First Thing Today (VIP) -- May 24, 2013

May 24, 2013 01:16 AM
 

GOOD MORNING!

CORN WEAKER, SOYBEANS MOSTLY LOWER AND WHEAT MIXED OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading 1 to 3 cents lower, soybeans are mostly lower, Chicago wheat is around 3 cents higher, while Kansas City and Minneapolis wheat are mixed with an upside bias. The U.S. dollar index is under pressure this morning.

LUCAS: HOUSE FARM BILL ON FLOOR IN MID-JUNE... House Agriculture Chairman Frank Lucas (R-Okla.) said he spoke with Majority Leader Eric Cantor (R-Va.) Thursday and expects the House farm bill to move to the floor in June. "Leadership has not given an exact date, you can't put your finger on it. I would simply say if you look at the calendar, the week we're gone, this, that and the other, it almost has to be the middle of June to fit in the timeline," Lucas said. The Congressional Budget Office yesterday estimated the House bill would cost about $940 billion in direct spending over a ten year period, about $15 billion less than the Senate bill. So far, most amendments to the Senate bill that would have had a significant impact have been defeated, leaving the original legislation mostly intact, something Lucas says gives him hope about moving his own bill next month. "Let's just say that I would like to think that watching the Senate committee-passed text essentially remain whole … I'd like to think that bodes well for my efforts to try and keep the House-passed committee draft in June on the floor whole," he said.

CROP INSURANCE MEANS TEST AMENDMENT PASSES IN SENATE FARM BILL DEBATE... Farm group lobbyists and Senate Ag Chairwoman Debbie Stabenow (D-Mich.) were dealt a setback in the Senate yesterday, when a means tests amendment for crop insurance pushed by Sens. Dick Durbin (D-Ill.) and Tom Coburn (R-Okla.) was approved by a relatively wide margin, 59-33. The amendment would reduce federal premium subsidies by 15 percentage points for producers with adjusted gross incomes of more than $750,000. Overall, the federal government pays 62% of a farmer’s premium and the farmer pays the rest. USDA would have to conduct a study to determine whether such action would have a detrimental effect on the crop insurance program. But Durbin said the study would be of no consolation to the amendment opponents. "The farmers who oppose it don’t take much refuge in that study. It’s not going to show the program will be devastated by this new requirement. It’s just a fact that some of these farmers are getting enormous federal subsidies for their crop insurance. We cut them by 15 percent(age points), and I don’t think that’s unreasonable," Durbin said after the vote. The Environmental Working Group said the vote on the Durbin-Coburn provision bodes well for an amendment that would set a maximum of $50,000 for crop insurance premiums, but others discounted that assessment. Coburn says the proposal reflected an approach that Congress will eventually take with most of its programs: Those who can pay more of their share of the costs will be asked to do so.

ACRE UPDATE... Those who enroll in the Average Crop Revenue Election (ACRE) program for 2013 crops will see an additional reduction of 8.5% in their direct payments -- payments that are already reduced by 20% in exchange for their participation in ACRE -- due to the sequestration. As for whether sequester cuts would apply to 2013-crop ACRE payments, that is a question that has an answer of "no"... so far. Budget contacts advise that when the decisions were being made on sequester impacts earlier this year, USDA was not projecting any ACRE payments on 2013 crops, so therefore no sequester reduction would be taken. But a farm policy source told us, "I think it is wishful thinking to hope that any potential ACRE payments would not be sequestered. It is irrelevant whether USDA projected an ACRE payment when they were doing sequestration estimates; the sequester applies to payments that go out the door, whether or not USDA had projected payments would be made. And, regardless of whether the grower signs up for ACRE or DCP, the direct payment will be sequestered. Meanwhile, if you are still working on getting your crops in, your county FSA office has been given the green light to use a "register" for ACRE signup. But you have to ask to be placed on the register if you can't get in to sign up for ACRE by the June 3 deadline.

NEXT STEPS ON COOL... The final rule published by USDA to bring the Country of Origin Labeling (COOL) law into compliance with WTO rules doesn't do that, according to Canadian Ag Minister Gerry Ritz. "We have no intention of backing off or backing down, if the Americans think this is a game of chicken," Ritz said Thursday after the rule was released. He indicated the country would go back to the WTO, eying retaliation. Ritz signaled the WTO process could take a month or two, but other trade sources note if the same panel is assembled to examine the retaliation issue as made the call on the U.S. COOL law, it could speed the process. Canada and Mexico, if cleared for retaliation, are expected to target ag and non-ag products in an effort to increase pressure on the U.S. to change the COOL law.

CHOICE BOXED BEEF CONTINUES TO RALLY... Choice boxed beef prices firmed another 17 cents to an all-time high of $211.17 on Thursday, the ninth consecutive day of record prices. Traders are unimpressed with the record run in boxed beef prices, however, as they fear the historic beef values, high gas prices and tepid economic growth will curb demand later this summer, especially with pork and chicken cheap compared to beef.

LIMITED DEMAND FOR CASH HOGS... Pork plants have near-term supplies secured, especially given downtime around the Memorial Day holiday. As a result, demand for cash hogs will be limited today. But given the tightening supply of market-ready hogs, packers are likely to keep cash hog bids steady at most locations as they don't want to risk losing supplies to competing plants.

HOLIDAY TRADING SCHEDULE... Grain and livestock markets will observe normal trading hours today ahead of the extended, holiday weekend. All markets and government offices are closed Monday, May 27, for Memorial Day.

OVERNIGHT DEMAND NEWS... Taiwan purchased 60,000 MT of Brazilian corn. Israel bought 75,000 MT of corn, 30,000 MT of feed wheat and 3,000 MT of feed barley -- all optional origin.

 

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