First Thing Today (VIP) -- March 11, 2014

March 11, 2014 01:26 AM

Good morning!

Corn weaker, beans mixed and wheat mostly firmer... As of 6:30 a.m. CT, corn futures are trading fractionally to 1 cent lower, soybeans are 1 to 4 cents lower in old-crop contracts and mostly 1 to 6 cents firmer in new-crop contracts, while wheat futures are steady to fractionally higher in most contracts. The U.S. dollar index is firmer this morning.

Russia-Ukraine update... Crimea's parliament has voted to declare independence from Ukraine ahead of a referendum this weekend in which the region's citizens will decide whether to join Russia. The parliamentary ballot highlights the continued stalemate in the crisis. Meanwhile, Russian President Vladimir Putin has apparently rejected a U.S. proposal to resolve the dispute over Ukraine that had been put forward by Secretary of State John Kerry over the past week, according to senior Russian and U.S. officials. Putin's decision led Kerry to put off a Russian invitation to meet Putin in Sochi, Russia, as early as the beginning of this week to discuss the Ukraine crisis, according to these officials.

Syngenta halts Duracade corn sales in Canada... Syngenta announced Monday it had halted sales of Duracade corn seed in Canada because the GMO trait has yet to be approved by China and the European Union. The company says "arrangements for immediate returns will be made" for Duracade corn seed. While the U.S. faces the same potential trade hurdles with Duracade corn, the company has said it has no plans to halt commercial sales here.

China expands crop insurance... China is now the world's second largest agricultural insurance market behind the U.S., according to the head of the China Insurance Regulatory Commission (CIRC). In 2013, crop insurance covered 73.33 million hectares (181.2 million acres) in China -- 45% of the country's planted acres) -- provided 1.4 trillion yuan ($230 billion) of risk protection, paid out 20.9 billion yuan ($3.4 billion) and benefited 33.67 million farmers. CIRC say it will continue to promote crop insurance coverage, enhance supervision over the business and strictly implement agricultural insurance rules in the future.

China moving to further increase the role of the free market as part of its economic overhaul... China said it will allow the creation of five privately-owned banks on a trial basis. Alibaba Group plans to apply for a bank license in partnership with China Wanxiang Holding. Also, the People's Bank of China plans to liberalize deposit rates in one to two years.

South Korea opens markets to Canadian beef, pork... After years of negotiations, South Korea and Canada are set to announce today a free trade agreement (FTA) that would open the South Korean market to Canadian beef and pork. South Korea will reportedly remove the 40% tariff on Canadian beef within 15 years and eliminate the 22.5% to 25% tariff on Canadian pork within 13 years. In exchange, Canada will phase out tariffs on South Korean auto imports. Beef had been a sticking point in the talks which started in 2005. The South Korean ban on imports of Canadian beef in 2008 chilled the talks and they gained speed in 2012 once South Korea lifted the ban. South Korea will gain quicker access to the Canadian auto market, with the tariff to be phased out over three years, two years shorter than the U.S.-Korea FTA. The trade deal, seen taking effect in 2015, is also being eyed by South Korea as a potential springboard to join the Trans Pacific Partnership (TPP) talks, something the Seoul government would like to see.

Groups agree to curb antibiotics use in livestock... Groups representing manufacturers of animal drugs announced a commitment to FDA’s guidelines aimed at curbing antibiotics use in livestock, meeting the mid-March deadline set by the agency. The Animal Health Institute and the Generic Animal Drug Alliance announced they had submitted written commitments to FDA, saying they would adhere to the voluntary guidance by removing any claims of growth promotion from their product labels. The agency also issued a proposed rule that would overhaul the veterinary feed directive, which created a new category of antibiotics allowed in animal feed. The proposed rule would allow states to establish the criteria for how veterinarians oversee antibiotic usage. The agency has given the industry three years to phase them in. Once the manufacturers make the changes to their labels, it will be illegal to use the drugs for any purpose not listed. Critics have noted that livestock antibiotics often have two label claims -- one for growth promotion and one for therapeutic uses. Removing the growth promotion claim will mean that they adhere to the FDA’s guidance, but can still use the drugs for preventative uses. Industry executives have previously said they do not expect any impact on sales.

Wholesale beef prices strengthen... Boxed beef prices continued higher Monday, with Choice values firming $2.88 and Select rising $3.12, though movement was light at 105 loads. While the $2 drop in cash cattle prices in the Plains last week suggests the cash market has posted a short-term top, the product market has so far shown no signs of topping.

Pork price rally continues... The pork cutout value surged another $2.42 Monday as all cuts except hams, which firmed "only" 20 cents, posted strong gains. While movement was relatively light at 218 loads, the strong price gains keep packer margins in the black. That will be plenty of incentive for packers to keep cash hog bids steady to firmer across the Midwest as they continue to compete for market-ready supplies.

Overnight demand news... South Korea tendered to buy 60,000 MT of optional origin corn. Japan is seeking 126,814 MT of wheat in its weekly tender.


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