MODEST CORRECTIVE GAINS OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading steady to 2 cents higher, August soybeans are a nickel lower while the other contracts are 3 to 6 cents higher, SRW and HRS wheat are around 2 cents higher and HRW wheat is 1 to 4 cents higher. The U.S. dollar index is modestly firmer this morning.
NO RFS REPEAL BUT HOUSE ENERGY PANEL LEGISLATION EXPECTED... Congress does not have the votes to repeal the renewable fuels standard (RFS), so petroleum refiners and ethanol producers should begin working with lawmakers on necessary legislative revisions to the program, Rep. John Shimkus (R-Ill.) said Tuesday. Shimkus told ethanol producers and petroleum refiners to drop their talking points and "start negotiating in good faith" during a House Energy and Commerce Subcommittee on Energy and Power hearing on the RFS. The petroleum industry has asked for the standard to be repealed. "You don't have enough [votes] for repeal. You do have enough for some reforms. So you better get in the room and get it done," Shimkus said. A majority of the House Energy and Commerce Committee would support revisions to the RFS, but not repeal, said Rep. Joe Barton (R-Okla.). Panel chairman Fred Upton (R-Mich.) is expected to direct his staff to start drafting reform legislation over the August recess to be ready for markup in the fall. During Tuesday's hearing, Barton said the committee has three options: do nothing, repeal the RFS, or modify it. "My guess is a majority of the committee is probably at that (third) option, take the middle road," Barton said. The Energy and Power Subcommittee will resume its hearing today when it takes testimony from livestock and agricultural groups.
HOUSE DEMOCRATIC WHIP DOUBTS HOUSE WILL GO TO CONFERENCE ON FARM BILL... House Minority Whip Steny Hoyer (D-Md.) says he does not expect the House to begin formal negotiations on legislation to reauthorize farm policy before current farm policy expires Sept. 30. The House has not responded to the Senate's request for a conference. House Majority Leader Eric Cantor (R-Va.) says he wants to bring a nutrition funding bill to the floor and Congress is scheduled to be in recess for the entire month of August. Meanwhile, House Ag Chairman Frank Lucas (R-Okla.) says GOP leaders have focused attention on achieving Republican consensus regarding a separate nutrition funding bill, but there is a lot more to be done before decisions are made. "There is a whole bunch of things we could line up our P's and Q's on before we get around to the nutrition price number or choice in commodity programs," Lucas said. "We've asked the Senate and we're trying to persuade them to work with us and we'll see where that goes."
DAY 1 HRS TOUR RESULTS... Scouts on the first day of the annual Wheat Quality Council HRS tour found an average yield of 43.3 bu. per acre from hard red spring wheat samples taken along routes in the southern half of North Dakota and northeast/north-central South Dakota. That compares to last year's day 1 results of 42.9 bu. per acre and the five-year average of 41.7 bu. per acre on similar routes. Scouts will sample fields in northwestern, central and north-central North Dakota today.
FARMERS' UNION: RUSSIAN CROPS NOT AS BIG AS GOV'T FORECASTS... Russia's total grain output and wheat crop will come in below official government forecasts, according to the Russian Grain Producers Union. The head of the farmers' union says the wheat crop at 45 MMT to 48 MMT compared to the government forecast of no less than 50 MMT. The union head says total grain production will be 75 MMT to 80 MMT, which is well below the official government forecast of 95 MMT. He puts 2013-14 Russian grain exports at 15 MMT to 15.7 MMT compared to the government projection of 20 MMT.
USDA TAKES MORE ACTIONS ON SUGAR... USDA is sending purchase invitations to domestic sugarcane processors to solicit bids to sell sugar pledged as loan collateral to the Commodity Credit Corporation (CCC) as it continues efforts to minimize costs to the government for the sugar program. The action is aimed at taking 136,000 MT of import supply of raw cane sugar at a cost of $18.7 million. The action would reduce expenditures by $37.6 million, the estimated cost if the sugar were forfeited to CCC. USDA has been criticized for not acting quicker on the sugar situation, which has seen prices plunge on a rise in supply, and some suggest even this action may not bolster prices enough to avert forfeitures and thus more government costs.
CHINA'S MANUFACTURING SECTOR CONTINUES TO CONTRACT... China's HSBC flash purchasing managers' index (PMI) for this month dropped to an 11-month low of 47.7 from a final reading of 48.2 in June. The new orders sub-index also came in at an 11-month low and was below the contraction line of 50 for a third consecutive month.
BOXED BEEF PRICES PLUNGE... Pressure on the boxed beef market intensified Tuesday, with Select values down $1.70 and Choice prices $2.64 lower. Movement modestly improved to 202 loads amid the sharp price pressure, but until product values find a short-term bottom, packers will be reluctant to raise cash cattle bids.
PORK PRODUCT MARKET STRENGTHENS... The pork cutout value firmed 62 cents Tuesday as all cuts except hams (which were $3.08 lower) posted strong gains. Just as importantly, packers moved 403.6 loads of product at the higher prices. Strength in the product market may be enough to hold cash hog bids steady at most Midwest locations today.
OVERNIGHT DEMAND NEWS... South Korea purchased 120,000 MT of optional origin corn. Taiwan purchased 23,000 MT of U.S. corn and 12,000 MT of U.S. soybeans for August-September delivery. Algeria purchased at least 400,000 MT of optional origin (likely French) milling wheat. Egypt tendered to buy at least one cargo of optional origin wheat. Results of the snap tender will be known later this morning. Egypt also tendered to buy 20,000 MT of soyoil.