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First Thing Today (VIP) -- March 25, 2013

06:04AM Mar 25, 2013


GRAINS MOSTLY WEAKER... As of 6:30 a.m. CT, corn futures are fractionally to 2 cents lower through the March contract, soybeans are 6 to 9 cents lower through the August contract while new-crop contracts are mixed and wheat futures are fractionally to 2 cents lower at all three exchanges. The U.S. dollar index is modestly weaker this morning.

CONGRESS ON TWO-WEEK EASTER RECESS; USDA REPORTS TAKE FOCUS... Both the House and Senate are on their spring recesses -- the Senate returns April 8 and the House on April 9. For agriculture, Thursday will be the major focus with the release of the Prospective Plantings and Quarterly Grain Stocks Reports. USDA will also release the Quarterly Hogs & Pigs Report Thursday. On the economic front, several Federal Reserve officials, including Fed Chairman Ben Bernanke, give speeches this week and GDP data will be released Thursday. Markets are closed for Good Friday. The government will be open that day, but little activity is expected in Washington.

FREEZE WARNINGS FOR PARTS OF SOUTHERN PLAINS... Areas of Texas and Oklahoma are under freeze warnings this morning, though it appears the heaviest HRW production areas will avoid the coldest temps. Another blast of sub-freezing overnight temps is forecast through the Central and Southern Plains tonight. With the HRW crop greening up, it's susceptible to freeze damage if temps drop low enough for long enough.

REFINERS URGE EPA TO REDUCE AMOUNT OF RENEWABLE FUEL UNDER MANDATES... Refiners are urging the Environmental Protection Agency (EPA) to reduce the amount of renewable fuel required under blending mandates for 2013 and 2014 to avoid hitting the so-called ethanol blend wall. EPA will finalize its 2013 renewable fuel standard (RFS) volume requirements this summer, with expectations of no change in the corn-based mandate. An EPA spokeswoman said the agency is still reviewing comments on the proposal. EPA predicted in the proposed rule that there would be sufficient renewable fuel credits to meet the 2013 standard. The 2014 mandate level will be a focus of this Congress, with hearings expected as soon as April. No formal petition to EPA has been filed by refiners, but American Fuel & Petrochemical Manufacturers President Charles Drevna said the industry is "going to look at all options." "If recent events have told us anything, it's the RFS needs to change sooner rather than later," Drevna said.

SENATOR WRITES EPA ABOUT SURGE IN RIN PRICES AND BLEND WALL... Sen. Ron Wyden (D-Ore.), chairman of the Senate’s Energy and Natural Resources Committee, sent EPA a letter March 22 asking the agency about the recent surge in RIN prices, saying the increases were most pronounced on the East and West coasts. He requested EPA data on recent high volume trades or unusually large trades made between Feb. 19 and March 14. He also asked for information about the 10 largest RIN holders who are not obligated parties under the renewable fuels standard. Wyden also asked EPA about the blend wall, including how much E15 and E85 consumers actually purchased through the first months of 2013 and how retailers would need to modify their equipment to sell higher ethanol blends.

BULLISH CATTLE ON FEED REPORT... Last Friday's Cattle on Feed Report was bullish with all three categories coming in on the friendly side of the pre-report guesses. Deferred live cattle futures should get the biggest price boost, as the number of cattle placed in feedlots last month was the lowest for the month since USDA's data set began in 1996. A strong bullish reaction to the report is needed for live cattle futures to put in a short-term low.

LIMITED DEMAND FOR CASH HOGS... Most pork plants are well bought ahead on slaughter needs given a reduced holiday kill schedule this week. As a result, demand for cash hogs will be limited and cash sources are expecting packers to offer steady to weaker cash hog bids to open the week.

WEEKEND DEMAND NEWS... China purchased 300,000 MT of Australian canola. The United Arab Emirates bought 40,000 MT of corn (likely South American origin). Indonesia purchased 30,000 MT of Australian wheat.