First Thing Today (VIP) -- June 28, 2013

June 28, 2013 01:22 AM


LIGHT AND CHOPPY TRADE OVERNIGHT... As of 6:30 a.m. CT, corn futures are narrowly mixed amid light bull spreading, while soybeans and wheat are mixed with an upside bias. The dollar is also quiet, holding around unchanged this morning.

ACREAGE, GRAIN STOCKS DATA OUT THIS MORNING... USDA will update planted and harvested acreage estimates and release June 1 grain stocks at 11 a.m. CT. Traders are anticipating corn acreage to decline and bean plantings to increase from March intentions. The average pre-report trade guess puts corn plantings at 95.340 million acres and soybean seedings at 78.024 million acres. June 1 stocks are guessed at 2.856 billion bu. for corn, 441 million bu. for soybeans and 750 million bu. for wheat.

JAPAN LOOKING TO REPLACE U.S. WESTERN WHITE WHEAT... For the first time in 53 years, Japan is offering to buy wheat used for making confectionery flour and tempura batter that is not the U.S. western white variety amid fallout from the discovery of GMO wheat in Oregon. Japan will allow millers to buy Australian premium white wheat, Canadian western red winter wheat and U.S. SRW and club wheat to be purchased during a special dealing period that closes on July 5, according to Toru Hisazome, a farm ministry official in charge of wheat trading. An Asian trader told Reuters, "We don’t expect the ban (on U.S. western white wheat) to last too long. They (Japan) will resume U.S. wheat imports as mills in Japan are used to handling western white wheat, it is not easy to switch."

SENATE CLEARS IMMIGRATION REFORM BILL, BUT HURDLES AHEAD IN HOUSE... The Senate on Thursday cleared, 68-32, a major immigration reform measure (S 744). Fourteen Republicans joined all Democrats in supporting the bill. Thirty-two Republicans voted against the measure, including every single member of the leadership. The new 1,000-plus-page immigration measure would update the U.S. visa system, mandate use of the E-Verify electronic employment verification system and provide billions of dollars for beefed-up border security measures. A key to the measure is an incremental 13-year path to citizenship for most of the 11 million immigrants living in the U.S., with expedited processes for some agricultural workers and young immigrants. The measure would double the U.S. Border Patrol's size by adding 20,000 agents, require 700 miles of fencing at the Mexico border, and add unmanned aerial drones to help police the border. It would direct $46.3 billion toward securing the border with Mexico. The amendment also ensured that immigrants could not claim Social Security benefits for the time they worked in the country illegally. All employers would have to check workers' legal status with an E-verify system, and a visa entry and exit system would be required at all airports and seaports. Those provisions would have to be in place before any undocumented immigrant could gain permanent legal status, known as a green card. The House will not consider the Senate’s plan, and Speaker John Boehner (R-Ohio) has said lawmakers will take up a bill of their own. Boehner also said Thursday he would not allow a vote on immigration overhaul bills or a conference report unless he has a majority of the Republican Conference on board. The House Republican Conference will hold a special meeting on July 10 to discuss the way forward on immigration.

SENATE-PASSED IMMIGRATION REFORM BILL INCLUDES ACCORD ON FARMWORKERS... The bill includes provisions giving undocumented farmworkers a fast track to legal status and establishing new visa programs to provide farms and food processors a future flow of immigrant employees. The bill would replace the existing H-2A visa system that is limited to seasonal workers and run by the Labor Department with a broader program managed by USDA. Dairy farms, meat processors and other livestock operations rely on illegal immigrants, as do fruit and vegetable farms. Under the E-Verify system required by the bill, employers would match a job applicant’s Social Security number or Department of Homeland Security work authorization number against agency databases. Employers would also verify that photos from federal or state databases match the photo on the applicant’s driver’s license or work authorization card. Meat processors already use E-Verify voluntarily, but they note it routinely fails to catch applicants with stolen IDs, exposing companies to federal immigration raids.

COMMENT PERIOD FOR PROPOSAL OF NEW NASS REPORTS ENDS JULY 1... The comment period is closing July 1 on the proposal by USDA's National Ag Statistics Service (NASS) to resume data gathering and publishing of eight of the myriad of industrial reports that were discontinued by the Census Bureau in April 2012. NASS is proposing some changes to the collection of data on fats and oils, corn ethanol grind, cotton processing and flour milling. The agency is proposing that the funding to add this data collection will come under the Census of Agriculture. NASS intends to generate four separate publications from the data they gather under their proposal.

H&P REPORT EXPECTED TO SHOW SLIGHTLY BIGGER U.S. HOG HERD... USDA will release its quarterly audit of the U.S. hog industry at 2 p.m. CT. Traders are expecting the total number of hogs and pigs in the U.S. to be up slightly from year-ago. The average pre-report guess puts All Hogs and Pigs at 100.6%, Kept for Breeding at 99.9% and Kept for Marketing at 100.7% of year-ago.

CASH CATTLE TRADE STILL UP IN THE AIR... Cash cattle negotiations have dragged on again this week with neither side willing to bend thus far. While steady to weaker cash cattle prices are still a possibility since packers are buying for a holiday-shortened slaughter schedule next week, recent price action in cattle futures suggests traders believe the cash market is working on a low.

PORK CUTOUT DROPS SHARPLY... The pork cutout value dropped $2.05 Thursday as all cuts except loins and hams were lower. Bellies led losses, plunging $15.13. With the pork cutout at a historically high level, traders will closely monitor the product prices (and movement) for signs the market is topping.

OVERNIGHT DEMAND NEWS... South Korea purchased 30,000 MT of Canadian milling wheat and tendered to buy 15,000 MT of Australian milling wheat. Iraq passed on a tender for a minimum of 50,000 MT of optional origin wheat, but retendered for a like amount that's open until July 18.


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