First Thing Today (VIP) -- March 20, 2014

06:41AM Mar 20, 2014
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Good morning!

Corn and wheat lower, beans mixed this morning... As of 6:30 a.m. CT, corn futures are trading mostly 2 to 3 cents lower, soybeans are narrowly mixed amid light bull spreading, SRW wheat futures are 4 to 9 cents lower, while HRW and HRS wheat futures are mostly 1 to 3 cents lower. A firmer U.S. dollar index is weighing on grains this morning.

China reselling South American soybeans to United States... Chinese soybean importers are working to resell cargoes of South American beans they purchased for spring delivery to the United States. Bloomberg reported Wednesday that Shandong Sunrise Grain and Oil Trading Ltd., China's top soybean importer, had resold three soybean cargoes to the U.S. and was looking for buyers of three more. Today, Reuters reports price is still being negotiated, but a leading Chinese soybean importer is hopeful of reselling about 360,000 MT (six cargoes) of South American beans to U.S. buyers. It's likely this is the same business, though Reuters didn't report the name of the Chinese importer involved in the negotiations.

Japan lowers feed wheat import forecast as corn use rises... Japan's ag ministry expects the country to import 900,000 MT of feed wheat in 2014-15 (April-March), down from its 1.07-MMT forecast for 2013-14. The ministry says lower corn prices are causing a pickup in corn use, lowering the need for feed wheat imports. In January, Japan's corn use in feed rations rose to 45.7% from 45.2% in December and 42.2% in January 2013.

Firm raises EU wheat export forecast... Private firm Strategie Grains raised its 2013-14 EU wheat export forecast by 1.3 MMT to a record 25.6 MMT amid strong exports from Romania, Germany and Poland. The firm sees better export potential because of the uncertainty in Ukraine. Strategie Grains also raised its 2014-15 EU wheat export forecast by 700,000 MT to 22.4 MMT because of the uncertainty in the Black Sea region.

Weekly export sales out this morning... For the week ended March 13, traders expect: corn sales between 400,000 and 700,000 MT; wheat sales between 250,000 and 500,000 MT; soybeans sales between -100,000 and 300,000 MT; soymeal sales between 100,000 and 200,000 MT; and soyoil sales between 0 and 50,000 MT.

Tax-break renewals, including expired biodiesel tax incentive, to get vote soon on Senate Finance Committee... The Senate Finance Committee could vote during the week of March 31 to revive dozens of tax breaks that expired at the end of 2013, congressional sources advise. The breaks include the research and development credit and a provision that lets companies defer U.S. taxes on some of their foreign income. Other expired breaks include the biodiesel tax incentive, production tax credit for wind energy and a tax credit for manufacturers of energy-efficient appliances. The panel has not decided whether to extend the breaks through the end of 2014 or 2015. The coming proposal will likely exclude or adjust some of the 55 breaks. But hurdles are still ahead, with Senate passage not assured. Meanwhile, House Republicans have said they won't consider a short-term extension of the breaks. A one-year extension would cost the government $46 billion to $47 billion in revenue.

The Federal Reserve will release results of its annual stress test on 30 banks today... Most are expected to pass. If the banks, which include JPMorgan, Citigroup and Morgan Stanley, are found wanting, they will have a few days to alter any plans to return money to shareholders. The Fed next week will say whether it will approve firms' dividend and/or stock-buyback programs.

Wholesale beef prices decline, but movement improves... Choice boxed beef prices were 71 cents lower Wednesday while Select boxes dropped 92 cents. However, movement improved to 194 loads on the price weakness. Unless wholesale beef prices plunge, packers are expected to eventually pay steady to higher prices for cash cattle in the Plains, though active trade may not be seen until after Friday afternoon's Cattle on Feed Report.

Pork demand remains strong... A modest 27-cent drop yesterday in the pork cutout value from Tuesday's record high caused movement to rise to 400.18 loads. That signals there's still plenty of retailer pork demand despite historically high prices. As long as retailer demand remains strong, packers won't have to dramatically lower prices to actively move product.

Overnight demand news... Taiwan passed on a tender to buy 20,000 MT of U.S. corn and 15,000 MT of U.S. soybeans. Bangladesh tendered to buy 50,000 MT of optional origin wheat. India tendered to export 35,000 MT of wheat.