First Thing Today (VIP) -- March 4, 2013

March 4, 2013 12:19 AM


CORN AND BEANS MIXED, WHEAT LOWER... As of 6:30 a.m. CT, corn futures are around 2 cents higher in old-crop contracts and narrowly mixed in new-crop contracts, soybeans are mixed, Chicago wheat is mostly 4 to 6 cents lower, Kansas City wheat is mostly 4 to 7 cents lower and Minneapolis wheat is mostly 3 to 4 cents lower. The U.S. dollar index is modestly firmer this morning.

FOCUS IN WASHINGTON: STOP-GAP SPENDING BILL IN HOUSE, VILSACK WITNESS BEFORE HOUSE AG PANEL... House GOP leaders this week will move a stop-gap spending bill to avoid a government shut down after March 27. Meanwhile, USDA Secretary Tom Vilsack will testify Tuesday morning before the House Ag panel on the state of the rural economy. He will likely be asked several questions regarding the impacts on agriculture from the sequester cuts, especially on meat inspection. USDA issues its Supply & Demand Report Friday, including world production updates. On the economic front, the big report comes Friday with an update on the employment situation.

OBAMA SIGNED SEQUESTRATION ORDER LATE FRIDAY; EFFORTS UNDERWAY TO ALTER BUDGET CUTS... President Obama said Friday he would not allow continuing disagreements over the $85.3 billion in spending cuts to derail his broader agenda. Focus now turns to March 27 -- the deadline for funding the government for Fiscal Year 2013, which began Oct. 1. The House of Representatives this week is expected to pass a Republican bill that would keep the government operating through September at the spending levels dictated by the sequester. Meanwhile, GOP congressional leaders opened some room Sunday for a longer-term deficit reduction agreement that eventually could blunt the effects of the $85.3 billion in automatic spending cuts now in place. But in appearances on the Sunday talk shows, Speaker John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) insisted that any revenue from a tax overhaul would have to be reserved for reducing tax rates and not used to fund government spending or lower the deficit.

OFFICIAL: CHINESE DEMAND FOR U.S. GRAIN NOT LIKELY TO EXPAND THIS YEAR... China expects to have record grain production for a 10th consecutive year the former director of the State Grain Administration told Dow Jones newswire. He says barring unfavorable weather, corn and wheat yields are expected to rise from year-ago, meaning "trade with the U.S. is not likely to see much growth."

CHINA TO CONTINUE COTTON SALES, MAY ATTEMPT TO BOOST SUGAR PRICES... China plans to sell 4.5 MMT of cotton from state reserves via weekly auctions that began Jan. 14. So far, China has sold 591,829 MT of state-owned cotton. Some market participants expect the government to suspend sales at the end of March but China National Cotton Reserves Corp., citing a report from the National Development and Reform Commission (NDRC), says the auctions will last through July. Meanwhile, NDRC says it may take steps to limit sugar imports and will consider stockpiling more domestic sugar in an attempt to support domestic prices.

CATTLE SUPPLIES UNCERTAIN... The number of cattle available for sale this week is uncertain after last week's severe storm caused weight loss and some death loss through the Plains. Packers will wait on estimated showlists before establishing initial cash cattle bids, though most cash cattle traders are anticipating steady to firmer bids compared with last week's mostly $128 trade in the Plains.

CASH HOGS CALLED MOSTLY STEADY... Packers are expected to pay steady bids for cash hogs at most locations to open the week. But with another winter storm moving into the Midwest and given strong margins, some packers may raise cash bids in an attempt to buy extra hogs ahead of the storm.

WEEKEND DEMAND NEWS... Saudi Arabia bought 465,000 MT of hard wheat and 110,000 MT of soft wheat. South Korea tendered to buy up to 140,000 MT of corn and 10,000 MT of non-GMO soybeans. India canceled tenders to export 160,000 MT of wheat, but will reissue the tenders next week.


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