First Thing Today (VIP) -- November 20, 2012

November 20, 2012 12:23 AM


CHOPPY TRADE OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading steady to 1 cent lower, soybeans mostly 3 to 7 cents lower, Chicago and Kansas City wheat narrowly mixed and Minneapolis wheat 1 to 3 cents lower. The U.S. dollar index is anchored near unchanged this morning after being firmer for much of overnight trade.

HRW CCI RATING CONTINUES TO DROP... When USDA's weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500 point scale), the HRW crop declined another 7 points to 288 while the SRW crop was unchanged at 379. For the HRW crop, modest improvement in Nebraska and Texas was more than offset by declines in Kansas (-3 points), Oklahoma (-1 point) and Colorado (-2 points).

UKRAINE ASKS TO REMAIN ON EGYPT'S WHEAT SUPPLIER LIST... Ukraine has formally asked Egypt to keep it on its list of potential wheat suppliers as it still has supplies to export. The vice chair of Egypt's main wheat buyer, GASC, says he told the country to stay on the list, any firm supplying Ukrainian wheat must guarantee wheat from other Black Sea countries at no additional cost if an export ban is enacted. Last week, Egypt removed Ukraine from its potential list of suppliers after being told a wheat export ban would start Dec. 1.

FINANCIAL MARKETS AWAIT BERNANKE SPEECH... Fed Chairman Ben Bernanke speaks in New York today and is expected to defend the Fed's actions to date to help the U.S. economy via asset purchases. Traders will also watch for any signal from Bernanke about what the Fed will do as Operation Twist winds down at the end of this year. The October FOMC minutes signaled many members saw the need for additional asset purchases in 2013. He's also expected to keep pressure on lawmakers to take action to avert the so-called fiscal cliff.

SENATE WILL DEBATE RUSSIA TRADE BILL WHEN LAME-DUCK SESSION RESUMES... The House has already passed legislation that would grant Russia permanent normal trade relations (PNTR), a requirement for the U.S. to garner the trade benefits following Russia's official entry into the World Trade Organization. The Senate is expected to approve its version, which may have to go back to the House if the current Senate language prevails. The issue: The legislation includes provisions, inspired by the death of attorney and anti-corruption activist Sergei Magnitsky at the hands of Russian jailers, to sanction human rights abusers, including those responsible for Magnitsky’s death. It would require the president to generate a list of human rights violators, whose assets would be frozen and U.S. visas revoked. But the Senate version is more global in application. The House version (HR 6156), is limited only to Russia, while the Senate measure (S 3406) would apply the sanctions to human rights abusers anywhere in the world.

POSITIVE IMPACT OF U.S. BEING ELIGIBLE FOR RUSSIAN WTO ENTRY CONCESSIONS... The Business Roundtable issued a statement recently noting that, "Russia has roughly 142 million consumers and is the world’s sixth-largest economy in terms of purchasing power, offering much potential for American businesses," the group noted. And it highlighted the fact that of all the WTO members, the U.S. is the only one not "fully benefiting from the market-opening concessions Russia made as part of its WTO membership."

JAPAN'S USE OF CORN IN FEED CONTINUES TO DECLINE... Japan's use of corn in feed declined for a ninth consecutive month in September as feedmakers seek alternatives to high-priced corn. The ratio of corn in feed production fell to 42.5% in September compared to 42.7% in August and 44.5% year-ago. The use of wheat for feed production is on the rise, increasing to 4.4% in September from 4.3% in August and 1.5% in September 2011.

CASH CATTLE OPINIONS ALL OVER THE BOARD... Cattle traders have a wide range of ideas on when cash cattle trade will take place this week and at what price level given the Thanksgiving holiday. The boxed beef market started the week strong as Choice boxes were $1.15 higher Monday and packers moved a strong 237 total loads of product on the day. Plus, showlist numbers are thought to be lighter than week-ago and packers will be buying for a full slaughter schedule next week. But cutting margins are deep in the red, which could limit packers' willingness to raise cash cattle bids.

CASH HOGS CALLED STEADY/WEAKER... Packer demand for cash hogs is expected to be limited ahead of Thanksgiving, which should keep pressure on the cash hog market. If packers find themselves short-bought on late-week slaughter needs, however, demand for cash hogs could improve coming out of Thanksgiving as cutting margins are deep in the black.

OVERNIGHT DEMAND NEWS... South Korea tendered for 24,500 MT of U.S. wheat. Japan is seeking 134,693 MT of wheat in its weekly tender. Japan also tendered for 49,000 MT of milling wheat, 6,000 MT of malting barley and 1,000 MT of food barley. Bangladesh tendered for 50,000 MT of optional origin wheat.


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