First Thing Today (VIP) -- July 1, 2013

July 1, 2013 01:37 AM


CORN WEAKER, BEANS AND WHEAT FIRMER OVERNIGHT... As of 6:30 a.m. CT, July corn futures are steady while new-crop contracts are 3 to 4 cents lower, soybeans are 14 to 17 cents higher in old-crop contracts and 3 to 4 cents higher in new-crop contracts, Chicago wheat is 1 to 2 cents higher, Kansas City wheat is mostly 3 to 4 cents higher and Minneapolis wheat is fractionally higher. The U.S. dollar index is modestly weaker this morning.

EMPLOYMENT REPORT ON FRIDAY KEY FOCUS IN WASHINGTON AS CONGRESS ON RECESS... Both the House and Senate are on recess for the week and will return Monday, July 8. The holiday-shortened week ahead will still have some important economic data, with updates on manufacturing via the PMI and ISM data today along with construction spending. Tuesday will see an update on factory activity with Wednesday’s schedule containing ADP private sector jobs data, International Trade and the ISM non-manufacturing index. Thursday is the Independence Day holiday and the week wraps up with a biggie -- the June Employment report and weekly jobless claims.

FAVORABLE WEATHER FORECAST... The forecast calls for mostly dry conditions in the western Corn Belt through the first half of the week and light, scattered showers around the Fourth of July. Meanwhile, rains are expected through some of the drier areas of the eastern Corn Belt this week. Temps are expected to be normal to slightly below normal across the region. While traders deem the weather to be favorable for crop development, crops need warmer temps to add growth after the slow start to the growing season.

FATE OF HOUSE FARM BILL STILL MURKY... GOP leaders are trying to determine whether or not there are enough votes to split the bill into two -- one for farm programs and the other for food stamps/nutrition. If so, a vote on the farm bill would likely go first, with the food stamp measure second. But no final decisions have been made. House members on recess this week will likely hear from some of their farmer constituents about the go-slow farm bill process.

CHINA'S MANUFACTURING SECTOR WEAKENS... China's official purchasing manufacturers' index (PMI) slipped to 50.1 in June from 50.8 in May. The sub-index for new orders declined from May, signaling weaker demand for Chinese products. Meanwhile, China's final HSBC PMI dropped to 48.2 in June from 49.2 in May.

WATCHING FOR BOTTOMING SIGNS IN CATTLE MARKET... Cash cattle traded at steady prices last week, which is an improvement from recent price pressure. With packers buying for a full slaughter schedule next week, there's hope demand for cash cattle will be stronger and lead to firmer cash cattle prices, especially given strong cutting margins. But it will take signs of a low in the boxed beef market to trigger sustained buying interest in cattle futures.

LIMITED REACTION TO H&P REPORT EXPECTED... Last Friday's Quarterly Hogs & Pigs Report was mostly neutral. As a result, the market reaction is expected to be muted. Once the report data is factored into the market, traders' focus should be on the cash hog and pork product markets as traders watch for a seasonal top.

WEEKEND DEMAND NEWS... South Korea is seeking up to 185,000 MT of U.S, South American, South African or Black Sea origin corn in two tenders. South Korea also tendered to buy 45,000 MT of Indian, Canadian, Australian, South American or Black Sea wheat. South Korea purchased 15,000 MT of Australian wheat.


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