First Thing Today (VIP) -- May 13, 2013

May 13, 2013 01:16 AM


MIXED TO MOSTLY FIRMER OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading 1 to 3 cents higher in all but the May contract, soybeans are mixed amid bull spreading, Chicago and Kansas City wheat are mostly 1 to 2 cents higher and Minneapolis wheat is narrowly mixed. The U.S. dollar index is holding near unchanged this morning.

WATER RESOURCES BILL IN SENATE AND FARM BILL MARKUPS ARE WASHINGTON FOCUS THIS WEEK... Senate debate on a water resources (WRDA) bill (S 601), and committee markup on immigration (Senate) and the farm bill (both Senate and House) are the focus in Congress this week. The Senate is expected to consider some of President Obama's nominations, which have been cleared for floor action. Regarding the farm bill, the Senate Ag panel marks up its version Tuesday, with the House Ag Committee on Wednesday. Of note, Senate Majority Leader Harry Reid (D-Nev.) wants the farm bill on the Senate floor as soon as late this week, or sometime next week. House GOP leaders have signaled farm bill debate in that chamber sometime this summer -- probably in June.

THINK-TANK SEES RISING CHINESE CORN OUTPUT AND IMPORTS... China is forecast to produce a record 214 MMT of corn this year, which would be up 2.8% from the 2012 crop, according to state-run China National Grain and Oils Information Center (CNGOIC). But corn consumption is forecast to rise 5.2%. As a result, CNGOIC is projecting 2013-14 Chinese corn imports of 5 MMT, up 85.2% from 2.7 MMT in 2012-13. In its first outlook for 2013-14 on Friday, USDA put Chinese corn production at 212 MMT and imports at 7 MMT.

MORE DISAPPOINTING ECONOMIC DATA FROM CHINA... Chinese factory output rose 9.3% from year-ago in April, which was up from an 8.9% rise in March, but below expectations for a 9.5% increase. Fixed asset investment was 20.6% higher last month compared to expectations for a 21% rise and a 20.9% increase in March. Meanwhile, retail sales matched expectations by rising 12.8% from year-ago, up from a 12.6% rise in March. This data raises more questions about China's economic recovery.

USDA REPORTEDLY WORKING ON RACTOPAMINE PROTOCOL WITH RUSSIA... We now expect USDA will provide the Russian government with necessary certification that U.S. beef and pork exports are ractopamine-free. This will likely take several months to unfold, as USDA and Russia work out various technical details of the protocol. Russia is in a Customs Union with Belarus and Kazakhstan, but it seems likely that if Russia signs off on the protocol, so would the other countries.

WATCHING FOR A TOP IN BOXED BEEF MARKET... After Choice boxed beef prices surged to an all-time high last week, traders are anticipating a short-term top is close -- if not already in place. While tightening market-ready supplies should keep the product market from falling sharply, retailer buying ahead of Memorial Day should be about complete, which suggests demand could ease and cause packers to have to lower prices to move product.

CASH HOG CALLED MOSTLY STEADY... Packers are expected to offer steady cash hog bids at most Midwest locations today despite highly negative cutting margins. Tight market-ready supplies should create enough packer demand to keep cash hog bids from weakening to start the week. But if margins don't improve, packer demand for hogs is likely to wane as some plants have already trimmed back kill hours.

WEEKEND DEMAND NEWS... South Korea tendered to buy 70,000 MT of optional origin corn.


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