First Thing Today (VIP) -- November 5, 2013

November 5, 2013 12:10 AM
 

GOOD MORNING!

CORN AND WHEAT MIXED, BEANS FIRMER OVERNIGHT... As of 6:30 a.m. CT, corn and wheat futures are narrowly mixed, while soybean futures are 3 to 6 cents higher. Trade is light and choppy as traders await USDA's crop reports at the end of the week. The U.S. dollar index is holding near unchanged this morning after two-sided trade overnight.

FARM BILL CONFERENCE MEETINGS BEHIND CLOSED DOORS ARE EXPECTED THIS WEEK... The four principles in House-Senate farm bill conference sessions are expected to meet throughout the week, despite the House being in recess until Nov. 12. The goal is to have a working agreement (tentative) on safety net and possibly even food nutrition funding and policy issues by the end of the week. While some farm-state lawmakers, including Rep. Collin Peterson (D-Minn.), have indicated they want to see farm bill conference talks wrapped up by Thanksgiving, we see low odds of that occurring. We see the process going into December.

TAX EXTENDERS DEBATE AHEAD... Congress may allow dozens of tax breaks to end in December, ahead of a comprehensive review of the U.S. tax code. This could include the $1 biodiesel tax incentive. Credits for alternative energy production, research and development, and other provisions may expire for months or forever, but lawmakers are expected to try to save certain tax breaks individually before the end of 2013. Some expect the expiring provisions to lapse well into 2014 or longer, while lawmakers work on a comprehensive tax overhaul. If Congress has not made much progress toward tax reform by fall of 2014, some reports suggest lawmakers will take a closer look at reviving the expired tax breaks and making them retroactive.

WINTER WHEAT CCI RATINGS IMPROVE... 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 improved 4 points to 364, while the SRW crop firmed 1 point to 378. The bulk of the improvement in the HRW crop was in Montana.

RUSSIAN GRAIN EXPORTS RISE... Russia has exported 11.177 MMT of grain the first four months of 2013-14, according to official Russian statistics data, up 8.5% from year-ago. Private firm, Institute for Agriculture Market Studies says wheat exports account for 9.2 MMT of that total. Meanwhile, Russian wheat export prices dropped for the first time last week since September amid falling global grain prices.

CANADA 'VERY CONFIDENT' COUNTRY-OF-ORIGIN LABELING WILL BE REPEALED... Canadian Agriculture Minister Gerry Ritz said Monday he is "very confident" the U.S. will repeal its country-of-origin (COOL) meat-labeling law, which Canada opposes. "COOL continues to hurt industries on both sides of the border, adding unnecessary red tape, delays, and costs to our integrated North American meat industry. U.S. legislators have an opportunity now through the farm bill to end the economic harm that COOL is having throughout North America," Ritz said. "Our government remains committed to pursuing all options available to resolve this dispute, including retaliation."

EARLY SIGNS POINT TO STEADY/WEAKER CASH CATTLE TRADE... Showlist numbers are up from week-ago across the Plains and packers are struggling to move beef, which suggests packers will be reluctant to raise cash cattle bids. But given overall tight market-ready supplies, firmer cash cattle trade can't be ruled out. Price action in live cattle futures is likely to be muted as traders wait on clearer signs on this week's cash trade.

STRONG PORK MARGINS... Pork plants are working with strong cutting margins, which is limiting pressure on cash hog bids. The pork cutout value was 85 cents higher and packers moved a solid 318.73 loads of product Monday, which when combined with the strong margins should keep cash hog bids steady at most Midwest locations today.

OVERNIGHT DEMAND NEWS... Exporters reported no tenders or purchases.

 

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