First Thing Today (VIP) -- November 7, 2012

November 7, 2012 12:21 AM


CORN AND WHEAT FIRMER, BEANS LOWER THIS MORNING... As of 6:30 a.m. CT, corn futures are trading steady to 2 cents higher, soybeans 5 to 7 cents lower and wheat futures mostly 2 to 4 cents higher at all three exchanges. The U.S. dollar index is firmer this morning after trading both sides of unchanged overnight.

A STATUS QUO ELECTION... President Obama was reelected to a second term with over 300 electoral votes, winning virtually all of the key swing states. The presidential election showed a huge margin of victory for Obama among Latino, African-American and women voters, as well as a continued positive spread among the youth who voted in larger numbers than many thought. Republicans kept control of the House and will be emboldened in coming fiscal cliff talks with President Obama. Senate Democrats increased the number of seats they will control, even though 23 of their seats were up for vote versus only ten for Republicans.

WHAT'S AHEAD FOR WASHINGTON... President Obama and Senate Majority Leader Harry Reid (D-Nev.) signaled compromise in coming talks on the lingering budget deficit and other issues. But the degree of those compromises among Democrats and House Republicans is a big unknown. A host of issues will be dealt with in the coming lame-duck session of Congress that starts Nov. 13, including perhaps final action on a new farm bill.

PROPOSITION THAT WOULD HAVE REQUIRED LABELING OF GM FOODS DEFEATED... An election proposition in California that would have required labeling of genetically modified (GM) foods was soundly defeated. While a final vote is not yet available, 55% of the vote was "no" with 45% voting "yes." A highly organized No campaign poured $46 million into defeating Proposition 37 and blanketed the state with advertising. St. Louis-based Monsanto, a leading maker of genetically engineered seeds, was the largest single contributor at $8.1 million.

CHINESE SOY IMPORT GROWTH RATE FORECAST TO SLOW... Chinese soybean imports are expected to grow by 3 MMT to 4 MMT annually (5% to 6% annual growth rate) over the next five years, according to an executive with state-run China Grain Reserves Corp. (Sinograin). Without giving a reason, the Sinograin executive says demand growth for meal and edible oils will slow, with meal demand forecast to grow 4% to 5% annually over the next five years.

UKRAINE GRAIN EXPORTS REACH 9.2 MMT... Ukraine has exported 9.2 MMT of grain so far in 2012-13 with wheat accounting for 4.5 MMT of that total, according to the country's ag minister. While Ukraine's ag ministry originally said it would ban wheat exports starting Nov. 15, exporters says they have been promised no ban will be enacted prior to Dec. 1 and the country's economy minister says his agency won't propose any export restrictions.

AUSSIE WHEAT CROP, EXPORT UPDATE... ANZ Banking Group forecasts the 2012-13 Australian wheat crop at around 20 MMT, with half of that production expected in the eastern states of New South Wales, Queensland and Victoria. With production expected to fall sharply from 2011-12 and given strong Asian demand, the bank says exportable supplies from these three eastern states could be nearly exhausted by April.

CORN, HRS MARGINS LOWERED... CME Group announced it's cutting speculative margins for corn futures by 25%. The Minneapolis Grain Exchange says it's cutting speculative and hedge margins for its hard red spring wheat futures by 7.5%.

BOXED BEEF FIRMS, BUT CASH EXPECTATIONS STILL WEAK... Boxed beef prices were 63 cents (Choice) to $1.16 (Select) higher Tuesday and packers moved a decent 169 loads of product on the day. Despite strength in the boxed beef market, most traders are anticipating steady to lower cash cattle prices as cutting margins are deep in the black and there's talk some plants will cut back on kill hours.

PORK CUTOUT DROPS SHARPLY... The pork cutout value was $1.19 lower Tuesday, although that was mostly due to a $5.32 plunge in loin prices. The heavy pressure on loins triggered strong retailer buying interest, however, as packers moved 71 loads of the cut, accounting for just over half of the daily load total for all cuts and trim.

OVERNIGHT DEMAND NEWS... Jordan retendered for 100,000 MT of optional origin wheat after rejecting all offers on a similar tender Tuesday.


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