First Thing Today (VIP) -- May 7, 2013

May 7, 2013 01:17 AM


GRAINS FIRMER OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading mostly 2 to 4 cents higher, soybeans are 6 to 9 cents higher, Chicago and Minneapolis wheat are 3 to 6 cents higher and Kansas City wheat is around 5 cents higher. The U.S. dollar index is weaker this morning.

LUCAS PROVIDES SOME FARM BILL UPDATES IN TWO SEPARATE INTERVIEWS... Here is what we picked up from House Ag Chair Frank Lucas (R-Okla.) interviews with The Hill and Politico: (1) He thinks the House will pass a five-year farm bill this summer, adding that getting House GOP leadership commitment to consider the bill this summer made him "very pleased;" (2) 100 amendments are coming during the Ag panel markup, and just as many or more in the modified open rule when it comes to the House floor -- what's coming, he said is a "very lively battle and debate;" 3) Believes the Senate bill will save "around $25 billion" while the House will save around $38 billion over ten years, provided he gets "no more surprises" from the Congressional Budget Office; (4) Breakdown of House farm bill cuts: $4 billion for sequester cuts, $14 billion in cuts to basic farm programs, and $20 billion in food stamp funding cuts; (5) He supports livestock disaster aid and may have to tap farm program and crop insurance funding to help pay for it; (6) Is very cool toward the Obama administration's food aid reform plan; (7) Says the Senate bill would put more emphasis on a revenue-based shallow-loss insurance program, while the House would keep traditional price-based supports as a choice; (8) Confirmed our previous report that premium subsidies for the new Supplemental Coverage Option, or SCO, crop insurance plan could be pared back to 65%, from 70% last year; (9) Said the dairy policy pushed by Rep. Collin Peterson (D-Minn.) would be part of the coming farm bill markup.

CHINA BIRD FLU UPDATE... Four more Chinese have died from the H7N9 strain of bird flu, bringing the death loss to 31, while the total number of confirmed cases is now at 129, according to Chinese health officials. China's National Health and Family Planning Commission says the H7N9 cases are isolated and there has been no sign of human-to-human transmission.

HRW CCI RATING CONTINUES TO SLIDE... 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 4 points to 251, while the SRW crop slipped 1 point to 372. Oklahoma and Texas paced declines for HRW, though CCI ratings were down throughout the Central and Southern Plains.

WESTERN AUSSIE WHEAT CROP EXPECTED TO RISE SHARPLY... Western Australia's wheat crop could rise by 16% from year-ago to 8 MMT, according to the head of operations at CBH Group, Australia's largest wheat handler. A bigger wheat crop in Western Australia would help offset expected production losses due to drought in eastern areas of the country. But Western Australia typically produces lower protein wheat so it wouldn't be an apples-for-apples exchange.

DRYNESS THREATENS UKRAINE SPRING GRAINS... Ukraine's spring grain output may decline by up to 30% if rains don't fall in the next two weeks, according to the head of the state weather forecasting center. While the spring wheat and spring barley crops are suffering amid dryness, the winter wheat crop, which accounts for about 95% of the country's wheat crop is in mostly satisfactory condition.

ROUGH START FOR BOXED BEEF MARKET... Boxed beef prices were 52 cents (Select) to $1.42 (Choice) lower Monday and packers moved only 125 loads of product on the day. Unless the boxed beef market shows dramatic improvement, traders will anticipate steady to lower cash cattle prices compared with last week's mostly $128 to $130 cash trade.

DECLINING DEMAND FOR CASH HOGS... Packer demand for cash hogs is expected to decline as the week progresses if cutting margins remain in solidly in the red. Cash sources feel plants may opt to reduce late-week slaughter runs instead of actively competing for a tightening supply of market-ready hogs.

OVERNIGHT DEMAND NEWS... South Korea purchased 69,000 MT of optional origin (likely South American) corn. Japan will skip its weekly wheat tender this week. Turkey tendered to export 240,000 MT of milling wheat.


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