First Thing Today (VIP) -- March 7, 2014

March 7, 2014 12:34 AM

Good morning!

Bulls dominate overnight trade... Strong demand and uncertainty amid the dispute between Ukraine and Russia continue to support grain and soy futures. As of 6:30 a.m. CT, corn futures are trading around 9 cents higher in old-crop contracts and around 3 cents higher in new-crop contracts, soybeans are 17 to 20 cents higher in old-crop contracts and 9 to 11 cents higher in new-crop contracts, while wheat futures are 7 to 12 cents higher with SRW contracts leading gains. The U.S. dollar index is weaker this morning.

Uncertainty heading into jobs report... A poll of economists by Reuters signals non-farm payrolls for February are expected to rise by 150,000 and the unemployment rate is expected to hold at 6.6%. But after two disappointing jobs reports in a row and given harsh weather during February, there is a lot of uncertainty over what this morning's jobs report will show.

Boehner calls for U.S. natural gas exports to Europe to disrupt Putin's energy influence there... Writing in the Wall Street Journal, House Speaker John Boehner said President Obama should announce a series of steps "that will dramatically expand production of American-made energy, beginning with lifting this de facto ban on exports of U.S.-produced liquefied natural gas. Taking this step would also create American jobs and lower prices for our consumers and small businesses when coupled with other moves that would bolster energy production in North America. These include construction of the Keystone XL oil pipeline, ending the Obama administration's embargo on our supplies of oil and gas from federal lands and waters, and halting the effort to take coal out of America's electricity generation mix."

Canada to announce actions to address rail shipment delays... Actions are to be announced today in Canada to address rail backlogs that have hampered exports of grain from the country and driven oat prices in the U.S. to record levels. Transport Minister Lisa Raitt and Agriculture Minister Gerry Ritz are set to announce steps to "address challenges in Canada's grain transportation," though specifics of the actions are not known. Canada’s Ritz had previously warned the government could step in with regulations to address the situation. The head of the Canadian Pacific Railway has blamed the backlogs on a harsh winter and record Canadian crop output. The rail industry has pledged to step up rail car deployments to address the backlog. Meanwhile, a potential trucker strike in Vancouver was avoided when unionized truckers reached a new deal Thursday.

Commodities speculation frequent topic at CFTC nominees' hearing... Timothy Massad, President Barack Obama's nominee to head the Commodity Futures Trading Commission (CFTC), told lawmakers he would "make it a priority" to finalize a rule aimed at curbing speculation by traders in certain commodity contracts. During the hearing, topics such as position limits, excessive speculation and the treatment of end-users -- especially agricultural concerns -- were raised several times by senators as they questioned the nominee. "Fundamentally, these markets were designed for risk-management and price discovery," Sen. Debbie Stabenow (D-Mich.) said. "Those functions are very important to commercial end-users -- you will hear that from every single member of our committee." During his confirmation hearing before the Senate Agriculture Committee, Massad assured that CFTC would pass a "position limits" rule, which was included in the 2010 Dodd-Frank law. He added that "it's very important that we work to finalize" the position limits rulemaking. "Congress obviously directed us to take action in this regard. I will make that a priority." Massad suggested he would ensure farmers, airlines and other "end-users" that trade in commodity markets to hedge against harmful market swings would not be negatively hurt by a position-limits rule. CFTC's first attempt at passing such a regulation was tossed out by a federal court in 2012.

Talk of a new China cotton policy... Talk that China, as it scraps its stockpiling effort for cotton, is looking at a new type of import quota helped push U.S. cotton futures higher Thursday. The speculation is that China may now come up with a "processing quota" relative to imports, although it was not clear what this new quota may entail. In addition, there are indications that China may also opt to entice domestic users to buy cotton from their massive state-owned stockpiles by granting those that purchase the cotton 1 MMT of import quota for every 4 MMT purchased, according to a report from Reuters.

Cash cattle trade lower... Cash cattle trade wasn't active Thursday, but there was enough activity to signal the price trend is clearly lower this week. So far, the bulk of cash trade in Kansas and Texas has been at $148 -- $2 lower than last week's trade. That points toward trade around $150 eventually developing in Nebraska.

Another day of price strength in wholesale pork market... The pork cutout value firmed another $1.75 Thursday while packers moved 257.8 loads cuts and trim on the day. While the cutout value is near a record high, the most impressive aspect of the rally has been price strength across all cuts, signaling broad retailer demand for pork.

Overnight demand news... Exporters reported no tenders or purchases.


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