First Thing Today (VIP) -- January 8, 2014

January 8, 2014 12:26 AM

Good morning!

Corn and wheat firmer, beans weaker overnight... As of 6:30 a.m. CT, corn futures are trading fractionally to 1 cent higher, soybeans are mostly 4 to 7 cents lower and wheat futures are mostly 2 to 4 cents higher. The U.S. dollar index is higher this morning.

China relaxing inspections of U.S. DDGs... Trade sources told Reuters Chinese quarantine authorities have sped up inspections of U.S. dried distillers grains (DDGs) and they are being "quite flexible." As a result, some Chinese buyers have resumed shipments of U.S. DDGs. China-based private consulting firm Shanghai JC Intelligence Co. says 20% to 25% of imported DDGs passed inspections last week. That rate is now up to 40% to 50% and is expected to rise to 60% to 70% next week. Meanwhile, trade sources expect inspections of U.S. corn shipments to remain tight.

USGC delegation in China to discuss GMO corn issue... A delegation from the U.S. Grains Council (USGC) is in China this week with hopes of gaining the country's approval of MIR 162 (Syngenta's Agrisure Viptera), which has triggered the rejection of over 600,000 MT of U.S. corn and dried distillers grains shipments. In December, China's approval process for MIR 162 was discussed in talks between the two countries as part of the Joint Commission on Commerce and Trade, but that meeting failed to produce a final resolve. Due to the rejections, Shanghai JC Intelligence Co. has cut its 2013-14 Chinese corn import forecast to 4.4 MMT from 6.6 MMT previously.

Discussions taking place on tax extenders, including biodiesel tax incentive... Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, said senior Democrats were continuing to eye a plan for tax cut extensions. Discussions are taking place among senior Democrats about potentially attaching offsets to tax legislation such as Sen. Harry Reid’s (D-Nev.) proposal for a one-year extension of expired tax cuts (S 1859). "That’s under discussion," Baucus said.

U.S. ag exports, trade balance hit records in November… The value of U.S. ag exports in November 2013 hit a record $15.686 billion and with imports at $8.257 billion, resulted in a record trade surplus of $7.429 billion for the month, according to USDA data. This marked the second consecutive monthly record export value registered by U.S. agriculture. This strong start to the fiscal year for U.S. ag exports and the trade balance, if it stays on this path, could put U.S. agriculture in position to register another record year for the value of ag shipments. U.S. ag exports were valued at a record $140.9 billion in FY 2013 and registered a similar strong start last year. USDA in August forecast U.S. ag exports to hit a value of $135 billion for FY 2014, down from their forecast for FY 2013 of $140 billion. USDA did not update that forecast in December as scheduled and the next outlook for U.S. ag trade is now scheduled for Feb. 20.

China has until July 9 to comply with WTO ruling re: duties on U.S. chicken... China will have until July 9 to comply with a World Trade Organization (WTO) dispute ruling condemning Chinese antidumping (AD) and countervailing (CV) duties on imports of U.S. chicken broiler products. In a joint communication circulated to WTO members Jan. 6, the U.S. and China announced they had reached agreement on the July 9 deadline for China to bring the measures in line with WTO requirements. A WTO dispute panel ruled June 25 that China violated several substantive and procedural WTO obligations in conducting its investigations and imposing AD and CV duties. The panel upheld 16 of the legal claims made by the U.S. against the Chinese measures, rejected two U.S. claims and declined to rule on another three. The AD duties were set between 50.3% and 53.4% for U.S. "mandatory respondents" and at 105.4% for all other producers. The CV duties were fixed between 4.0% and 12.5% for the three respondents and at 30.3% for all others.

Wholesale beef prices charge higher, movement remains light... Choice boxed beef prices were another $1.77 higher Tuesday, while Select cuts surged $2.18. While boxed beef prices are surging, retailer demand has slowed as only 130 loads of cuts changed hands yesterday. With product movement slowing, there is growing speculation the cash cattle market (and live cattle futures) may be near a short-term top.

Hog movement expected to pick up... Temps are expected to return to seasonal levels across the Midwest the second half of the week and snow-covered roads are being cleared. Therefore the flow of hogs to market should increase and a weaker tone is expected in cash hog markets across the Midwest.

Overnight demand news... Iraq tendered to buy at least 50,000 MT of U.S., Canadian or Australian wheat. Oman purchased 40,000 MT of Indian wheat.


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