First Thing Today (VIP) -- March 7, 2013

March 7, 2013 12:31 AM


CORN AND BEANS MIXED, WHEAT MILDLY FIRMER... As of 6:30 a.m. CT, corn and soybean futures are mixed amid bull spreading. Chicago and Kansas City wheat are 1 to 3 cents higher and Minneapolis wheat is 6 to 9 cents higher. The U.S. dollar index is under pressure this morning.

BRAZIL CUTS SOYBEAN CROP ESTIMATE... The Brazilian government (Conab) cuts its soybean crop forecast to 82.1 MMT from 83.4 MMT last month as conditions were too dry in southern Brazil and too wet in Mato Grosso. Brazil is still forecast to produce a record soybean crop. The corn crop estimate was left unchanged at 76.1 MMT.

ARGENTINA AUTHORIZES WHEAT FOR EXPORT... An unnamed government official and an industry source each told Reuters the Argentine government has authorized 5 MMT of wheat exports for 2013-14. This is much earlier than Argentina has authorized exports in the past and will allow farmers to better plan before the 2013-14 crop is planted. Argentina also reportedly freed up an additional 1 MMT of 2012-13 wheat for export, pushing the allotment for the current marketing year to 3 MMT.

FAO SEES BETTER WHEAT PROSPECTS FOR 2013 CROP... The United Nations Food and Agriculture Organization (FAO) forecasts world wheat production to rise 4.3% in 2013-14 to 690 MMT. For 2012-13, FAO raised its world cereal grains output by 4 MMT to 2.306 billion MT and its world cereal grains carryover by a like amount to 499 MMT. Meanwhile, FAO's world food price index was unchanged at 210 in February. Rises in dairy and fats/oils prices were offset by lower prices for cereal grains and sugar.

WEEKLY EXPORT SALES SCHEDULED FOR THIS MORNING... As of early this morning, there has been no notice from USDA that weekly export sales will be delayed due to yesterday's weather-induced closure. For the week ended Feb. 28, traders expect: corn sales between 450,000 and 650,000 MT; wheat sales between 350,000 and 550,000 MT; soybean sales between 900,000 and 1.25 million MT; soymeal sales between 200,000 and 300,000 MT; and soyoil sales between 5,000 and 15,000 MT.

AG SPENDING BILL MAY BE ADDED TO SENATE CR APPROACH NEXT WEEK... Senate Democrats are trying to balance concerns over the sequester’s effects on federal agencies and spending on major regulatory initiatives with the need to fund the government through the rest of the fiscal year. That approach could include funding for Agriculture in next week's markup of its continuing resolution -- and thus in part be a solution to the dreaded sequester cuts for USDA, including meat inspectors. The key will be to devise a Senate package that can win enough GOP support to garner 60 votes in the Senate without angering House conservatives. Some less controversial spending bills, such as Homeland, Commerce-Justice-Science, Agriculture and Transportation-HUD could be added to the CR, congressional sources signal. If so, that would be more spending measures attached to the CR than the House approach, which included Defense and Military Construction-Veterans Affairs.

NEXT CLUES FOR FARM BILL DEBATE COULD COME NEXT WEEK... Both the House and Senate next week will reveal details of their budget resolutions. The House version will be introduced March 12 and marked up by the House Budget Committee on March 13. The Senate Budget Committee is expected to mark up a rival Democratic budget resolution on March 14. Both of them could contain how much money a new farm bill must save over ten years. If so, look for Senate and House Ag Committee leaders to announce markup dates for a new farm bill.

ONE REASON U.S. BEEF SALES TO JAPAN NOT AS HIGH AS SOME PREDICTED: YEN... When Japanese regulations for importing U.S. beef were relaxed on Feb. 1, some observers predicted "banner" U.S. beef sales. That has not yet been the case. One reason is likely the free fall in the value of the Japanese yen. Since November, the value of the Japanese currency versus the U.S. dollar has lost around 18%. Export statistics to be released next week should show the currency's impact.

MOST FEEDLOTS WAITING ON HIGHER CASH CATTLE BIDS... The sharp drop in cattle futures Wednesday morning triggered light cash cattle trade at $128 in Texas, which was steady with the bulk of last week's trade. But most Plains feedlots continue to hold out in hopes of getting firmer cash cattle bids as they are current on marketings, especially after last week's winter stormed caused weight loss in cattle.

PORK CUTOUT DROPS AGAIN... The pork cutout value was another 47 cents lower yesterday, though price action was much different than Tuesday. Instead of widespread losses, only ribs and hams were lower. Until the overall cutout value strengthens and movement is consistently strong, traders won't have confidence the product market is putting in a low.

OVERNIGHT DEMAND NEWS... Taiwan purchased 93,680 MT of U.S. wheat. Japan bought 133,057 MT of wheat in its weekly tender, including 47,658 MT of U.S. wheat. South Korea passed on a tender to buy 55,000 MT of optional origin corn. The United Arab Emirates tendered to buy 20,000 MT each of corn, soymeal and feed barley (all optional origin). Oman tendered to buy 20,000 MT of optional origin milling wheat.


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