First Thing Today (VIP) -- March 17, 2014

March 17, 2014 01:08 AM
 

Good morning!

Price pressure overnight... Grain markets had a sell-the-fact reaction to Crimea's vote to break away from Ukraine and join Russia, as this was widely expected. As of o6:30 a.m. CT, corn futures are trading 6 to 8 cents lower, soybeans are 8 to 11 cents lower in old-crop contracts and 4 to 5 cents lower in new-crop contracts, SRW wheat futures are 12 to 13 cents lower, HRW wheat futures are 4 to 8 cents lower and HRS wheat futures are 2 to 10 cents lower. The U.S. dollar index is mildly firmer this morning.

Key questions ahead as Crimea votes to secede from Ukraine... Crimea's parliament passed a vote to proclaim the region an independent state after an overwhelming majority of residents voted to break away from Ukraine and rejoin Russia. Next questions include (1) Will Russia officially annex Crimea? (2) Will Russia extend its moves beyond Crimea? (3) Will Sen. John McCain's (R-Ariz.) call for military funding (not troops) aid to Ukraine escalate tension? (4) What will be the impact of threatened financial sanctions on Russia, and will others like China react to the use of such sanctions in future and existing asset dealings with the West?

Washington shut down for fifth time this winter due to another snowstorm... The House and Senate are in recess, but there are a few field hearings, including one regarding the California drought. Snowfall in the Washington area could impact the timing of some reports and events, as the Washington, D.C. area is closed for the day. The week opens with a major focus on the Crimea referendum. The potential for tensions to intensify is evident. Wednesday will be an economic focal point for the week as that’s the conclusion of the Federal Open Market Committee (FOMC) meeting. It will also mark the first press conference for Fed Chairwoman Janet Yellen, so that will keep markets occupied at midweek. For agriculture, more data will come on winter wheat conditions as Colorado is scheduled to release its crop and weather observations today. The situation with Ukraine continues as another watch point for wheat futures in particular, with any additional actions by China on soybeans or any crop updates from South America also potential factors that traders will watch. USDA will release its Cattle on Feed and Cold Storage Reports Friday afternoon.

NOPA report to show drop in crush pace... NOPA members are expected to report soybean crush totaled 140.9 million bu. in February. That would be 10.2% less than January, but 3.4% above year-ago and the biggest February crush figure in four years. Soyoil stocks are guessed at 1.870 billion pounds.

Chinese cotton imports slowed in February... China imported 246,100 MT of cotton in February, according to the China Cotton Association citing customs data. That was down 15.9% from January and 35% less than February 2013. Chinese cotton imports the first two months this year are down 35.6% from year-ago.

Smithfield halts Friday hog kills as North Carolina plant... Smithfield Foods announced it has suspended Friday hog kills at its Tar Heel, North Carolina, pork plant due to reduced supplies because of porcine epidemic diarrhea virus (PEDV). The company didn't indicate how long the elimination of Friday kills will last, but with PEDV cases continuing to rise, it's likely to be awhile before the plant returns to a full kill schedule. And kill schedule reductions at other U.S. pork processing plants are expected.

Bullish cash cattle hopes... After steady to firmer cash cattle trade in the Plains last week, traders start this week expecting a similar price trend. That should be price-supportive for live cattle futures as they are trading below the cash market. But traders may be reluctant to push futures too aggressively as there is a general expectation that the cash and product markets will soon post short-term tops.

Cash hogs called steady/firmer... The combination of strong cutting margins and tight market-ready supplies will keep packer demand strong for cash hogs. As a result, cash hog bids are expected to be steady to firmer across the Midwest to open the week.

Weekend demand news... Exporters reported no tenders or purchases.

 

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