First Thing Today (VIP) -- June 5, 2013

06:17AM Jun 05, 2013
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MIXED PRICE TONE OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading mixed with the July contract around a penny higher and most other contracts around 4 cents lower, soybeans are around 1 cent higher in old-crop contracts and mostly 7 to 8 cents lower in new-crop contracts, Chicago wheat futures are fractionally to 2 cents lower, while Kansas City and Minneapolis wheat are narrowly mixed. The U.S. dollar index is modestly weaker this morning after two-sided trade overnight.

SENATE FARM BILL FINISH LINE NOW LIKELY NEXT WEEK... As most expected, no amendment agreement was reached on Tuesday, forcing Majority Leader Harry Reid (D-Nev.) to file cloture late Tuesday evening, The motion would set up a 60-vote threshold on Thursday to end debate. With no Senate votes on Friday and the chamber out today for the funeral of Sen. Frank Lautenberg (D-N.J.), the farm bill (S 954) end zone appears headed into next week. Though senators would have up to 30 hours of debate if cloture is invoked, Agriculture Chairwoman Debbie Stabenow (D-Mich.) pressed for a quicker passage. "There's a chance it could get done Thursday night," she said. "I would say Thursday night or Monday." Tuesday action on the farm bill saw no votes taken on amendments as the chamber continues to work on the omnibus legislation.

U.S. AG TRADE SURPLUS SHRINKS... U.S. agriculture registered a trade surplus of just $1.022 billion for April, the smallest since July 2007 when the surplus was $766 million, according to USDA data. The value of U.S. ag exports in April was $10.572 billion, continuing the monthly decline seen from the peak of $14.641 billion registered to open FY 2013. U.S. ag imports were valued at $9.550 billion in April, a record-high value on a monthly basis, a factor in the tempered U.S. ag trade surplus.

EPA TESTIMONY ON ETHANOL BLEND WALL TODAY... While blenders will be able to use leftover 2012 RINs (Renewable Identification Numbers) to meet 2013 Renewable Fuels Standard (RFS) requirements, an official from EPA will tell a congressional hearing today that the supply of 2013 RINs will be "critical" to meeting rising RFS requirements in 2014. Christopher Grundler, director of the office of transportation and air quality at EPA, will testify at a House Oversight and Government Reform hearing that the agency is monitoring the situation to see when the ethanol blend wall is hit.

GMO WHEAT UPDATE... South Korea says it has detected no GMO content in shipments of U.S. wheat, but it will continue to conduct tests. A new testing method from the U.S. government is expected to arrive in the country later this week. Meanwhile, Japanese officials say the country may seek alternative supplies to U.S. western white wheat if USDA's investigation into the situation drags on. Domestically, the Oregon field in which a farmer found the unapproved GMO wheat was never used as a test plot for the GMO strain and the farmer has "no idea" how the wheat made it into his 125-acre field, according to his lawyer.

ARGY SOY PROTEIN CONTENT DROPPING... Protein content of Argentina's soybeans has dropped in recent years and is not expected to rebound, according to Argentina's CIARA grains industry chamber. As a result, CIARA agreed to lower the protein content terms of their standard contracts to 46.5%. This is likely to put pressure on Argentine prices and could increase the competitiveness (and demand) for U.S. soybean meal.

RUSSIAN OFFICIAL UPDATES GRAIN SITUATION... Russia will work to keep 2013-14 grain exports in the 18 MMT to 20 MMT range, according to Deputy Ag Minister Ilya Shestakov. While the country will not put tariffs on exports, it could intervene by purchasing grain for state reserves. Shestakov puts 2013-14 grain production at 95 MMT, with wheat accounting for 54 MMT to 55 MMT of that total.

INFORMA JUNE CROP REPORT OUT LATER THIS MORNING... Informa Economics will update its winter wheat crop estimate, based on June 1 conditions, around 10:30 a.m. CT. Informa's June crop report will NOT include estimates for row crops.

ASIAN STOCKS SWOON ON DETAILS OF JAPAN ECONOMIC PLAN FROM PM ABE... The Nikkei dropped nearly 4% and other regional markets were weaker overnight as details of the economic component of the plan by Japanese Prime Minister Shinzo Abe were greeted with skepticism by traders. One of the big concerns is there are a lack of expected labor market reforms in the package, raising questions about how effective this component will be in bolstering the Japanese economy.

CASH CATTLE NEGOTIATIONS SLOW TO GET STARTED... While feedlots are asking $126 for cash cattle in the Plains, packers have yet to establish initial cash cattle bids. As a result, cash sources are not expecting cash trade to develop until late in the week. With packers not appearing to need many cattle this week, most traders are anticipating steady to lower prices compared with last week's mostly $124 trade.

CASH HOGS CALLED MOSTLY STEADY... Packers are expected to again pay steady prices for cash hogs at most Midwest locations today. While cutting margins are negative, the tightening supply of cash hogs is keeping packer demand solid. But if margins don't strengthen soon, packers may begin to actively lower cash hog bids.

OVERNIGHT DEMAND NEWS... China's Dandong Port Group signed an agreement with Perdue Agribusiness to buy 29 million bu. (around 790,000 MT) of U.S. beans from the firm. China's COFCO purchased the country's first commercial cargo of Argentine corn since the phytosanitary agreement was signed between the two countries in February 2012 -- previous purchases were small trials. Taiwan purchased 124,000 MT of Brazilian soybeans. Iran bought one cargo (around 60,000 MT) of Black Sea origin corn. Algeria purchased at least 425,000 MT of optional origin (likely French) wheat.