First Thing Today (VIP) -- May 10, 2013

06:17AM May 10, 2013


CORN AND WHEAT LOWER, BEANS MIXED... As of 6:30 a.m. CT, corn futures are 2 to 4 cents lower expect the May contract that is fractionally higher, soybeans are 4 to 7 cents higher in old-crop contracts and mostly 1 to 2 cents lower in new-crop contracts, Chicago and Kansas City wheat are mostly 5 to 6 cents lower and Minneapolis wheat is 1 to 3 cents lower. The U.S. dollar index is firmer this morning.

USDA MAY CROP REPORTS OUT THIS MORNING... USDA will release its first official look at the 2013-14 balance sheets and its first survey-based estimate of the winter wheat crop at 11 a.m. CT. In the Crop Production Report, all wheat is guessed at 2.059 billion bu., winter wheat at 1.477 billion bu., HRW at 765 million bu., SRW at 496 million bu. and white winter at 217 million bushels. In the Supply & Demand Report, only minor adjustments are expected to 2012-13 carryover projections. But the focus is on the 2013-14 balance sheets, in which traders are expecting USDA to show corn carryover at 1.973 billion bu., soybean ending stocks at 239 million bu. and wheat carryover at 627 million bushels.

HOUSE FARM BILL TEXT TO BE RELEASED TODAY, FOLLOWING THURSDAY RELEASE OF SENATE BILL... We're told there will be one major change in the farmer safety net program in the House bill compared to last year's version, but the target price levels will remain the same, and will be above the levels revealed in the Senate farm bill draft on Thursday under a new Adverse Market Payment program, giving producers a target-price-based option missing from last year’s Senate version. Target prices for rice in the Senate bill are $13.30 per 100 pounds for long- and medium-grain rice and $523.77 per ton for peanuts. The 2012 House farm bill called for $14 per cwt. for rice and $535 per ton for peanuts. Direct payments would end and be replaced by the Agriculture Risk Coverage (ARC) program, a "shallow loss" revenue protection plan. But to save money, the Senate delayed payouts under ARC by shifting to a full market-year price to base payments. It would also reduce the cost of ARC by requiring farms to have a revenue loss of at least 12% before getting payments, not 11% as in last year’s version. The Senate bill limits target price protection to base acres, while the House bill will be based on planted acres up to a maximum of base acres. ARC payouts are based on actual plantings.

BIG FOOD STAMP FUNDING DIFFERENCES BETWEEN SENATE AND HOUSE... On food stamps (SNAP), the Senate saves $4 billion and the House bill will save $20 billion via food stamp funding cuts. The Senate bill raises the minimum amount required to trigger a standard utility allowance that is used to calculate SNAP monthly benefits. The Senate bill puts the threshold at $10; the coming House bill will move that to $20. Overall the Senate bill saves $23 billion over ten years, while the House savings will come in around $38 billion. The Senate will eventually have to boost its savings level and some key ARC provisions may change again later in the farm bill process.

BRAZIL APPROVES 3 MMT OF CORN PURCHASES... Brazil's government approved the purchase of up to 3 MMT of domestic corn, with the purchases likely to come the second half of this year. An ag ministry official says 2 MMT of options will be auctioned to producers or cooperatives, who will then have the option to sell corn at a fixed price and future date to government warehouses. The government will purchase the 1 MMT from producers and cooperatives through term contracts

MCDONALD'S CUTS ANGUS BURGERS FROM MENU... McDonald's announced Thursday it is phasing out one-third pound Angus burgers from its U.S. menus due to high beef prices. Company spokesperson Danya Proud says, "While these burgers will no longer be available in our restaurants, they may still play a future role on our menu."

CHINA TO AGAIN STOCKPILE PORK... For a second time this year, China will stockpile pork in state reserves in hopes of stabilizing domestic prices. The ministry of commerce gave no tonnage or duration for the latest stockpiling effort.

CHOICE BOXED BEEF PRICES CONTINUE TO CHARGE HIGHER... Choice boxed beef prices advanced another 82 cents Thursday to a new high of $205.49. But recent price action in live cattle futures signals traders feel the surge in boxed beef prices is temporary. The drop in cash cattle prices this week also signals packers are leery of the beef rally.

PACKER DEMAND FOR HOGS HOLDING STRONG... Packer demand for cash hogs has stayed stronger than anticipated this week, especially with cutting margins falling deep into the red. Tightening market-ready hog supplies are keeping cash hog bids pointed higher, though demand may ease a little ahead of the weekend. Cash hog bids are expected to be steady with scattered firmer bids to close out the week.

OVERNIGHT DEMAND NEWS... South Korea purchased 70,000 MT of optional origin corn, but passed on another tender for 55,000 MT of optional origin corn. For the week, South Korea has purchased 323,000 MT of corn and 55,000 MT of feed wheat. Algeria purchased at least 150,000 MT of milling wheat (likely French) and 175,000 MT of optional origin durum wheat.