First Thing Today (VIP) -- March 31, 2014

March 31, 2014 01:03 AM
 

Good morning!

Quiet trade overnight... Overnight trade consisted mostly of pre-report positioning ahead of USDA's key reports later this morning. As of 6:30 a.m. CT, corn futures are trading 1 to 3 cents lower, soybeans are narrowly mixed amid mild bull spreading and wheat futures are 3 to 6 cents lower. The U.S. dollar index is weaker this morning.

Key USDA reports out this morning... USDA will release its much-awaited Prospective Plantings and Quarterly Grain Stocks Reports at 11 a.m. CT. Much of the pre-report focus has been on planting intentions, but March 1 grain stocks will likely be the tone-setting data. According to a Reuters survey, the average pre-report trade guesses peg corn plantings at 92.748 million acres, soybean plantings at 81.075 million acres and spring wheat plantings at 12.270 million acres. March 1 stocks are guessed at 7.099 billion bu. for corn, 989 million bu. for soybeans and 1.042 billion bu. for wheat.

Putin-Obama talk as signs point to diplomatic solution... Russian President Vladimir Putin called President Obama on Friday and that resulted in a Sunday meeting between U.S. Secretary of State John Kerry and his Russian counterpart, Foreign Minister Sergei Lavrov, who said that Russia has no intention to or interest in crossing the Ukrainian border. Kerry, in remarks after the negotiations, said he received no assurances from the Kremlin that it would pull back thousands of Russian troops amassed on Ukraine's eastern border, but there are some reports today that Russian forces are gradually withdrawing from Ukraine's border. Russia wants Ukraine to grant greater powers to its regions, have a nonaligned status outside NATO and make Russian a second official language, he said. Kerry said both sides had agreed on a set of priorities for future talks, including the need to protect minority rights and disarm "provocateurs" fomenting the crisis. But Kerry said a key Russian proposal calling for transforming Ukraine into a federal state with highly independent entities was not addressed during the meeting. Meanwhile, Russian Prime Minister Dmitry Medvedev visited Crimea today, flaunting his country's renewed grip on the territory following its annexation from Ukraine. Russia’s Baa1 government bond rating may be cut by Moody’s Investors Service, the ratings company said in a statement after the close of U.S. markets March 28.

WASHINGTON FOCUS THIS WEEK INCLUDES UKRAINE AID, EMPLOYMENT UPDATE AND TAX INCENTIVE MARKUP... Providing aid to Ukraine, amending the Affordable Care Act (ACA), unemployment insurance legislation, a measure on Medicare physician pay rates and a Senate Finance panel markup of tax incentive extenders are the focus of Congress this week. On the economic report front, the key day is Friday with release of the Employment report.

EPA's McCarthy: Administration still ‘committed to biofuels' despite proposed reduction... The Obama administration "remains committed to biofuels" despite a proposed rule that would roll back the biofuel mandates in the Environmental Protection Agency's 2014 Renewable Fuel Standard (RFS), Administrator Gina McCarthy said March 28. "This administration remains committed to biofuels despite the fact that people have concerns about our proposal," McCarthy said at a forum held by the American Council on Renewable Energy. "What our proposal attempted to do and what it will do ... is continue incentives for the increase of biofuels." Discussing the RFS, McCarthy said the agency is still in the process of drafting the final rule but added, "We all know there are goal lines here, Congress told us what they are and we are going to be moving in those directions." She added, "We are now talking to everybody about how to address the situation that we are in and how do we meet the obligation under the Renewable Fuel Standard and do it in a way that continues making progress moving forward. It is a very difficult issue." The final rule setting the 2014 RFS is expected in late spring or more likely early summer.

Top in wholesale beef prices?... Boxed beef prices were sharply lower Friday. Therefore, traders will be watching for additional signs the wholesale beef market has put in a short-term top. If there are additional signs of topping action, it would create thoughts the cash cattle market has also put in a short-term top.

Bearish H&P Report... Last Friday's Quarterly Hogs & Pigs Report showed nearly every category above the average pre-report guesses. The total U.S. hog inventory came in 2.5 percentage points higher than expected -- 1.4 million head more than the average pre-report guess implied. As a result, hog futures will face heavy pressure to open the week.

Weekend demand news... Iraq tendered to buy at least 50,000 MT of wheat from the U.S., Canada, Australia, Ukraine or Russia.

 

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