First Thing Today (VIP) -- July 11, 2013

July 11, 2013 01:19 AM


GRAINS FIRMER AHEAD OF USDA REPORTS... As of 6:30 a.m. CT, corn futures are mostly 2 to 5 cents higher (July is 18 cents higher), soybeans are mostly 3 to 6 cents higher (July is 10 cents higher), Chicago wheat is mostly 3 to 5 cents higher (July is 10 cents higher), Kansas City wheat is around 4 cents higher and Minneapolis wheat is around a nickel higher. The U.S. dollar index is under heavy pressure this morning.

JULY CROP REPORTS RELEASED THIS MORNING... USDA will update its 2012-13 and 2013-14 balance sheets and also release its first survey-based estimates of the spring wheat crop and all wheat production at 11 a.m. CT. In the Supply & Demand Report, traders are expecting old-crop corn carryover at 722 million bu. and old-crop soybean ending stocks at 121 million bushels. Old-crop wheat carryover will be 718 million bu., as reported in the Quarterly Grain Stocks Report. For the 2013-14 marketing year, traders expect corn carryover at 1.874 billion bu., soybean ending stocks at 270 million bu. and wheat carryover at 624 million bushels. In the Crop Production Report, the average guess puts all wheat production at 2.057 billion bu., winter wheat production at 1.507 billion bu. and other spring wheat production at 504 million bushels.

WEEKLY EXPORT SALES REPORT ALSO OUT THIS MORNING... For the week ended July 4, traders expect: corn sales between 300,000 and 600,000 MT; wheat sales between 600,000 and 1 million MT; soybean sales between 150,000 and 500,000 MT; soymeal sales between 75,000 and 150,000 MT; and soyoil sales between 0 and 10,000 MT.

CHINA BUYS U.S. CORN, WHEAT IMPORTS REVISED UP... China Grain Reserves Corp (Sinograin) has recently bought over 1 MMT of U.S. new-crop corn, trade sources told Reuters. One source put the purchases at 23 cargoes (around 1.38 MMT). Meanwhile, Chinese 2013-14 wheat imports are expected to rise 73% from last year to 5 MMT, according to state-run China National Grain and Oils Information Center, as domestic production has been hurt by poor weather. That's up sharply from it's previous forecast of 3.5 MMT.

HOUSE TO DEBATE CLOSED RULE, FARM-ONLY FARM BILL TODAY… The House Rules Committee approved a closed rule for House floor consideration of a farm-only farm bill -- HR 2642. The measure and rule will be debated today in the House. The farm-only farm bill includes amendments approved on the House floor to HR1947 but does not contain the nutrition title. Also, the plan would remove the 1938 and 1949 Acts as permanent law and replace them with the commodity title from HR 2642. Given that the measure was sent to the House Rules Committee and text of the bill posted, that suggests House leaders believe they have the votes needed to approve the bill and send the matter to conference with the Senate. Meanwhile, the administration said President Obama's advisors would recommend a veto if HR 2642 arrived at the White House.

FAO REVISES UP ITS WORLD CEREAL GRAINS FORECAST... World cereal grains production for 2013-14 is now forecast at 2.749 billion MT, according to the United Nations Food and Agriculture Organization (FAO), compared to its previous forecast of 2.46 billion MT. That would be a 7.2% increase from 2012-13. World wheat output is seen at 704 MMT, up 6.8% from 2012-13 and coarse grains production is forecast at 1.275 billion MT, up 9.7% from 2012-13.

EGYPT HAS LESS IMPORTED WHEAT THAN PREVIOUSLY BELIEVED... Ousted Egyptian President Mohamed Mursi's minister of supplies told Reuters the country has only 500,000 MT of imported wheat left, less than two months' supplies. He says Egypt has 3 MMT of domestic wheat supplies left in government stockpiles. Meanwhile, FAO says civil unrest and dwindling foreign exchange reserves raise serious food security concerns in Egypt.

BERNANKE TALKS UP ACCOMMODATIVE POLICY… While prepared remarks late yesterday from Fed Chairman Ben Bernanke stuck to the history of monetary policy, in remarks following his speech, Bernanke talked up the need for accommodative monetary policy. Bernanke said that "that highly accommodative monetary policy for the foreseeable future is what's needed in the U.S. economy." The unemployment rate of 7.6%, he noted, probably "understates" the weakness of the U.S. jobs market. His comments came after the FOMC minutes from the June 18-19 session revealed a split on the interest-rate setting panel on when to start tapering the Fed's asset purchase program. Bernanke's comments, along with those from Chinese Premier Li on China's economy, helped to push stocks up globally in overnight action.

LAWMAKERS RAISE CONCERNS ON SMITHFIELD PURCHASE BY CHINA'S SHUANGHUI… Senate Ag Committee members expressed concerns about the purchase of Smithfield Foods by Chinese firm Shuanghui, with Chairwoman Debbie Stabenow (D-Mich.) concerned that the "technology" China would gain could help them boost exports and compete against the U.S. in markets like Japan. Smithfield CEO Larry Pope sought to downplay the concerns, noting exports of U.S. pork to China and not Chinese pork exports were the expected results from the deal. The Treasury Dept. also conducted a behind-closed-door briefing on the deal for members of the Ag and Finance panels after the public hearing.

BEEF MOVEMENT IMPROVES... Packers moved a strong 254 loads of boxed beef Wednesday, suggesting the slide in prices may have gone deep enough to trigger value buying among retailers. Until packers are able to actively move beef at higher prices, however, there won't be strong signs of a low in the product market.

PORK MARGINS WEAKEN... Cash hog bids have been under light pressure this week, but the pork cutout value has declined at a greater clip, causing packer margins to weaken. Some plants are now cutting in the red, which will keep pressure on the cash hog market as market-ready hog supplies will soon start to build.

OVERNIGHT DEMAND NEWS... Japan bought 49,954 MT of wheat in its weekly tender, including 25,673 MT of U.S. supplies. Taiwan purchased 60,000 MT of Brazilian corn, but passed on a tender for 23,000 MT of U.S. corn and 12,000 MT of U.S. soybeans. Algeria purchased between 400,000 and 500,000 MT of optional origin (likely French) milling wheat. South Korea bought 20,000 MT of U.S., Canadian and Australian non-GMO soybeans.


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