First Thing Today (VIP) -- May 6, 2013

May 6, 2013 02:57 AM
 

GOOD MORNING!

CORN LEADS LOSSES OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading mostly 15 to 17 cents lower, soybeans are steady to 4 cents lower in all but the May contract that is around 12 cents higher, Chicago wheat is 7 to 10 cents lower, Kansas City wheat is around a dime lower and Minneapolis wheat is 5 to 7 cents lower. The U.S. dollar index is modestly firmer after two-sided trade overnight.

CONGRESS RETURNS TO WORK ON WATER BILL AND FARM BILL IN SIGHT... Congress returns for a three-week period before the Memorial Day recess. Key items on the agenda include a state internet sales tax measure, a water development bill, employment legislation, and a bill regarding the U.S. debt limit. The farm bill will also be in focus with expected release of the House farm bill as early as Wednesday, with Senate farm bill action less certain, despite continued reports of a Thursday Ag Committee markup session. USDA will release its first official 2013-14 supply/demand tables Friday morning.

FARM BILL TIMELINES... As soon as this Wednesday, the House Ag Committee may issue the text of its latest farm bill proposals. Ag Chairman Frank Lucas (R-Okla.) will brief panel members Wednesday. Tentative day for House Ag panel markup of the bill is still May 15. And in important news on Friday, House Majority Leader Eric Cantor (R-Va.) included the farm bill as part of the House floor summer agenda. That seems to confirm previous reports that GOP leaders want the farm bill debate done by the July Fourth recess. The timeline for the Senate is a bit murky. Some sources say the Senate Ag panel will markup its bill this Thursday. Others say there is still no overall consensus on Title I (farm programs). If so, then the dates for releasing the Senate text and markup could slip. Senate leadership wants the farm bill completed by the Memorial Day recess. Also, the Congressional Budget Office either today or Tuesday will deliver their latest farm bill budget scores to House and Senate Ag staffers. The results of those scores could in part determine other farm bill timelines.

LINKING CONSERVATION COMPLIANCE AND CROP INSURANCE... Draft language submitted to the Senate Ag Committee this weekend deals with the controversial topic of linking conservation compliance with crop insurance programs. The forthcoming Senate Ag Chairwoman's farm bill mark was reportedly going to contain the language in S 10 dealing with the matter, but the Committee wanted to discuss the "paper" worked out by the American Farm Bureau Federation, apparently with some key commodity groups. Some sources hope a significant number of farm and conservation groups will be on the final document -- likely by noon today. The groups did not approach NSAC (National Sustainable Agriculture Coalition) or the Environmental Working Group (EWG) because they knew they would not sign on. Some observers note the compromise is considerably better than S 10 and what agriculture stakeholders wanted was to protect Adjusted Gross Income (AGI), payment limits, etc., from farm bill amendments and the hope is that this compromise will or should help them garner lawmaker resistance to any such proposed amendments.

STABENOW MAY BACK OFF CONTROVERSIAL EGG BILL LANGUAGE IN SENATE FARM BILL DRAFT... Controversial language dealing with the size of hen cages may not show up in the coming Senate farm bill draft, according to some sources, who cautioned that the fate of the language has changed several times. One source revealed that after last Thursday afternoon's Ag legislative assistant meeting, Sen. Debbie Stabenow's (D-Mich.) staff apparently had second thoughts. Reportedly a staffer of Sen. Chuck Grassley (R-Iowa) pressed hard about the language hurting smaller producers. Sen. Mike Johanns (R-Neb.) has already indicated he would not support the measure if the Egg Bill language is included. The bill has strong opposition from agricultural groups, who fear such legislation would set a precedent leading to national production and welfare standards for other livestock.

CARGILL TO IDLE INDIANA SOY PROCESSING PLANT... Cargill announced Friday it will temporarily idle its Lafayette, Indiana, soy crushing facility due to poor margins and tight supplies. The plant will be shut down mid-month for an unspecified period of time, though sources told Reuters crushing operations won't likely come back online until new-crop supplies are available.

CHINA EXTENDS CORN STOCKPILING PROGRAM... China's corn stockpiling program, which was to end on April 30, has been extended through the end of this month as bird flu has reduced demand from feedmakers, according to the State Grain Administration. This gives farmers, who still hold large quantities of corn another opportunity to sell their corn.

CHINA BIRD FLU UPDATE... China has confirmed 127 cases of H7N9 bird flu with 27 of those resulting in deaths, according to Xinhua news agency. While the number of cases and deaths is expanding, Xinhua reports 26 individuals have recovered after contracting the virus.

COLUMBIA GRAIN LOCKS OUT DOCKWORKERS IN PNW... Columbia Grain locked out dockworkers at the Port of Portland Saturday, which led to a protest by the locked out workers. Without giving details, the company says it has contingency plans to keep operations running during the lockout.

CHOICE BOXED BEEF SETS RECORD HIGH... Choice boxed beef prices rose to a record $201.68 Friday, besting the previous high by 50 cents. While boxed beef prices are rising sharply, supporting cash cattle bids, traders are concerned the cash and product markets may be nearing a short-term top. Traders also have concerns with beef demand as the record wholesale prices will be passed on to consumers. Those concerns are keeping summer-month live cattle futures well below the cash market.

CASH HOGS CALLED MOSTLY STEADY... Cash hog bids are expected to be steady at most Midwest locations to open the week. While market-ready supplies are tight, packers are working with negative margins, which is expected to somewhat limit demand for cash hogs.

WEEKEND DEMAND NEWS... South Korea tendered to buy up to 70,000 MT of optional origin corn and 10,000 MT of optional origin non-GMO soybeans. Libya tendered to buy 50,000 MT of optional origin milling wheat and 50,000 MT of optional origin durum.

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