterly Grain Stocks Report and Winter Wheat Seedings Report.

CONGRESS ON RECESS, BUT POLITICAL LEADERS SPAR OVER DEBT ISSUES... The Senate will not be back for legislative business until Jan. 22, the House on Jan. 14. A joint session of Congress takes place Jan. 21 for the inauguration. While lawmakers are out, some are staking clear position on the coming debt limit issues. House Speaker John Boehner (R-Ohio), in an interview with The Wall Street Journal editorial page, said the GOP wouldn't agree to any more tax increases in the next two years. "The tax issue is resolved," he said. Senate Majority Leader Mitch McConnell (R-Ky.) said, "The tax issue is finished, over, completed. That's behind us." He said new tax revenue is "absolutely" off the table as part of any coming negotiations with Democratic lawmakers and President Obama. But Democratic leaders say more revenue is needed, mainly by scaling back tax breaks.

ESTATE TAX AND GIFT TAX EXEMPTION FOR 2013 RISES TO $5.250 MILLION, DOUBLE FOR SPOUSE... The exemption is $5 million indexed for inflation for years after 2011. The tax rate jumps to 40% for estates above the exemption amount. Annual gift tax exclusion rises to $14,000 per donee. Congress also revived the portability of the estate tax exemption between spouses. Up to $1,070,000 of farm or business realty can receive discount estate tax valuation. Also, more estate tax qualifies for an installment-payment tax break. If one or more closely held businesses make up more than 35% of an estate, as much as $572,000 of tax can be deferred, and the IRS will charge only 2% interest.

BOXED BEEF NEARING A TOP?... Cattle traders will be watching the boxed beef market closely early this week for signs of topping action as prices are at levels that have slowed demand in the past and were under pressure Friday. If the boxed beef market indicates a short-term top is in place or close, packers will be reluctant to raise cash cattle bids as cutting margins are deep in the red.

CASH HOGS CALLED MOSTLY STEADY... Packers are expected to open the week offering steady bids for cash hogs at most Midwest locations. If not for negative cutting margins, packer demand would likely be stronger today as pork plants are needing slaughter supplies for the second half of the week.

WEEKEND DEMAND NEWS... Exporters reported no tenders or purchases.


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