First Thing Today (VIP) -- March 19, 2014

March 19, 2014 01:33 AM

Good morning!

Soybeans continue their rebound... Corn futures saw two-sided trade overnight, but as of 6:30 a.m. CT most contracts are posting losses of 1 to 2 cents. Wheat futures are also seeing some mild profit-taking, with SRW wheat down 2 to 4 cents and HRW wheat around a penny lower. HRS wheat has held onto 1- to 2-cent gains. Soybeans, on the other hand, saw strong followthrough buys during the overnight session and are up 13 to 16 cents in old-crop futures, while new-crop contracts are 5 to 9 cents higher. Outside markets were subdued overnight, with the U.S. dollar index and crude oil futures chopping around unchanged.

Keys for the FOMC conclusion today... The end of the two-day Federal Open Market Committee (FOMC) meeting this afternoon will mark the first with Janet Yellen at the helm. Important factors to watch today include how the Fed shifts its post-meeting statement, particularly relative to the forward guidance on interest rates and whether the Fed alters or jettison's mention of its 6.5% unemployment target. Updated economic forecasts will also be issued and those will shed light on how Fed members see the economy playing out in the months to come, including their expectations of when the Fed funds rate is expected to move up from its current 0% to 0.25% mark. And the Yellen press briefing after the meeting will give yet another reading on where the Fed sees the economy.

USTR Froman: U.S. insisting on agriculture access from Japan, Canada in TPP... The U.S. is insisting on agriculture market access from Japan and Canada prior to sealing a deal on the Trans-Pacific Partnership (TPP) agreement, U.S. Trade Representative Michael Froman said. "The fact that we don't have a TPP agreement right now is tied to the fact that we are insisting on agricultural access both from Japan and from Canada," Froman said at the Atlantic Annual Economy Summit. "We're very much focused on achieving those before we can come back with an agreement that we feel comfortable selling to the American people and to stakeholders." Froman declined to say whether the agreement could be concluded prior to President Barack Obama's trip to Asia in April, noting the substance of the talks would determine the timetable. Japan is seeking exemptions from the TPP goal of tariff elimination in five product areas — meat, dairy, sugar, wheat and rice — covering 600 tariff lines. Froman did not go into details regarding Canada's supply management system, which imposes limitations on production of milk, cheese, eggs and poultry by means of a government-provided quota to support prices.

Canadian shipping backlogs improve, more improvement needed... Grain railway shipments have picked up since the Canadian government ordered the nation's two largest railways to double their shipments to 5,500 cars a week, each, or face big fines, according to Canadian National Railway Co. (the country's largest railway) and Western Grain Elevator Association. A spokesman for Canadian National says it spotted an average 4,320 grain hopper cars per week at country elevators the past two weeks compared to 2,964 cars in February. The railway is working to add 500 more hopper and plans to continue spotting more than 4,000 cars per week until the Port of Thunder Bay in Ontario opens in early April. At that point, the spokesman says the railway will be able to move toward the government's target -- so long as grain companies collaborate. The other major railway has not commented on the number of cars it has deployed, though it did note it is transporting record grain volume. On March 7, The government gave the railways four weeks to reach the aforementioned target. Reuters reports Canadian Ag Minister Gerry Ritz remains unsatisfied. He says rail service is still not keeping pace with demand.

China booking Ukraine corn under 2012 export deal... Feed mills in China recently booked roughly 110,000 MT of Ukrainian corn as part of the loan-for-grain deal the nations signed in 2012. Not counting the latest commitment, Ukraine has shipped 163,550 MT to China since late last year, according to China National Complete Engineering Corp., which signed the $3 billion deal. This follows news late last week that Ukraine exported its first ever shipment of barley (1,500 MT) to China under the export agreement.

Swiss trading firm to acquire physical commodity side of JPMorgan... U.S. investment bank JPMorgan has agreed to sell its physical commodity business to Mercuria, a Swiss trade house, Reuters reports, citing a source close to the deal. The terms of the deal are unknown. But when the bank opened the door to a buyers this fall, its assets were valued at $3.3 billion.

De ja vu? More dead pigs found in Chinese river... At least 131 dead pigs have been pulled out of a section of the Ganjiang River in China over the weekend. Authorities say they believe the pigs were dumped into the river near Jiaxing, and then flowed downstream. The river provides drinking water to the province's capital, but examination of the city's water intake reveals tap water is safe for consumption, according to the city's municipal government information office. In March 2013, thousands of dead pigs were discovered in the Huangpu River in Shanghai.

Cattle traders brushing off bullish fundamentals... Choice and Select boxed beef cuts firmed more than $1.00 yesterday and movement picked up a bit to 100 loads. Meanwhile, the Wall Street Journal has noted that beef prices saw their largest monthly change in February in more than a decade -- since the November 2003, when mad cow disease fears shot prices higher. But despite lofty beef prices and tighter showlist estimates, traders have shown tepid interest in aligning futures with last week's cash prices. This is a clear signal they believe a top is in place or near.

Attitudes remain strongly bullish in the lean hog market... While lean hog futures remain vulnerable to a correction at any time, few are willing to take on short positions with the market rallying to new contract highs, again and again. An impressive $3.55 leap in the pork cutout value yesterday could add fuel to bulls' fire, especially considering movement improved to 281.65 loads. Meanwhile, packers have seen margins strengthen this week, keeping demand strong.

Overnight demand news... Japan received no bids in its weekly tender for 120,000 MT of feed wheat or 200,000 MT of feed barley. The country did buy 118,795 MT of food quality wheat from the U.S. and Australia. Taiwan made no purchase in its tender for 60,000 MT of corn.

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