First Thing Today (VIP) -- November 18, 2013

November 18, 2013 12:40 AM


CORN PRICES CONTINUE TO SLIDE... Corn futures faced pressure overnight and appear headed for a test of the key 2013 lows, as EPA's 2014 proposal to reduce the corn for ethanol component from 2013 levels in the Renewable Fuels Standard remains a weight on the market. As a result, most corn contracts are 4 to 5 cents lower this morning. Soybean futures have seen two-sided trade this morning, but as of 6:30 a.m. CT most contracts are fractionally to 4 cents higher. Wheat futures are enjoying slight gains in the winter wheat markets while HRS wheat is mixed. The U.S. dollar index is under pressure to start the week, but so are gold and crude oil futures.

BUDGET DEADLINE, TAX REFORM PLANS AHEAD... The House plans to debate energy security bills, while the Senate wants to move to a Defense Dept. authorization measure in addition to continuing debate on a compounding pharmacies bill. On the budget front, Friday is the deadline suggested by leaders of the House and Senate Appropriations panels for when they hope the budget conference committee can issue top-line budget figures at least for Fiscal 2014, which began Oct. 1. The conference committee of 29 members has an informal deadline of Dec. 13 to produce its recommendations on a spending plan with an existing funding mechanism for government set to expire Jan. 15. Regarding tax reform, Senate Finance Committee Chairman Max Baucus (D-Mont.) will meet with members Tuesday, and could release a draft of the panel's tax reform plan. But with the House holding off on tax reform at least until 2014, Baucus could hold off on the panel's details. The House Thanksgiving break starts in just four days, and there are only eight legislative days scheduled in December in the House. The Senate leaves on Nov. 27.

VOTES ON YELLEN'S NOMINATION TO CHAIR FED POSSIBLE THIS WEEK... The Senate Banking Committee could vote this week on Janet Yellen to be the first chairwoman of the Federal Reserve Board. While several senators have pledged to put a hold on her nomination to force votes on other issues, her eventual approval is widely expected. Current Fed Chairman Ben Bernanke's tenure runs through January. On Tuesday evening, Bernanke will speak at the National Economists Club Annual Dinner at the U.S. Chamber of Commerce. On Wednesday, the Fed will release minutes from its latest meeting. The next Federal Open Market Committee (FOMC) meeting is scheduled for Dec. 17-18, Bernanke's last as chairman. The Senate Homeland Security and Government Affairs Committee might vote Wednesday on President Obama's nomination of Jeh Johnson to head the Homeland Security Department.

CHINA TO IMPLEMENT DOMESTIC STOCKPILING PROGRAM... China's National Development and Reform Commission announced the country will implement interim stockpiling policies in the major production area of northeast China in the hopes of stabilizing grain production and helping farmers. The commission did not specify when China would start these stockpiling efforts, but it did say the government would halt its buys by April 30, 2014.

EGYPT MAY RESUME WHEAT EXPORTS... Strong bids for export tenders by India's state trading agencies indicates the country may resume wheat exports. In October, the country was forced to reduce the minimum export price for wheat by $40 per ton to $260 per ton.

EGYPT HAS WHEAT NEEDS COVERED UNTIL MARCH... Egypt's prime minister says the country has wheat supplies to sustain the country until March 5. The Egyptian government is working to build 100 silos to boost the country's wheat storage capacity to 3 MMT.

CORN IMPORTS SURGE TO ITALY SURGE... Italy reports that its 2013 imports of corn through the month of August rose sharply to 2.37 MMT, compared to 1.3 MMT for the first eight months of the year in 2012, according to an Italian cereals association. Italy's soft wheat imports declined over this time span to 2.3 MMT, compared to 2.85 MMT last year.

HIGHER CASH CATTLE TRADE VS. SLOWED BEEF MOVEMENT... Cash cattle trade got underway at $1 higher prices of $132 in the Southern Plains on Friday, which could give the cattle market a lift to start the week. However, nearby futures are at a $1-plus premium to these cash prices, which means the market might also see some profit-taking. Action in the boxed beef market to wrap up the week was disappointing as a $1.40 dip in Choice boxed beef values and an 8-cent slide in Select cuts only encouraged light movement of 132 loads. The product market will be closely watched for cash clues this week. Later in the week, traders will shift attention to positioning for USDA's Cattle on Feed Report.

BUILDING SUPPLIES TO REMAIN A LIMITING FACTOR FOR HOGS... The lean hog market sustained major damage last week, and more of the same could be seen this week amid technical selling and building market ready supplies. Hog weights climbed to record levels last week and numbers are also on the rise. But strong packer profit margins are helping to prevent a supply glut. The pork cutout value softened Friday and movement slowed from its strong pace most of the week, with just 303.91 loads changing hands. Product market performance and how it plays into packer profit margins will be watched again this week.

WEEKEND DEMAND NEWS... South Korea's Nonghyup Feed Inc. (NOFI) bought 136,000 MT of U.S. corn. The country's Major Feedmill Group (MFG) also bought 113,000 MT of corn that is likely to be sourced from the Black Sea region. South Korean flour millers also bought 47,200 MT of U.S. milling wheat. Iraq tendered for a minimum of 50,000 MT of milling wheat. Lebanon tendered for 20,000 MT of wheat.

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