CORN AND BEANS FIRMER, WHEAT MIXED... As of 6:30 a.m. CT, corn futures are trading 2 to 4 cents higher, soybeans are mostly 4 to 9 cents higher, Chicago wheat is steady to 2 cents higher, while Kansas City and Minneapolis wheat are narrowly mixed. The U.S. dollar index is mildly firmer this morning.
BUDGET MATTERS TAKE CENTER STAGE IN BOTH THE HOUSE AND SENATE THIS WEEK... The Senate will take up its version of the continuing resolution (CR) for Fiscal Year 2013, and both the House and Senate Budget panels will release text of their budget resolutions for Fiscal Year 2014 -- which could include specific savings for a new farm bill. The Senate CR could help provide more flexibility to sequester cuts, including furloughed meat inspectors. The Senate will take up a House-passed funding resolution for FY 2013, but will include three additional spending bills to the continuing resolution (HR 993). Passage of a CR would prevent a government shutdown scheduled to occur March 28 if no action is taken. Senate Appropriations Chairman Barbara Mikulski (D-Md.) said the three bills to be added are for Agriculture, Homeland Security, and Commerce-Justice-Science. The House version, passed March 6 by a vote of 267-151, folded in Defense and Military Construction spending bills. The Senate version will also reflect the Budget Control Act's 2013 discretionary spending target, but like the House version, will be "subject to sequester," Mikulski said.
FAPRI SEES RECORD CORN, SOYBEAN CROPS THIS YEAR... The Food and Agricultural Policy Research Institute (FAPRI) released its projections for the upcoming growing season Friday, forecasting record corn and soybean crops. FAPRI sees the corn crop rebounding to 14.370 billion bu. on a national average yield of 161.8 bu. per acre and 2013-14 carryover increasing to 1.638 billion bushels. For soybeans, the think-tank sees output at 3.367 billion bu. on a national average yield of 43.5 bu. per acre and 2013-14 carryover rising to 191 million bushels. The wheat crop is seen at 2.233 billion bu. with carryover of 727 million bu. and the cotton crop falling to 13.21 million bales and carryover tightening to 4.08 million bales.
DISAPPOINTING CHINESE ECONOMIC DATA... Chinese consumer prices rose more than expected last month, while industrial output and retail sales expanded at a slower rate than anticipated. China's consumer price index (CPI) rose 3.2% from year-ago in February, a 10-month high and up from a 2% increase in January. Food prices rose 6%, while non-food prices expanded 1.6%. The National Development & Reform Commission forecasts Chinese consumer price inflation to be around 3% this year. Meanwhile, industrial output rose 9.9% in the first two months of the year, while Jaunary-February retail sales rose 12.3% -- both under economists' expectations.
USDA ISSUES RULE ON COUNTRY-OF-ORIGIN LABELING (COOL) WITH SIGNIFICANT CHANGES... The proposed rule from USDA to bring the U.S. Country of Origin Labeling (COOL) requirement into compliance with U.S. WTO obligations, unveiled late Friday, would boost labeling requirements for retailers and others in the meat chain. The rule would eliminate the ability of meat from multiple origins to be labeled as such and instead would require the label to state where the animal was born, raised and slaughtered. USDA also would broaden their definition of "retailer" under the proposal. Even meat from animals that are born, raised and slaughtered could not be merely labeled as a "Product of the U.S." but rather would have to carry a label stating the product was "Born, Raised and Slaughtered in the U.S." Also, commingling currently allowed under the current mandatory COOL regulations would no longer be available under the proposed amendments. As for a cost, USDA said they estimate a "midpoint cost of the proposed rule for this label change is $32,764,500 with a range of $16,989,000 to $47,326,500."
CANADA REACTS NEGATIVELY TO USDA'S COUNTRY-OF-ORIGIN LABELING (COOL) RULE... Reaction to USDA's COOL rule from Canada was swift, and negative. In a statement, Canadian Agriculture Minister Gerry Ritz said his government was "extremely disappointed" with the U.S. proposal. "We do not believe that the proposed changes will bring the United States into compliance with its WTO obligations," Ritz said. "The proposed changes will increase the discrimination against exports of cattle and hogs from Canada and increase damages to Canadian industry. Our government will consider all options, including retaliatory measures, should the U.S. not achieve compliance by May 23, 2013, as mandated by the WTO."
DEMAND CONCERNS HANG OVER CATTLE/BEEF MARKET... Boxed beef prices surged last week and packers paid mostly steady prices for cash cattle, but cattle futures dropped as demand concerns continue to hang over the market. While tight supplies limit downside risk, traders will remain hesitant to buy futures until demand concerns ease.
CASH HOGS CALLED MOSTLY STEADY... Packers are expected to open the week paying steady prices at most Midwest locations as they assess available supplies against their needs for the week. Poor road conditions will limit hog movement across much of the western Midwest, but given tight margins, packers will be reluctant to raise cash hog bids.
WEEKEND DEMAND NEWS... South Korea bought 68,000 MT of optional origin (likely South American) corn. Oman purchased 20,000 MT of Canadian wheat. India rejected all bids in a tender to export 250,000 MT of wheat.