First Thing Today (VIP) -- March 25, 2014

March 25, 2014 01:10 AM

Good morning!

Mild profit-taking overnight... As of 6:30 a.m. CT, corn and soybean futures are trading 1 to 3 cents lower, while wheat futures are mostly 4 to 7 cents lower. The U.S. dollar index is mildly firmer this morning, which is helping encourage grain traders to take some profits following yesterday's price gains.

HRW crop ratings continue to decline... The condition of the HRW crop in the Southern Plains declined further in the latest week, with state reports noting the need for widespread precip to improve soil moisture. In Kansas, the HRW crop is now rated 21% "poor" to "very poor" and 33% "good" to "excellent," up two percentage points in the bottom two categories and down one point in the top two. The Oklahoma crop is now rated 42% "poor" to "very poor" and 17% "good" to "excellent," up five points and down one point, respectively. In Texas, the crop is now rated 55% "poor" to "very poor" and 11% "good" to "excellent," up three points in the bottom two categories and down three points in the top two. Click here for more details from the individual state reports.

Aussie scientists: El Nino chances increase... Conditions remain ENSO-neutral, but odds of El Nino developing are increasing, with most models showing sea surface temperatures reaching El Nino thresholds during the southern hemisphere winter (our summer), according to the Australian Bureau of Meteorology. In its latest update, the bureau says, "Observations indicate the tropical Pacific Ocean is currently warming. Following two strong westerly wind bursts since the start of the year, waters below the surface of the tropical Pacific have warmed significantly over the past two months. This has led to some warming at the surface, with further warming expected in the coming weeks. The Southern Oscillation Index (SOI) has dropped to –13 -- the lowest 30-day value since March 2010 -- but would need to remain firmly negative for several weeks to indicate the atmosphere and ocean are reinforcing each other."

Informa to release planted acreage estimates this morning... Informa Economics will update its 2014 U.S. planted acreage estimates at 10:30 a.m. CT. The acreage numbers are based on Informa’s mid-March survey. U.S. production implications for the 2014 crop year will be included. USDA will release March planting intentions next Monday.

Firm raises Russian grain crop forecast... Private firm SovEcon raised its 2014 Russian grain crop forecast to 88 MMT from 86 MMT previously, though that would still be down from last year's 92-MMT crop. SovEcon forecasts 2014-15 (July-June) grain exports at 22 MMT, down from its estimate of 24.1 MMT for the current marketing year.

Groups ask Finance panel to retroactively extend tax incentives... The Senate Finance Committee should retroactively extend several expired alternative fuel credits as it plans to mark up tax extenders legislation, several renewable fuel industry groups wrote in a letter to committee leaders. The March 24 letter to Finance Committee Chairman Ron Wyden (D-Ore.) and ranking member Orrin Hatch (R-Utah) requested extension of the Second Generation Biofuel Producer Tax Credit, the Special Depreciation Allowance for Second Generation Biofuel Plant Property, the Biodiesel and Renewable Diesel Fuels Credit, and the Alternative Fuel and Alternative Fuel Mixture Excise Tax Credit. Those credits include a $1-per-gallon credit for biodiesel and renewable diesel, a $1.01-per gallon credit for cellulosic, or "second generation" biofuels, and a 50-cent per gallon credit for other kinds of alternative fuels, such as liquid fuel from biomass, and compressed or liquefied petroleum. The letter comes as the Senate Finance Committee plans an early April markup to consider legislation to extend dozens of tax breaks that expired at the end of 2013. Meanwhile, the top House tax writer told colleagues on Monday that he plans to seek a "permanent" fix to the dozens of expired tax provisions, potentially increasing momentum for work on the package of temporary breaks known as tax extenders.

U.S. to press China to allow yuan to rise more quickly... The U.S. continues to urge China to let its currency rise further and faster, U.S. Trade Representative Michael Froman said. China has allowed the yuan to rise in response to pressure from the Obama administration and the U.S. Treasury Department, but the moves are not far enough or fast enough, Froman said. He said the U.S. will use several venues to push China to become more market-oriented and open its economy. Trade negotiations on this "key economic relationship" will be accompanied by other measures when necessary and the U.S. will keep using World Trade Organization cases, he said. "We continue to use our enforcement measures to assure that our trade laws and our trade agreements are fully enforced," Froman said.

Wholesale beef prices holding strong... Choice boxed beef prices were 96 cents higher Monday, while Select boxes firmed $2.27. If wholesale beef prices are able to hold near their recent all-time highs, packers may be willing to pay up for cash cattle as market-ready supplies remain tight. Showlist estimates this week are a little tighter in Nebraska and Colorado, while available supplies are thought to be a little bigger in Kansas and Texas.

Sluggish pork movement... Packers moved only 195.5 loads of pork Monday despite a modest 19-cent decline in the cutout value. If movement remains slow it could signal retailers are starting to balk at historically strong pork prices. But with pork cheap compared to beef, there isn't a lot of risk of pork prices falling sharply unless the wholesale beef market plunges.

Overnight demand news... Jordan tendered to buy 150,000 MT of optional origin wheat. Taiwan passed on a tender to buy 60,000 MT of U.S. or South American corn.


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