First Thing Today (VIP) -- March 18, 2014

March 18, 2014 01:34 AM

Good morning!

Short covering lifts grain futures overnight... Corn and wheat futures are enjoying some mild short-covering this morning, which is helping most contracts post gains around 2 to 4 cents. Soybean futures continue to see some bull spreading activity. Old-crop futures are up 6 to 12 cents while deferred months are mixed. Crude oil and the U.S. dollar index are mildly favoring the upside, while gold futures are slightly lower.

South American shipping woes continue... A soybean cargo ship that ran aground 10 days ago at the Rosario port, one of Argentina's main shipping hubs, has disrupted exports longer than anticipated. Efforts to lighten the cargo so that it can be freed will continue until at least Wednesday, according to the manager of the port chamber. Lightening the ship was originally expected to take just 72 hours. Meanwhile, workers at the port continue to threaten a strike if wage negotiations are not underway by March 25.

Vladimir Putin has authorized a draft treaty for Crimea to join Russia... Putin has formally notified his country's parliament of the Ukrainian province's request in that regard. The actions follow Putin signing a decree yesterday that recognizes Crimea's independence, which has allowed negotiations on annexation to start. Putin is due to address parliament later today. Meanwhile, several U.S. lawmakers want the White House sanctions on Russia to be more robust, with Senator John McCain (R-Ariz.) urging food aid for eastern Ukraine. Discussion on Capitol Hill includes legislation that would allow the White House to sanction any foreign firm doing business with any blacklisted Russian company or individual. The current sanctions only apply to American entities.

U.S. inflation data coming today... Analysts predict inflation fell to 1.2% on year in February from 1.6% in January. The figures will come as the Federal Open Market Committee (FOMC) convenes for its first meeting with Janet Yellen as Chair of the Fed. Policy makers are expected to trim another $10 billion from the bank's Quantitative Easing (QE) program, while they could also abandon the 6.5% unemployment trigger for considering a rate hike and link policy to a range of economic indicators instead. Meanwhile, today's Wall Street Journal includes a front-page item about the rise of food prices both in the U.S. and world.

Winter wheat condition ratings worsen... Winter wheat condition ratings continued their decline over the past week, as the crop is breaking dormancy under drought conditions. In addition, central Kansas has seen some of the crop eliminated via winterkill. Twenty percent of the Kansas winter wheat crop is now rated "poor" to "very poor," which is up 2 percentage points from the week prior. Texas saw a major decline in conditions the week ended March 17, as just 13% of the crop is now rated in "good" to "excellent" condition, versus 28% last week. More than half the crop (52%) is now rated in the bottom two categories, versus 31% last week. Winter wheat crop conditions declined in Oklahoma as well; 37% of the state's crop is now rated "poor" to "very poor," which is up 6 percentage points from week-ago.

Chinese soybean demand remains strong... China is likely to import 5.25 MMT of soybeans in March, according to the nation's ministry of commerce. This represents a 50% increase from its previous forecast of 3.49 MMT. The ministry estimates soybean imports for February totaled 4.3 MMT. This sign of still-strong demand could ease concerns about bird flu and negative crushing margins slowing feed demand.

Firm ups Russian grain export forecast on lower competition from Ukraine & weaker ruble... SovEcon, a Russian analytical firm, has increased its 2013-14 grain export forecast for the country to a range of 24.0 MMT to 24.4 MMT. Previously, the firm expected grain exports of 23.1 MMT. SovEcon cited less competition from Ukraine and a weaker currency for the higher forecast. SovEcon expects wheat exports to tally between 17.4 MMT and 17.8 MMT, which compares to its previous forecast for 16.5 MMT in wheat exports. The firm expects corn exports to tally 3.8 MMT, up 300,000 MT from its prior estimate.

Study questions fat and heart disease link... A large and exhaustive new analysis by a team of international scientists found no evidence that eating saturated fat increased heart attacks and other cardiac events. The research, published on Monday in the journal Annals of Internal Medicine, did not find that people who ate higher levels of saturated fat had more heart disease than those who ate less. Nor did it find less disease in those eating higher amounts of unsaturated fat, including monounsaturated fat like olive oil or polyunsaturated fat like corn oil. "My take on this would be that it’s not saturated fat that we should worry about" in our diets, said Dr. Rajiv Chowdhury, the lead author of the new study and a cardiovascular epidemiologist in the department of public health and primary care at Cambridge University, in remarks cited by the New York Times.

China's cotton stockpiling efforts slow as supplies dwindle... China's state cotton stockpiler last week purchased its lowest volume of cotton since the start of the season at just 91,360 MT, as available supplies are diminishing. The nation plans to wind down its stockpiling program this year following a three-year period and a test of a new system using direct subsidies for growers in the nation's top cotton producing region.

Cattle traders on watch for a market top... Choice boxed beef values surged $2.41 to notch another record high of $242.85 per cwt. yesterday. But with movement taking a hit, traders remain watchful for a top. The same can be said for the cash market. While trade took place at steady to higher prices last week, traders have shown little urgency to narrow the discount April live cattle hold to the cash index. Tighter showlist estimates and record-high beef prices would typically give feedlots the advantage in cash cattle trade negotiations, but traders are not convinced that will be the case this week.

Record-high pork still a value... Record-high beef prices have helped the pork market to post all-time highs of its own as prices remain a bargain relative to beef. Meanwhile, the lean hog market got off to another impressive start yesterday with most contracts gapping higher on the open and posting new contract highs. While a time or price correction is overdue according to the Relative Strength Index, any price pullbacks have been followed by a surge in value buying. This is making traders hesitant toward the short side of the market.

Overnight demand news... Egypt tendered for an unspecified amount of soft and/or milling wheat from global suppliers. South Korea purchased 193,000 MT of corn, with 125,000 MT to be sourced from the U.S. and the remainder to be sourced from either the U.S. or South America.

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