CHOPPY PRICE ACTION... As of 6:30 a.m. CT, corn, soybean and wheat futures are narrowly mixed as traders are unwilling to actively add new positions ahead of USDA's barrage of reports on Friday. The U.S. dollar index is firmer this morning.
DON'T BELIEVE TALK ON NO DIRECT PAYMENTS FOR 2013... Chatter is rising in farm country that direct payments might not flow to farmers for 2013 crops. But we find no evidence that this rising "fear" is on the mark. First, there is a farm program in place for 2013 via the extension of the 2008 Farm Bill and there is no other program there. And don't let talk of the fact the farm bill extension runs through Sept. 30 foster ideas the direct payments are somehow in danger -- recall 2012-crop direct payments arrived in October despite many portions of the 2008 Farm Bill expiring as of Sept. 30. Even if a new farm bill is passed quickly by the new Congress, there are still several steps in the implementation process and a new bill would be effective for 2014 crops. So figure direct payments into your 2013 plan. As part of upcoming budget talks, there could be an option that could reduce (but not eliminate) direct payments for 2013 crops, but then that would lower slightly the baseline for 2014 and beyond.
BRAZILIAN CROP FORECASTS INCH HIGHER... Conab, the supply forecasting agency of the Brazilian government, modestly raised its soybean production forecast to a record 82.7 MMT from 82.6 MMT last month. The corn production forecast was also mildly raised to 72.2 MMT from 71.9 MMT previously.
CHINA BUYING U.S. AND CANADIAN WHEAT... Rising wheat prices in China and falling global prices are encouraging Chinese end-users to seek supplies from the U.S. and Canada. Trade sources tell Reuters China has bought several cargoes of U.S. and Canadian high-protein wheat in recent days and more purchases are likely. Meanwhile, China's appetite for soybeans is expected to decline significantly as crusher demand slows. A trade source tells Reuters Chinese soy imports in January could fall to 3.5 MMT and be even lower in February.
UKRAINE GRAIN PRODUCTION EXPECTED TO INCREASE... Ukraine's grain output should rise to 50 MMT this year from 46.2 MMT last year, according to an early forecast from the country's ag ministry. Wheat production is forecast to rise to 19 MMT from 15.5 MMT last year. Ukrainian producers are expected to plant 16.2 million hectares (40 million acres) to grains, up 670,000 hectares (1.66 million acres). Winter grains have already been seeded on 8.1 million hectares (20 million acres) and 92% of those crops are in satisfactory condition, according to the ag ministry. Private consulting firm UkrAgroConsult forecasts Ukraine's 2013 wheat crop could rise to 21 MMT.
VERY LIGHT CASH CATTLE TRADE IN TEXAS... A pen of cattle traded at $128 in Texas Tuesday, which was steady with last week's cash cattle trade in the Plains. It appears those cattle were left over from last week and not tone-setter for cash cattle trade this week.
DEMAND FOR CASH HOGS DECLINING... Packers are now thought to have the bulk of this week's cash hog needs covered. With cutting margins in the red and the pork cutout value 63 cents lower Tuesday, packer demand for cash hogs is expected to decline. Cash hog bids are seen steady at most Midwest locations, but some lower bids are possible.
OVERNIGHT DEMAND NEWS... South Korea purchased 69,000 MT of corn (likely South American origin), 55,000 MT of optional origin feed wheat and 45,000 MT of optional origin soymeal. Japan purchased 36,450 MT of feed wheat and 38,580 MT of feed barley. Japan also tendered for 121,188 MT of of Australian noodle-grade wheat.