First Thing Today (VIP) -- November 26, 2013

November 26, 2013 12:12 AM


GRAINS WEAKER OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading 4 to 5 cents lower, soybeans are 2 to 4 cents lower and wheat futures are steady to 5 cents lower with SRW contracts leading losses. The U.S. dollar index is weaker this morning.

SIMPLE EXPLANATION ON GRAIN INSPECTIONS DATA DISCREPANCY... As we reported in "Evening Report," some market participants were abuzz Monday when cumulative soybean export inspections from USDA as of Nov. 21 grew by a larger amount than the weekly inspections figure. Specifically, some were caught off guard by cumulative total of 585.634 million bu. of soybean inspections for 2013-14, up 76.768 million bu. from the prior week. However, the soybean export inspections for the week ended Nov. 21 were reported at 66.934 million bushels. The higher cumulative figure was due to a total of 9.834 million bu. in "corrections" to prior reports that were reported by USDA. All of the corrections involved shipments to China. USDA typically releases corrections to prior reports as part of the weekly update, but the level of the corrections yesterday spurred questions.

CHINA TO LET MARKET FORCES HAVE GREATER IMPACT ON GRAIN PRICES... China plans to allow market factors gradually play a greater role in setting grain prices whereas the current system relies on government support prices and stockpiling. China
Economic Times
newspaper quotes Fang Yan, rural economic director at the National
Development and Reform Commission, as saying,"Grain prices have come to the stage to be decided by the market." She says the Chinese government is likely test the market-pricing system with one unspecified market while "temporarily extending" price controls for the staple grain markets of wheat and rice.

BRAZIL MAY DECIDE SOON ON WHETHER TO IMPOSE TRADE RETALIATION AGAINST U.S. EXPORTS RELATED TO U.S. COTTON SUBSIDIES... Inside U.S. Trade reports that senior Brazilian government officials this week may decide to impose hundreds of millions of dollars in trade retaliation against U.S. exports, as another month closes without any signal that the U.S. will pay the monthly $12.25 million it agreed to pay Brazil as part of an interim settlement to a long-standing fight over farm subsidies for cotton. Citing sources familiar with the Brazilian government's deliberations, the publication said a special inter-ministerial group known as CAMEX is slated to convene on Nov. 27 and will consider a "menu" of options in terms of the monetary value, method and timing of imposing trade retaliation, as well as which sectors will be affected.

PERU WON’T IMPOSE COUNTERVAILING DUTIES ON U.S. COTTON... The Peruvian commission on competition and intellectual property (INDECOPI) has decided not to impose a countervailing duty on imports of U.S. cotton after an 18-month investigation, the U.S. National Cotton Council (NCC) announced. The Peruvian investigation by the commission found no causal link between the imports of U.S. cotton and the economic situation of Peru’s cotton farmers. The decision, which must go through a 15-day waiting period to allow an appeal, will mean that U.S. cotton will continue to be available to Peru’s textile industry free of import duties, as agreed to in the U.S.-Peru Free Trade Agreement. NCC labeled the Peru decision as the "correct decision" in a statement announcing the investigation results.

WINTER WHEAT CCI RATINGS DROP... When USDA's weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale), the HRW crop declined 3 points to 363 while the SRW crop dropped 2 points to 378. These are the final crop ratings of the fall. USDA will resume national crop condition reports next spring.

STRONG BOXED BEEF PRICE GAINS... Boxed beef prices were sharply higher to start the week, with Choice cuts surging $2.40 and Select boxes $1.46 higher yesterday. While prices were strong, packers moved only 135 loads of product on the day. Given higher showlist estimates for the week, the boxed beef market likely needs to show strength in movement and price to encourage packers to raise cash cattle bids.

PORK CUTOUT DROPS, BUT MOVEMENT STRONG... The pork cutout value dropped 67 cents Monday, which allowed packers to move a strong 386.95 loads of product. With market-ready hog numbers and carcass weights on the rise, the pork product market is likely to face more near-term price pressure as packers try to keep the pork pipeline from backing up. With the product market weakening, cash hog bids will remain under pressure.

OVERNIGHT DEMAND NEWS... Jordan tendered to purchase 100,000 MT of optional origin wheat.


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