First Thing Today (VIP) -- July 31, 2012

July 31, 2012 01:39 AM


FIRMER TONE OVERNIGHT... Grain and soy futures faced profit-taking pressure early in overnight trade, but are higher this morning. As of 6:30 a.m. CT, corn futures are trading 2 to 5 cents higher, soybeans mostly 10 to 17 cents higher and Chicago wheat 1 to 4 cents higher, while Kansas City and Minneapolis wheat are mixed with a slight upside bias. The U.S. dollar index is holding near unchanged in light and choppy trade.

MORE CALLS AHEAD FOR RFS ETHANOL MANDATE WAIVER... Several governors from livestock states are expected to soon urge EPA to announce an ethanol mandate waiver, following an official waiver request on Monday from a coalition of livestock and poultry sector groups. While sources continue to signal a waiver is unlikely at this time, contacts say pressure for action will grow if corn prices continue to surge. The results of USDA's Aug. 10 Crop Production Report will be another key factor in the coming debate. If the corn production estimate is as low as some predict, the next step in the RFS waiver debate would be an interagency committee meeting to discuss the topic.

HOUSE, SENATE AG LEADERS TO MEET TODAY AMID REPORTS HOUSE MAY PULL BACK FROM ONE-YEAR FARM BILL EXTENSION... The leaders of the House and Senate Agriculture panels will meet today to discuss various issues, including the need for an agriculture disaster relief measure and to keep talking about the need for a new five-year farm bill. Congressional sources and others are signaling House GOP leaders may back away from getting a vote on a one-year farm bill extension and instead offer a stand-alone ag disaster relief measure.

CORN, BEAN CCI RATINGS CONTINUE TO DROP... When USDA's weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500 point scale), the corn crop dropped another 8 points to 255, while the soybean crop declined another 6 points to 274. For both corn and soybeans, modest crop improvement in Ohio and Indiana was more than offset by deterioration in the other key production states.

FC STONE UPDATES CROP FORECASTS... Brokerage firm FC Stone sees corn yields falling in a range of 132 bu. to 138 Bu per acre, Peter Nessler Jr., executive vice president of commodities, told Reuters. Nessler says soybean yield potential is 37 Bu to 38 Bu per acre, but could fall to 34 Bu to 35 Bu per acre if rains aren't seen in the next couple of weeks.

PALMER DROUGHT INDEX SHOWS SEVERITY OF DROUGHT... Much of the Corn Belt needs 9 to 15 inches of rain to return to normal on the Palmer Drought Index, with some areas of Indiana and Illinois in need of more than 15 inches of precip. Click here to view the Palmer Drought Index and Drought Severity Index maps.

AUSSIE SCIENTISTS: EL NINO STILL LIKELY... Most climate indicators in the tropical Pacific Ocean remain at values near the threshold of an El Niño event, according to the Australian Bureau of Meteorology. "Although indicators such as the Southern Oscillation Index (SOI) and trade winds are less El Niño-like than they were a month ago, ocean surface temperatures continue to show a pattern, and in some places values, typical of the development stage of an El Niño," says the bureau. Climate models suggest weak El Niño conditions are likely to be reached some time in late summer or fall.

INDIAN FARM MINISTER PROPOSES MEAL TAX MOVES... India's farm minister has proposed a 10% tax on soymeal exports for the next six months in a measure to preserve domestic supplies. He also proposed removing the 15% import tax on oilseed meal imports. A ministerial panel is expected to address the proposals later today.

POSITIVE START FOR BOXED BEEF MARKET... Boxed beef prices were 68 to 75 cents higher Monday and while movement wasn't overly impressive at 150 loads, it was a positive start for the product market. With showlist numbers up from week-ago, the boxed beef market likely needs to build on Monday's performance to entice packers to raise cash cattle bids from last week's $114 trade in the Plains.

PORK PRODUCT MARKET SPUTTERS... The pork cutout value was 36 cents lower Monday and packers moved only 43.75 loads of product on the day. Given the sluggish start in the pork product market, packers may back off cash hog bids after paying steady to firmer prices at most locations for cash hogs Monday.

OVERNIGHT DEMAND NEWS... Taiwan purchased 60,800 MT of Brazilian corn and also tendered for 23,000 MT of US corn and 12,000 MT of US soybeans. Japan purchased 11,700 MT of milling wheat and is seeking 141,443 MT of US and Australian wheat in its weekly tender.


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