First Thing Today (VIP) -- March 24, 2014

March 24, 2014 01:06 AM

Good morning!

Grains firmer this morning... Overnight trade in grain and soy futures was volatile. As of 6:30 a.m. CT, corn futures are trading 2 to 4 cents higher, soybeans are fractionally to 5 cents higher in most contracts and wheat futures are 5 to 9 cents higher. The U.S. dollar index is firmer this morning.

Ukraine aid, Russia sanctions and FY 2015 budget hearings highlight the week in Washington... The House and Senate return from their latest break, with key issues including a Ukraine aid package, including sanctions on Russia. The chambers must resolve differences on these matters. Meanwhile, a host of hearings regarding the Fiscal Year 2015 budget will take place during the week. President Obama will spend most of the week overseas.

Russia-Ukraine update... During his trip to Europe this week, President Obama will meet with other leaders of the G7 -- Canada, the United Kingdom, France, Germany and Japan -- in an effort to further strengthen the West’s response to Russian President Vladimir Putin and to support Ukraine. For now,the White House wants Congress to pass $1 billion in loan guarantees to Ukraine. The Senate is slated to vote on its package when it returns today. On Saturday, Russia overtook another Ukrainian military base in Crimea. Russian troops have also remained along its border with Ukraine. On Friday, the government in Kiev signed a political association agreement with the European Union, committing Ukraine to tighter political and economic cooperation with the rest of Europe. Meanwhile, Visa and MasterCard have restarted processing payment transactions for customers of a Russian bank linked to oligarchs blacklisted by the U.S. government on Thursday, March 20. Visa said it made the change based on clarifications provided by the U.S. government.

Russian grain exports remain strong... From July 1 through March 19, Russia exported 19.786 MMT of grain, a 40.8% increase over year-ago. Of that total, wheat accounted for 14.584 MMT and corn exports were 2.902 MMT. Russia's ag ministry forecasts 2013-14 grain exports at 22 MMT versus 15.69 MMT in 2012-13.

China rejects another cargo of U.S. corn... China has rejected a 21,800-MT cargo of U.S. corn because it contained unapproved MIR 162 (Syngenta's Viptera) corn, according to Xinhua news agency citing quarantine authorities in China's Tianjin municipality. Due to ongoing rejections of U.S. corn by China, this news is no longer a price shock to the market.

China's manufacturing sector continues to weaken... Preliminary data show China's manufacturing sector slowed to an eight-month low this month. HSBC's flash purchasing managers' index (PMI) for March dropped to 48.1 from a final reading of 48.5 in February. HSBC data indicate output and new orders continued to decline, but new export orders were up for the first time in four months.

China cuts floor price for cotton sales... China will reduce the minimum price domestic mills can buy cotton auctioned from state-owned reserves in an attempt to move more of the government's massive stockpiles. Starting April 1, bids for standard-quality cotton held in state reserves will start at 17,250 yuan (around $2775) per ton, down from the current minimum price of 18,000 yuan (around $2900) per ton, according to the China Cotton Association.

COF data negative for deferred futures... The number of cattle placed into feedlots last month topped year-ago by 15%, which was well above the average pre-report estimate. That's the second straight month placements have greatly topped year-ago, suggesting there will a bigger supply of market-ready cattle during the third quarter. While the placements category was negative compared to the average pre-report guess, the overall feedlot inventory and marketings came in as expected.

Cash hogs called steady/firmer... Packers come into the week in need of hogs. In addition, they are working with profitable margins. As a result, cash hog bids are expected to be steady to firmer across the Midwest to open the week.

Weekend demand news... Taiwan tendered to buy up to 60,000 MT of corn from the U.S., Brazil or Argentina.


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