First Thing Today (VIP) -- November 12, 2013

November 12, 2013 12:32 AM


MORE SHORT COVERING IN THE GRAIN & SOY MARKETS... Corn futures have extended their rally since Friday with most contracts 1 to 2 cents higher as of 6:30 a.m. CT. Soybean futures are also seeing renewed buying interest with most contracts up 3 to 5 cents. Wheat futures are following corn. All three flavors are roughly 1 to 3 cents higher. The U.S. dollar index is firmer this morning, which is pressuring crude oil and gold futures.

HOLIDAY SCHEDULE REMINDER... USDA will release its Weekly Export Inspections Report at 10:00 a.m. CT today, followed by its weekly Crop Progress & Condition Report at 3:00 p.m. CT. The release of these reports was delayed due to the government's observance of Veterans Day.

USDA DISPUTES LAWMAKER CONTENTIONS THE U.S. WILL CLEAR IMPORTS OF CHINESE CHICKEN... Comments from Sen. Charles Schumer (D-N.Y.) and Rep. Rosa DeLauro (D-Ct.) that USDA was poised to approve imports of Chinese chicken within a year are now being challenged by USDA. The Food Safety and Inspection Service (FSIS) issued a statement countering the comments made by the two lawmakers, saying USDA "has not found China's poultry slaughter system to be equivalent and therefore poultry slaughtered in China is not allowed to be imported to the United States. The U.S. food supply is among the safest in the world, and the Food Safety Inspection Service is dedicated to maintaining that status."

PROPONENTS, OPPONENTS OF RFS MANDATE GEAR UP FOR EPA'S COMING ANNOUNCEMENT... The guessing game as to when the EPA will announce Renewable Fuel Standard (RFS) volume requirements for 2014 continues, with a spate of media articles today saying it could come as soon as today. Whenever the information is released, expect both sides to head to the courts if they don't like what they hear. In fact, both sides could enter the courts if they don't get exactly what they feel is "warranted." Meanwhile, Renewable Fuels Association President Bob Dinneen, who heads an ethanol industry group, said he expects EPA to reduce the mandate. "The EPA has adopted the oil companies’ narrative with respect to the blend wall," Dinneen said, according to Politico.

MASSAD TARGETED TO HEAD CFTC... President Barack Obama reportedly plans to nominate Timothy Massad to head the Commodity Futures Trading Commission (CFTC) when the current Chairman Gary Gensler's term expires Jan. 3, 2014. The president is expected to officially announce the nomination today. Massad is a lawyer who spent a brief period on the Congressional Oversight Panel, which oversaw the Troubled Asset Relief Program (TARP). Since then, he has been closely involved with the program as he served as the Assistant Secretary for Financial Stability.

CHINA UNVEILS REFORM AGENDA... Leaders in China wrapped up a four-day meeting today with the unveiling of a reform agenda for the next decade. In it, the Communist Party said it will let markets play a "decisive" role in allocating resources. Leaders also promised to enact fiscal and land reforms and relax investment controls.

CHINA RAISES NOVEMBER SOYBEAN IMPORT FORECAST BY NEARLY 3 MMT... China's Ministry of Commerce more than doubled its November soybean import forecast, raising its projection from 2.97 MMT to 5.95 MMT. But the ministry also lowered its soybean import estimate for October by 680,000 MT to 4.53 MMT.

KAZAKHSTAN PRIME MINISTER URGES MONTHLY GRAIN EXPORTS OF 1 MMT... Since the start of the marketing year on July 1, Kazakhstan has exported a total of 2.8 MMT of grain and flour in grain equivalent, according to its prime minister, with exports in October totaling around 1 MMT in grain and flour. He told cabinet members the country must maintain an export level in excess of 1 MMT of grain per month this marketing year. The country expects to export between 9 MMT and 10 MMT of grain for the 2013-14 marketing year.

FRANCE TRIMS CORN PRODUCTION ESTIMATE... France's farm ministry trimmed its corn production forecast by 300,000 MT from the month prior to 15.2 MMT. This would still represent a 1.2% increase over 2012. The country now expects lower yields to late sowings, delayed growth in the spring and heat and dryness in August.

TIGHTENING SUPPLIES REMAIN SUPPORTIVE OF LIVE CATTLE... Lacking product market news due to USDA's observance of Veterans Day, traders focused on longer-term fundamentals and expectations for ongoing supply tightening yesterday. Showlist estimates are slightly higher this week as increases in Nebraska, Colorado and Kansas were greater than a decline in Texas. This could make it tough for packers to get better than steady prices for cash cattle. Feeder cattle, on the other hand, have been pressured by recent strength in the corn market.

STRONG PACKER PROFIT MARGINS LIMIT DOWNSIDE FOR HOGS... Highly profitable packer cutting margins are keeping a floor under cash prices despite seasonally expanding supplies. Yesterday some locations even raised bids to secure needs, while others paid steady to lower prices for market-ready hogs. Buying interest in the front-month contract will likely remain limited as it is at a premium to the cash hog index.

OVERNIGHT DEMAND NEWS... A South Korean feedmakers plans to import 15,000 MT of Russian corn. Bangladesh tendered for 50,000 MT of wheat. Tunisia tendered for 92,000 MT of durum wheat.

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