First Thing Today (VIP) -- May 9, 2013

May 9, 2013 01:25 AM


LIGHT AND CHOPPY TRADE OVERNIGHT... As of 6:30 a.m. CT, corn futures are narrowly mixed, soybeans are mostly 1 to 4 cents higher, Chicago wheat is fractionally to 2 cents lower, Kansas City wheat is fractionally to 1 cent higher and Minneapolis wheat is narrowly mixed. The U.S. dollar index is holding near unchanged this morning.

CHINESE INFLATION RISES MORE THAN EXPECTED... China's consumer price index (CPI) rose 2.4% from year-ago in April, which was up from a 2.1% increase in March and also topped expectations for a 2.3% rise. Food prices rose 4% last month, up from a 2.7% increase in March, while non-food prices rose 1.6%. Meanwhile China's producer price index (PPI) declined 2.6% last month, which was more than the 1.9% decrease in March and the 14th straight month of a declining PPI compared to year-ago.

FAO FORECASTS INCREASE IN GLOBAL GRAIN OUTPUT... The United Nations Food and Agriculture Organization (FAO) forecasts global cereal grain production will rise 6% this year to 2.708 billion MT, though admits the forecast is based on favorable weather. World wheat production is projected to rise 5.4% to 695 MMT, while world corn production is forecast to increase 10% to 960 MMT. Meanwhile, FAO's food price index rose 2 points to 215.5 in April as a sharp increase in dairy prices more than offset declines in cereal, fats/oils and sugar prices. Meat prices were steady.

EASTERN AUSTRALIA TO RECEIVE NEEDED RAINS... The Australian Bureau of Meteorology is calling for much-needed widespread rains across eastern Australia early next week. If the forecast rains develop, it would boost wheat seedings across the region as many producers have been waiting on precip to plant their crop. Some private forecasters are calling for additional rains later next week.

WEEKLY EXPORT SALES REPORT OUT THIS MORNING... For the week ended May 2, traders expect: corn sales between 400,000 and 800,000 MT; wheat sales between 400,000 and 600,000 MT; soybean sales between 400,000 and 900,000 MT; soymeal sales between 75,000 and 200,000 MT; and cotton sales between 0 and 15,000 MT.

VILSACK ON HILL TODAY... USDA Secretary Tom Vilsack heads to the Senate Appropriations Ag Subcommittee to testify on the FY 2014 budget proposal from the administration. He's expected to face questions on the warned sequester furloughs and impacts that now don't appear to be unfolding. Some lawmakers also have concerns about the administration's proposal to shift U.S. food aid to a mostly cash aid basis.

EPA NOMINEE COULD HIT SOME SNAGS... The Senate Committee on Environment and Public Works this morning will consider Gina McCarthy to be EPA Administrator. Some panel Republicans may seek to postpone the vote on Obama's nominee. Two Senate Republicans (Sens. Boozman and Sessions) said they would consider filibustering McCarthy's nomination once it reaches the Senate floor, noting they remain frustrated by McCarthy's responses to questions asked following her confirmation hearing.

RECORD CHOICE BOXED BEEF PRICE SPURS LOWER CASH TRADE?... Choice boxed beef prices surged to a record high of $204.67 Wednesday, but cash cattle trade this week has been roughly $2 below last week around $126 to $127 in the Plains. Despite the big discount they already had priced in, live cattle futures are following the cash market lower instead of the product market higher. That's a clear indication traders' attitudes are bearish given demand concerns amid the record beef prices and macro-economic worries.

PORK PRODUCT MARKET STRENGTHENS... The pork cutout value was 52 cents higher and packers moved a strong 505.6 loads of product yesterday. While cutting margins are still deep in the red, packer demand for cash hogs is expected to remain strong enough to keep cash bids steady to firmer across the Midwest today.

OVERNIGHT DEMAND NEWS... South Korea bought 55,000 MT of optional origin food-grade corn. South Korea also bought 68,000 MT of optional origin corn for feed and 55,000 MT of feed wheat. Jordan tendered to purchase 150,000 MT of optional origin milling wheat and 100,000 MT of optional origin feed barley.


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