First Thing Today (VIP) -- May 23, 2013

May 23, 2013 01:18 AM


VARIED PRICE TONE OVERNIGHT... As of 6:30 a.m. CT, corn futures are 1 to 2 cents lower, soybeans are narrowly mixed amid mild bulls spreading, Chicago wheat is mostly 4 to 6 cents higher, Kansas City wheat is 1 to 3 cents higher and Minneapolis wheat is around 1 cent higher. The U.S. dollar index is under heavy pressure, which is helping grains ignore a selloff in global stock markets.

SENATE FARM BILL FOCUS TODAY ON CROP INSURANCE... Wednesday saw sugar policy proponents defeat (45-54) an attempt to modify the current program. Today will focus on several crop insurance-related amendments. Sen. Dick Durbin (D-Ill.) said it was "not unreasonable" to ask more from farmers making more than $750,000 per year. Durbin's amendment would limit crop insurance premium subsidies for farmers making more than $750,000 annually. The amendment, co-sponsored by Sen. Tom Coburn (R-Okla.), was adopted by the Senate last year when the chamber was considering its 2012 farm legislation. For farmers above the $750,000 threshold, their premium subsidies would be reduced by 15 percentage points. "They’ll still make a lot of money," Durbin said. The proposal would only impact about 1% of farmers or about 20,000 out of two million U.S. farmers, Durbin said. A vote today will also come on an amendment that would permit states to require labels on genetically modified food. The Senate on Wednesday also rejected (36-60) an amendment to turn food stamps into a block grant program. As for the farm bill timeline, the consensus now is that the debate will not end until after the Memorial Day recess. More than 180 amendments to the bill have been filed.

CHINA'S MANUFACTURING DATA CONTINUES TO WEAKEN... The HSBC flash purchasing managers' index (PMI) dropped to 49.6 in May from 50.4 last month, the first time the reading has been below 50 since October, signaling contraction in China's vast manufacturing sector. The new-orders sub-index slipped to an 8-month low of 49.5 as domestic and export orders weakened. Concerns with China's manufacturing sector are raising worries about economic growth in the country and are weighing on global markets overnight.

CHINA TO STOCKPILE 5 MMT OF RAPESEED... China plans to stockpile 5 MMT of domestic 2013-crop rapeseed in an effort to support farmers and encourage production, according to the State Grain Administration. The purchase price will increase to 5,100 yuan ($830) per ton from 5,000 yuan per ton last year. China National Grain and Oils Information Center forecasts Chinese rapeseed production to rise 0.7% to 14.1 MMT this year.

WEEKLY EXPORT SALES REPORT OUT THIS MORNING... For the week ended May 16, traders expect: corn sales between 200,000 and 500,000 MT; wheat sales between 400,000 and 700,000 MT; soybean sales between 400,000 and 800,000 MT; soymeal sales between 100,000 and 225,000 MT; and soyoil sales between 0 and 15,000 MT.

CASH CATTLE TRADE LOWER DESPITE SURGING BEEF PRICES, PACKER MARGINS... Cash cattle trade got started at $124 in Texas Wednesday, which is $1 lower than week-ago and disappointing given the record runup in boxed beef prices that has moved packer margins deep into the black. Nearby live cattle futures continue to trade well below the cash market despite record boxed beef prices and tightening market-ready supplies.

JUNE HOG FUTURES MOVE PREMIUM TO CASH... The sharp rally in June lean hog futures into the close Wednesday pushed the lead-month contract to a premium to the cash index, reflecting traders' improved attitudes. Supporting the stronger attitudes are a strengthening pork product market and tightening market-ready supplies. July lean hog futures are now trading roughly in line with the cash market.

OVERNIGHT DEMAND NEWS... Japan purchased 122,222 MT of wheat from its weekly tender, including 67,897 MT of U.S. supplies. Japan also bought 24,700 MT of feed wheat and 112,000 MT of feed barley. Algeria bought 400,000 MT of optional origin (likely French) wheat. United Arab Emirates purchased 16,000 MT of Indian wheat. Oman bought 10,000 MT of Argentine corn.


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