MIXED TO MOSTLY WEAKER TONE IN GRAINS... As of 6:30 a.m. CT, corn futures are trading steady to around 1 cent lower, soybeans 4 to 7 cents lower, Chicago wheat fractionally to 3 cents lower and Kansas City and Minneapolis wheat mixed with a slight downside bias. The U.S. dollar index is firmer this morning.
LAWMAKERS LOOK AT FARM BILL SPENDING CUTS AS PART OF FISCAL CLIFF PACKAGE... Leaders from both political parties continue to posture relative to slow-paced fiscal cliff talks, with Sen. Dick Durbin (D-Ill.) saying he remains skeptical of including entitlement savings in any down payment. "Well, it could be, but I’d have to look closely at what you might include there," Durbin said. "It’s more likely that it would be other mandatory programs. There’s a list that came out of the Super Committee that’s still floating around. Some of them still work." Senate Ag Chairwoman Debbie Stabenow (D-Mich.) said she was hoping the Senate-passed farm bill’s $23 billion in mandatory savings could be used to help replace the automatic budget cuts. Stabenow said the White House was "very open to doing that."
API SUES EPA ON BIODIESEL MANDATE, CALLS FOR REPEALING RFS... The American Petroleum Institute (API) on Tuesday filed suit in the U.S. Court of Appeals for the District of Columbia to block the Environmental Protection Agency (EPA) from raising the mandate for biodiesel usage from a billion gallons this year to 1.28 billion in 2013. The industry group said it has also filed a petition with EPA for administrative reconsideration of the 2013 mandate. "EPA’s overzealous 2013 biodiesel mandate is unworkable, could raise the costs of making diesel fuel, and should be reduced," said Bob Greco, group downstream director for API. API also called for repealing the Renewable Fuel Standard (RFS), which sets the annual targets for biodiesel, corn ethanol and other biofuels. Greco said the ethanol mandate will be unworkable as the market reaches the blend wall, or saturation point, for the biofuel and refiners consume the surplus credits, or RINs, that they can use to comply with RFS quotas. Perspective: Most observers believe the court will back up the U.S. government on its biodiesel mandate decision.
JAPAN'S USE OF U.S. CORN DECLINING... Japan is expected to import 30% of its 2012-13 corn needs from Brazil, a five-fold increase from 2011-12, while the country's reliance on U.S. corn will drop to 57% from 86% last year, according to a trading executive with Zen-Noh, one of Japan's major feedmakers. Japan's feed wheat imports for 2012-13 are also expected to more than double as end-users seek alternatives to U.S. corn given tight supplies and high prices.
UKRAINE TO ALLOW MORE WHEAT EXPORTS... Ukraine's ag ministry is telling exporters they can continue to ship wheat even though exports have reached the 5.5 MMT "ceiling." "As of today, 5.5 MMT of wheat have been exported and we are continuing exports. Our updated data show that it is possible to continue exports," Ivan Bisyuk, first deputy agriculture minister says. "We will not use non-tariff regulations. If we need to (ban exports), we will announce that, but today there is no need to limit exports." Exporters are confused by the mixed messages coming from Ukrainian officials, but indicate they will continue to ship wheat in small tonnages until they are told to stop.
INDIA LIKELY TO FREE UP MORE WHEAT FOR EXPORT... India's government had previously cleared the way for the export of up to 2 MMT of state-owned wheat reserves, but officials are now saying more exports are likely. An Indian official says around 3 MMT of government-owned wheat is likely to be exported as the 2012-13 crop is in good shape and government stockpiles are large.
CHOICE BOXED BEEF DROPS AGAIN... After firming 93 cents Tuesday morning, Choice boxed beef prices weakened yesterday afternoon to end 77 cents lower for the day. While most cattle traders are anticipating firmer cash cattle prices in the Plains this week (aside from the light trade at steady $128 prices Monday), softening Choice boxed beef prices and negative packer margins raise some uncertainty.
STRONG PERFORMANCE BY PORK PRODUCT MARKET... The pork cutout value surged $1.63 Tuesday, but perhaps more impressive was the 194.13 loads of product packers moved at the sharply higher prices. That signals pork demand is strong even at higher prices, suggesting retailers are gearing up for year-end pork features. With the pork product market strengthening, cash hog bids will remain steady to firmer across the Midwest.
OVERNIGHT DEMAND NEWS... Two South Korean firms purchased a total of 165,000 MT of South American soymeal, while another South Korean firm passed on a tender for up to 13,000 MT of soymeal. Japan tendered for 120,000 MT of feed wheat and 200,000 MT of feed barley.