FIRMER TONE IN GRAINS... As of 6:30 a.m. CT, corn futures are trading 6 to 9 cents higher, soybeans are 8 to 10 cents higher in old-crop contracts and mixed in new-crop contracts (November soybeans are around 2 cents higher), Chicago wheat futures are mostly 5 to 7 cents higher, Kansas City wheat is 6 to 8 cents higher and Minneapolis wheat is mostly 8 to 9 cents higher. The U.S. dollar index is firmer this morning as investors await the interest rate decision from the European Central Bank (rate cut is expected).
DAY 2 HRW TOUR RESULTS... Scouts on Day 2 of the Wheat Quality Council HRW tour found lower yield potential compared to year-ago, as expected, through western and southern Kansas and far northern Oklahoma. Tour samples unveiled an average yield of 37.1 bu. per acre compared to 43.7 bu. per acre on similar routes last year and a five-year average of 39.5 bu. per acre. An independent tour in Oklahoma forecasts wheat production in that state of 85.583 million bu. (25.45 bu. per acre yield), down from 154.8 million bu. (36 bu. per acre yield) last year. Scouts will take samples today on routes from Wichita to Kansas City, where the tour concludes. Final tour results and an average guesstimate of the Kansas wheat crop by tour scouts will be released this afternoon.
REPORT: USDA MIGHT ESCAPE FURLOUGHS... A Government Executive article says, "The Agriculture Department will not have to furlough employees at the Farm Service Agency this fiscal year, and hopes to avoid putting workers at the Rural Development division on unpaid leave because of budget cuts. If Rural Development escapes the furlough ax that means the department’s roughly 94,000 employees are off the hook in Fiscal 2013," which ends Sept. 30. An Agriculture spokeswoman confirmed that furloughs are not on the table for any other agencies now in the department. USDA was able to avert furloughs at FSA by freezing hiring, cutting discretionary operating and contract expenses and transferring unused funds from a conservation program to cover salaries. Sec. Tom Vilsack notified congressional appropriators in an April 23 letter that he intends to use the department’s special limited authority -- known as interchange transfer authority -- to shift money within the Rural Development division to avoid furloughs there. Congress has 30 days to review the request, so employees at Rural Development should know their fate by late May. Many still wonder why Vilsack and his officials didn't find similar flexibility to avoid meat inspector furloughs before Congress had to fix the matter.
FARM BILL TO BE IMPACTED BY SEQUESTER, BUT NO POLICY CHANGES EXPECTED... The May Congressional Budget Office (CBO) baseline update, against which the current Senate and House farm bills are being scored, will incorporate the sequester, up front, over a nine-year timeframe, sources advise. CBO has recently decided to reduce the agriculture baselines to account for the full 9-year sequester up front. The House and Senate Agriculture Committee farm bills are expected to save $38 billion and $23 billion, respectively. Sources indicate those targets will still be met. The only difference is that part of those savings will be used to satisfy the sequester (perhaps up to $8 billion, although no figure has officially been announced) and the remainder will go directly to deficit reduction. We're told this does not alter anything for the farm bill and it appears to be essentially an accounting issue.
LIVESTOCK AND POULTRY GROUPS PROVIDE COMMENTS ON 'NEGATIVE IMPACT OF THE RFS'... Seven livestock and poultry groups submitted comments to the House Energy and Commerce Committee on what they said were the negative effects the federal Renewable Fuels Standard (RFS) has had on agriculture, including the high cost of feed facing livestock and poultry producers. The comments answer several questions posed by the committee on the impact of the RFS. "The RFS has been the major driver in increasing corn use for ethanol production, and causing corn stocks to decline to crisis levels," the comments state. "In a market-driven world, ethanol would be priced competitively with gasoline. That has never been true in the entire history of the industry." The groups submitted a study to support their comments.
MORE NEGATIVE CHINESE MANUFACTURING DATA... China's final HSBC purchasing managers' index (PMI) dropped to 50.4 in April from 51.6 in March, further signaling a slowdown in the country's vast manufacturing sector last month. The new export orders sub-index fell to 48.4, the first time it has signaled contraction (below 50) this year and the lowest reading since October 2012.
WEEKLY EXPORT SALES REPORT OUT THIS MORNING... For the week ended April 25, traders expect: corn sales between 800,000 and 1 million MT; wheat sales between 300,000 and 500,000 MT; soybean sales between 600,000 and 900,000 MT; soymeal sales between 150,000 and 250,000 MT; and soyoil sales between 0 and 15,000 MT.
CASH CATTLE TRADE STEADY DESPITE SURGING CHOICE BOXED BEEF PRICES... Cash cattle trade got started at $128 in Kansas and Texas and at $130 in Nebraska Wednesday afternoon, price levels steady with week-ago. The early sales at that price were surprising as Choice boxed beef prices surged to $199.49 Wednesday, which was only $1.69 below the all-time high of $201.18 that was posted on Oct. 16, 2003. That's largely why feedlot interest in selling cattle at steady prices was relatively limited.
PORK MARKET BOUNCES BACK... The pork cutout value got back 67 cents of what it lost Tuesday and movement improved to a strong 522.1 loads yesterday. Despite a stronger product market, some plants are cutting in the red as cash hog bids have outpaced the product market recently. Still, cash hog bids are expected to remain steady to firmer across the Midwest as packers are competing for a tightening supply of market-ready hogs.
OVERNIGHT DEMAND NEWS... Jordan purchased 50,000 MT of optional origin wheat and tendered to buy another 150,000 MT of optional origin wheat. India tendered to export 100,000 MT of wheat.