First Thing Today (VIP) -- November 11, 2013

November 11, 2013 12:33 AM


FOLLOWTHROUGH CORN BUYS TO START WEEK... Corn futures are enjoying some followthrough buying after a number of contracts saw bullish reversals on Friday. As of 6:30 a.m. CT, most contracts are 3 to 4 cents higher. The soybean market, on the other hand, is down 1 to 5 cents amid some light profit-taking. Wheat futures are choppy this morning, with nearby contracts of all three flavors mostly 2 to 4 cents higher.

HOLIDAY SCHEDULE REMINDER... Government offices are closed for Veterans' Day, but grain and livestock markets are open for normal trading hours. Due to USDA being closed, the release of weekly export inspections and crop progress data is delayed until Tuesday.

GUESSING GAME CONTINUES ON WHEN EPA WILL ANNOUNCE 2014 RFS VOLUME REQUIREMENTS... Reports that the announcement would come Friday were wrong -- as most expected. Now some staffers on the House Energy and Commerce Committee think it will be "sometime this week." Of note, EPA Administrator Gina McCarthy appears before a congressional panel Thursday on EPA accountability -- an interesting topic as EPA was late in announcing the 2013 RFS volume requirements by more than eight months.

KEY ITEMS ON TAP IN WASHINGTON THIS WEEK... Janet Yellen's nomination to be head of the Federal Reserve, another FY 2014 budget conference, a hearing on the U.S. economy, a hearing appearance by EPA administrator Gina McCarthy and continued work behind the scenes on farm bill conference issues are the highlights in Washington this week. On the report front, today's holiday also shifts things a bit, moving the weekly Crop Progress report to Tuesday and the Weekly Export Sales data to Friday morning. But there will also be trade data for market consideration on Thursday, the final data for Fiscal 2013, so we’ll find out how much of a trade surplus agriculture has generated.

COMPANIES SLASH HFCS PRICES... Producers of high fructose corn syrup (HFCS) are reportedly offering big price cuts on next year's supplies in an effort to keep them competitive relative to tumbling sugar prices. Reuters reports that companies such as Cargill Ltd. and Archer Daniels Midland Co. are offering cuts of 10% on HFCS in initial negotiations on next year's supplies.

UKRAINE WILL DELIVERY 2 MMT TO CHINA BY YEAR-END... Ukraine says it will be able to deliver 2 MMT of corn to China before the end of the year as part of a loan agreement between the countries, despite a delayed grain harvest . Last year, the countries reached an agreement on sanitary and quality requirements for Ukraine to ship 2 MMT of corn to the country in 2013 and another 2 MMT in the first seven months of 2014 to pay off a Chinese loan geared at improving developing the agriculture industry in Ukraine. So far, Ukraine has reportedly shipped 1.1 MMT of corn to China.

LACKLUSTER DEMAND FOR CHINESE COTTON RESERVES... Chinese buys for state cotton reserves remain tepid as just over half (555,920 MT) of the cotton offered for auction was purchased in the latest offering. This was down from 608,560 MT the week prior. The country's total cotton buys this year stand at 1.9 MMT, which is down 13% from year-ago. New quality standards have restricted the amount of cotton that can be purchased. The same can be said for rumors the country may soon release old-crop cotton at attractive prices.

ATTITUDES TOWARD CATTLE MARKET STILL FRIENDLY... Live cattle futures posted a high-range close Friday despite lower cash prices on the Southern Plains last week. This along with the premium futures hold to last week's cash prices signals bullish attitudes prevail. Key will be if followthrough buying lifts futures today or if the market faces profit-taking. The latter would suggest bulls are growing tired and increasing concerns about demand. On Friday, Choice cuts slid $1.20 and Select declined 43 cents. But even more disappointing was light movement of just 108 loads.

STRONG PROFIT MARGINS REMAIN AN UNDERLYING SOURCE OF SUPPORT FOR HOGS... While hog supplies continue to build both in terms of numbers and weights, packers are enjoying wide profit margins, which are giving them incentive to keep kill lines full. This continues to limit price declines in the cash and futures markets. Also supportive is an uptick in the product market Friday. The pork cutout value firmed 43 cents and movement was decent at 352.66 loads.

WEEKEND DEMAND NEWS... Lebanon tendered for 40,000 MT of wheat.

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