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First Thing Today (VIP) -- November 21, 2012

06:09AM Nov 21, 2012


CORN AND BEANS FIRMER, WHEAT MIXED... As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents higher, soybeans 4 to 8 cents higher, Chicago and Minneapolis wheat narrowly mixed and Kansas City wheat fractionally to 3 cents lower. The U.S. dollar index is firmer this morning, but well off the overnight highs.

CHINA CONFIRMS CORN, SOYBEAN STOCKPILING... China's State Grain Administration confirmed what we reported last week that it will stockpile new-crop domestic corn and soybean supplies at prices that are 7% higher for corn and 15% higher for beans than year-ago. The government will buy as much of these supplies as farmers want to sell in the provinces of Heilongjiang, Jilin, Liaoning and Inner Mongolia through April 30.

RUSSIA RAISES GRAIN EXPORT CEILING... Russian 2012-13 grain exports could reach 15.5 MMT, according to Deputy Ag Minister Ilya Shestakov, who says 11 MMT of grain have already been exported. That would leave Russia with tight grain stocks of 6 MMT to start the 2013-14 marketing year. Previously, the Russian ag ministry was forecasting 2012-13 grain exports at 10 MMT to 14 MMT. Shestakov also indicated the government plans to restart active grain sales from intervention stocks in February. Meanwhile, the head of the Russian Grain Union says Russia will export 9.5 MMT to 10 MMT of wheat in 2012-13.

FISCAL CLIFF TALKS SHOW DIVIDED TIMELINE AND OTHER ISSUES... The upbeat assessments given by congressional leaders from both parties last Friday have given way to what is clearly different approaches taken by both parties and President Obama regarding the timeline of a hoped-for agreement, including major differences in the timing and the scope of the solutions. Most concede a two-step process is likely to replace budget cuts and tax increases set for 2013 with enforced spending cuts and a longer-term plan to increase revenue via tax reform. The two sides have sharp differences over how much can be done in a lame-duck session of Congress and what should be pushed into 2013. The fate of whether the new farm bill will be completed this calendar year will likely be known shortly after the sides meet for their second meeting sometime next week. Democrats think a deficit reduction "down payment" worth up to $1.6 trillion over 10 years is possible in the lame duck. They propose raising $800 billion by making individuals earning more than $200,000 and couples earning more than $250,000 pay higher tax rates on their ordinary and investment income above that threshold. Most Republicans would prefer to take more modest steps. Republicans oppose any increase in income tax rates, but they are open to the general idea of a down payment and say they are open to raising revenue by scaling back tax preferences for high-income earners if Democrats agree to what they would consider substantive and enforceable changes that would reduce the growth of Medicare and Medicaid.

COLD STORAGE REPORT OUT THIS AFTERNOON... Traders are expecting USDA to report pork stocks at the end of October at 632.5 million lbs., which would be more than 100 million lbs. above the current record for the month. Total beef stocks as of Oct. 31 are expected to be 420.2 million pounds.

FRIDAY CASH CATTLE TRADE APPEARS LIKELY... Cash cattle bids and asking prices are still $5 to $6 apart in the Plains, suggesting active cash cattle trade isn't likely until Friday. With showlist numbers tighter than week-ago, boxed beef prices firming and packers running a full slaughter schedule next week, most traders anticipate steady to firmer prices compared with last week's $125 to mostly $126 trade in the Plains.

CASH HOGS CALLED STEADY/LOWER... Packer demand for cash hogs is expected to remain limited ahead of the Thanksgiving holiday, which is likely to keep cash hog bids under pressure. But there are growing expectations that pork plants may be more aggressive in their pursuit of hogs coming out of the holiday. If that turns out to be the case, cash hog bids may be steady to firmer Friday and early next week.

HOLIDAY TRADING SCHEDULE... Grain and livestock markets will observe normal trading hours today. All markets and government offices are closed Thursday for Thanksgiving. Grain and livestock markets will trade abbreviated hours Friday, Nov. 23. (9:30 a.m. CT to noon CT for grain futures at the Chicago Board of Trade and Kansas City Board of Trade, 9:30 a.m. CT to 12:15 p.m. CT for wheat futures at the Minneapolis Grain Exchange. Livestock markets are open from 9:05 a.m. CT to 12:15 p.m. CT.)

OVERNIGHT DEMAND NEWS... South Korea bought 24,500 MT of U.S. wheat and 23,700 MT of Canadian wheat. Japan purchased 134,693 MT of wheat in its weekly tender, including 45,195 MT of U.S. supplies, but canceled a tender for 120,000 MT of feed wheat and 200,000 MT of feed barley. Syria tendered for 100,000 MT of optional origin wheat.