First Thing Today (VIP) -- March 22, 2013

March 22, 2013 01:41 AM


LIGHT PROFIT-TAKING OVERNIGHT... Grain and soy futures traded in a narrow range during the overnight session and most contracts are currently trading in the lower end of it. Corn futures are roughly 1 to 3 cents lower, with wheat futures posting similar losses. Soybeans have moved off their lows to trade just 1 to 4 cents lower. The U.S. dollar index is under light pressure.

HEARINGS, LEGISLATIVE INITIATIVES AHEAD FOR ETHANOL/RFS MANDATE... Charges and counter-chargers are escalating in the ethanol policy arena among industry groups, refiner and renewable fuel firms, and lawmakers on both sides of the impending ethanol blend, which some say is driving up RIN prices for refiners and forcing some production facilities to close. The Environmental Protection Agency (EPA) must finalize fuel standard blending requirements for 2013, with sources expecting no major changes from its initial announcement. However, there is a growing belief that Congress will visit the matter regarding the 2014 ethanol mandate, with hearings expected shortly after lawmakers return from the Easter recess. The introduction of several legislative initiatives on the matter is fully expected.

NEGOTIATORS AVERT A BRAZIL PORT STRIKE... Brazilian government representatives and union leaders averted a possible strike Monday at the country's biggest port, Santos, as the sides resolved disagreements regarding a recent change to port operation rules. The new rules would allow privately owned ports and operators to hire non-union workers and would permit such ports to operate under rules that would lower the costs for such exporters relative to the expenses of public ports. The terms of the agreement are not yet available.

CHINESE SOYBEAN IMPORTS SLOW DUE TO BRAZIL SHIPPING ISSUES... China's soybean imports may fall below 4.5 MMT for April as a result of port congestion in Brazil that has resulted in major shipping delays, according to an executive at Chinatex Grain & Oils Company. This compares to market expectations for around 5 MMT in imports and monthly crushing needs of 4.8 MMT, according to the executive. China National Grain & Oils Information Center recently forecast that soybean imports in March will total just 3.77 MMT.

ARGY GOVT EXPECTS BUMPER CORN & BEAN CROPS... Argentina's ag ministry yesterday issued its first forecast for the 2012-13 bean crop. It expects production of 51.3 MMT, which would be a 28% increase from the year prior and would be near record-highs. The ministry noted that rain in February provided relief to the dry soy crop. Its soy crop estimate is higher than that of most private firms, but it is in line with USDA's latest production estimate of 51.5 MMT.

The ministry pegged corn production for 2012-13 at a record-high 25.7 MMT, which would be a 21.2% increase over the previous marketing year. Earlier this month, USDA forecast an Argentine corn crop of 26.5 MMT. Following the release of its bumper crop estimate for corn, Argentina's government approved an additional 2 MMT of corn for export in 2012-13, bringing the total quota to 17 MMT.

ANALYST: UKRAINE GRAIN EXPORTS OF 27 MMT POSSIBLE... Ukraine may raise its grain export forecast for 2013-14 by 26% to 27 MMT due to expectations for a record-large crop in excess of 53 MMT, according to an analyst at UkrAgroConsult. On Wednesday, the country's ag ministry increased its grain export forecast to 24.5 MMT. The analyst details that wheat exports could rise by 2.25 MMT from year-ago to 8.75 MMT in 2013-14 and that corn exports could rise by 2.5 MMT to 15 MMT.

CHINA REMOVES BAN ON AUSTRALIAN CANOLA IMPORTS... China has agreed to permit imports of Australian canola under specific conditions, according to an Australian feed group. This decision would overturn a three-year ban stemming from concerns about a 2009 fungal disease in some Australian crops. The change is effective immediately, according to the executive director at the Australian Oilseeds Federation.

INFORMA TO UPDATE 2013 ACREAGE ESTIMATES... Informa Economics will update its 2013 acreage estimates at 10:30 a.m. CT today. These projections are based on the firm's early March survey and will include U.S. production implications for the 2013 crop year.

CATTLE ON FEED REPORT OUT THIS AFTERNOON... USDA's monthly look at feedlot activity is expected to show all categories below year-ago levels. Pre-report expectations call for USDA to peg On Feed at 93.5% of year-ago levels, Placements at 91% and Marketings at 92.7% of last year. Placements will again be the wildcard category, as expectations covered a 10-percentage point range.

SELECT BOXED BEEF VALUES TOP CHOICE PRICES... Boxed beef prices were mixed yesterday with Choice cuts down 43 cents and Select values up 21 cents. Notably, this moved Select values to a premium 26-cent premium to high-quality cuts. Sluggish boxed beef action encouraged additional light cash cattle trade in Texas yesterday at $124 to $125, which is steady with action earlier in the week, but down from the week prior. This could set the stage for some profit-taking today as traders move to the sidelines ahead of the Cattle on Feed Report and the weekend.

PORK PRICES JUMP, BUT MOVEMENT SLOWS... The pork cutout value rebounded $1.09 yesterday, though the firmer prices slowed movement to just 34.13 loads. Until both movement and prices improve for the product market, cash hog demand will be limited. Also pointing to cash market weakness, plants are bought ahead for what will be a holiday-shortened week for some.

OVERNIGHT DEMAND NEWS... Japan bought 37,188 MT of food wheat and 30,000 MT of food barely in a simultaneous buy-and-sell tender. The United Arab Emirates is tendering for 20,000 MT of corn and 20,000 MT of feed barley. South Korea rejected all offers and made no purchase after seeking 55,000 MT of feed wheat.

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