First Thing Today (VIP) -- May 29, 2013

May 29, 2013 01:16 AM


MIXED TO MOSTLY WEAKER TONE OVERNIGHT... As of 6:30 a.m. CT, corn futures are narrowly mixed, soybeans are 2 to 4 cents lower, Chicago wheat is 2 to 5 cents lower, Kansas City wheat is 1 to 2 cents lower and Minneapolis wheat is narrowly mixed. The U.S. dollar index is under heavy pressure this morning.

HFCS ON POSSIBLE MEXICO RETALIATION LIST RE: U.S. COOL RULE... Unless the U.S. government corrects the regulatory changes to the country-of-origin labeling (COOL) rules for livestock products, which took effect May 23, Mexico will move forward under World Trade Organization (WTO) procedures that allow it to retaliate against a long list of U.S. products, an official at the Economy Ministry told Bloomberg Bureau of National Affairs (BNA). The Mexican official says the trade division already had started looking at a "long list of products" currently imported from the U.S. that could be hit with retaliatory duties if the country does not act swiftly to ensure the COOL regulations are removed all together, in line with the WTO ruling. BNA says the official confirmed that any potential retaliation would seek to include products "particularly sensitive" to U.S. trade, such as high fructose corn syrup (HFCS). Canada has already said it would target a broad list of products beyond beef and pork if they pursue retaliation at the WTO.

STABENOW CALLS HOUSE PASSAGE OF FARM BILL 'CHALLENGING'... A five-year farm bill is likely to pass the Senate the week of June 3, Senate Agriculture Committee Chairman Debbie Stabenow (D-Mich.) said recently at Michigan State University, though she noted that getting a House version passed will be "challenging." Some in Congress "don't understand" the bill's provisions on crop insurance, which replace direct payments to farmers with a new program linking payments to risk management, and want to offer amendments limiting assistance to farmers in need, Stabenow said. "Many people that are part of the most extreme elements of the Republican party, the tea party, don't think we should do anything to support agriculture, nutrition or conservation," she said after her speech. "They don't think we should do a farm bill at all."

HRW CCI RATING CONTINUES TO DECLINE... When USDA's weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale), the HRW crop dropped another 3 points to 244. The CCI ratings for Kansas, Oklahoma and Nebraska declined, while modest improvement was recorded in Texas and Colorado. The SRW CCI rating also dropped 3 points last week to 375. Click here for more.

SOVECON REVISES RUSSIAN CROP, EXPORT FORECASTS... Private firm SovEcon revised its 2013-14 Russian grain crop forecast to a range of 85 MMT to 89 MMT from 84 MMT to 89 MMT previously. The firm sees Russian wheat production rising to 50 MMT this year. Exportable grain stocks are forecast at 19 MMT, up from 16 MMT previously, with wheat exportable supplies at 13 MMT to 15 MMT.

BRAZIL COULD BUY MORE DOMESTIC CORN... Brazil's government could by up to 1 MMT of domestic corn via the Acquisitions of the Federal Government program if prices fall below an unspecified minimum level, according to the country's secretary of ag policy. However, the program still needs final government approval. Earlier this month, Brazil's government approved the purchase of up to 3 MMT of domestic corn from this year's crop.

SHUANGHUI GROUP CLOSE TO PURCHASE OF SMITHFIELD FOODS... China's Shuanghui Group is close to a deal to acquire Smithfield Foods Inc. for between $4.5 billion and $5 billion, according to the Wall Street Journal. The deal reportedly could be announced as soon as today, though it could be subject to review by the U.S. Committee on Foreign Investment. Shuanghui is China's largest pork producer, according to the company, and it sells products under the English name Shineway.

BEEF MOVEMENT PICKS UP... Boxed beef prices were slightly lower Tuesday, but movement improved to 191 loads. Traders are paying special attention to boxed beef movement this week for an indication of how holiday clearance went. Given historically high boxed beef prices, there are concerns retailers may not actively buy beef for summer features.

SLUGGISH START FOR PORK MARKET... The pork cutout value dropped 93 cents Tuesday and packers moved only 297.3 loads of product on the day. The sluggish start to pork trade this week is not what bulls were hoping for, especially since retailers actively bought pork ahead of the Memorial Day weekend.

OVERNIGHT DEMAND NEWS... South Korea purchased 55,000 MT of optional origin (likely Black Sea) wheat.Japan received no bids in a tender to purchase 120,000 MT of feed wheat and 200,000 MT of feed barley.


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