First Thing Today (VIP) -- June 12, 2013

June 12, 2013 01:35 AM


CORN AND WHEAT WEAKER, BEANS FIRMER OVERNIGHT... As of 6:30 a.m. CT, corn futures are fractionally to 2 cents lower, soybeans are 8 to 12 cents higher in old-crop contracts and steady to 2 cents higher in new-crop contracts, Chicago wheat is 4 to 7 cents lower, Kansas City wheat is 3 to 5 cents lower and Minneapolis wheat is around 1 cent lower. The U.S. dollar index is firmer this morning.

JUNE S&D, CROP PRODUCTION REPORTS OUT THIS MORNING... USDA will release its Supply & Demand and Crop Production Reports at 11 a.m. CT. Traders are anticipating only minor adjustments to the old-crop balance sheets for corn, soybeans and wheat. For 2013-14, corn carryover is guessed at 1.758 billion bu. (2.004 billion bu. in May), soybean ending stocks are guessed at 273 million bu. (265 million bu. last month) and wheat carryover is guessed at 634 million bushels (670 million bu. in May). In the Crop Production Report, traders are expecting the winter wheat crop to be 1.457 billion bu., with HRW at 743 million bu., SRW at 506 million bu. and white winter wheat at 208 million bushels.

ABARES RAISES AUSSIE WHEAT FORECAST... The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) raised its 2013-14 Australian wheat crop estimate to 25.399 MMT from 24.9 MMT in March as planted acreage is expected to be greater than previously anticipated and extended weather forecasts call for above-normal precip across most key production regions. The Aussie wheat crop is expected to rise by 15% from production of 22.077 MMT last year.

ARGENTINE FARMERS TO START STRIKE SATURDAY... Argentine farmers will stage a coordinated strike from Saturday through next Wednesday where they will halt grain sales in protest of government ag policies. Next Thursday and Friday are public holidays in Argentina, so grain sales will be halted for a week. While some congestion of cargo ships is expected at Argentine ports, no major export disruptions are anticipated.

HOUSE PANEL SEEKS INFO ON IMPACT OF RFS ON FUEL PRICES... As part of a recent white paper, the House Energy and Commerce Committee is seeking data on the renewable fuel standard's (RFS) impact on fuel prices and whether it should be modified to reduce oil dependence and improve energy security. The latest white paper is the fourth in a series from the committee considering the impact of the RFS and whether it should be revised. The report asks interested parties to discuss how the standard relates to larger energy policy and whether the economic assumptions underlying the RFS have changed in recent years. The latest paper asks how vulnerable the U.S. is to oil supply disruptions and price spikes. It also asks to what extent the decline in oil imports can be attributed to the RFS as well as the standard's impact on gasoline prices, fuel diversification, and oil dependence. The committee is also asking whether the standard should be revised to expand the number of fuels that qualify under its provisions. Committee Chairman Fred Upton (R-Mich.) and ranking member Rep. Henry Waxman (D-Calif.) are issuing a series of white papers while they consider whether any revisions are needed to the renewable fuel standard. The committee is asking interested parties to respond by June 21 on issues discussed in the fourth paper.

GREENHOUSE GAS REGS COMING VIA OBAMA ADMINISTRATION... The Obama administration will pursue more via regulation to restrain greenhouse gases if Congress does not act, a top aide to President Obama said. The Clean Air Act provides several regulatory tools that could be used to reduce emissions of greenhouse gases, Heather Zichal, deputy assistant to the president for energy and climate change, said at a conference organized by Sen. Sheldon Whitehouse (D-R.I.). She did not detail what steps the administration will take, but she said, "We will do more." She said opportunities for actions to reduce greenhouse gases include not only the Clean Air Act, but energy efficiency, renewable energy on federal land, and the phasing out of fossil fuel subsidies.

CROP INSURANCE INDEMNITIES RISE SLIGHTLY... Indemnities paid out on 2012 crops reached $17.346 billion as of June 9 with the loss ratio remaining at 1.56, according to Risk Management Agency data. Corn built on its already large payouts, rising to $11.788 billion, now nearly $1 billion more than the entire 2011 payouts for all crops. The pace of increase continues to slow, rising only $153 million over the past month. One of the items in focus during the current farm bill debate has been the subsidy level provided for the program, currently at 62.8% for all crops and policy types. The subsidy percentage on corn and soybeans ranges from over 66% for 75% coverage to below 50% for 85% coverage policies.

CASH CATTLE TRADE UNCERTAINTY... Cash cattle negotiations have yet to get underway in the Plains as packers have not yet established initial bids. The slow start to cash negotiations is adding to a cash picture that's already cloudy. On the bullish side, feedlots are hopeful Tuesday's strong gains in futures improve their odds of getting steady to firmer cash prices compared with last week's trade, especially since packers are working with positive margins. But bears note that showlist supplies are up from week-ago and packer demand for cattle has been sluggish for weeks.

PORK PRODUCT MARKET STRENGTHENS... The pork cutout value built on Monday's strong gains with an 85-cent advance yesterday and movement improved to 388.5 loads. While packer margins are below breakeven, the firming pork market along with tight market-ready supplies should keep cash hog bids steady to firmer across the Midwest.

OVERNIGHT DEMAND NEWS... South Korea purchased 62,000 MT of optional origin corn.


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