First Thing Today (VIP) -- November 8, 2012

November 8, 2012 12:44 AM


MILD PRICE STRENGTH OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading fractionally to 2 cents higher, soybeans 3 to 6 cents higher, Chicago and Kansas City wheat 1 to 3 cents higher and Minneapolis wheat narrowly mixed. The U.S. dollar index is mildly firmer this morning.

FISCAL CLIFF WARNING FROM FITCH RATINGS... Fitch Ratings issued the latest warning relative to the U.S. fiscal cliff situation, saying that if lawmakers and the administration don’t take action to avoid that from happening, it could plunge the U.S. economy into recession and push unemployment up. "Failure to avoid the fiscal cliff and raise the debt ceiling in a timely manner, as well as securing agreement on credible deficit reduction, would likely result in a rating downgrade in 2013," the firm said. Their view on the fiscal cliff causing a recession matches a Congressional Budget Office (CBO) assessment of the situation.

BRAZIL RAISES SOYBEAN FORECAST, LOWERS CORN OUTLOOK... Conab, the supply agency of the Brazilian government, slightly raised its soybean production forecast to a range of 80.09 MMT to 82.99 MMT from 80 MMT to 82.8 MMT last month. For corn, Conab made a slight downward revision, lowering its forecast to a range of 71.55 MMT to 72.85 MMT from 71.9 MMT to 73.2 MMT in October.

FAO CUTS WORLD WHEAT PRODUCTION FORECAST... The United Nations Food and Agriculture Organization (FAO) lowered its 2012-13 global wheat crop forecast by 2 MMT to 661 MMT. Wheat production is now seen 5.5% under 2011-12, while total cereal grains production is forecast to fall 2.7% from last year to 2.284 billion MT. Meanwhile, FAO's food price index averaged 213 in October, down 2 points from September as a drop in cereals and oils/fats prices more than offset increases in dairy and sugar prices.

LIMITED DEMAND FOR STATE-OWNED CHINESE SOYBEANS... China sold 65,495 MT of state-owned soybeans at auction out of 397,204 MT put up for sale. Demand for state-owned has waned as the older supplies (2010-crop) are priced about the same as new-crop domestic supplies and imported soybeans.

RUSSIAN GRAIN EXPORTS EXPECTED TO EXCEED 12 MMT... Russia has exported 9.8 MMT of grain from July 1 through Oct. 24 and 2012-13 grain exports are likely to top 12 MMT, according to the country's ag ministry. The ag ministry had previously said grain exports would be in the 10 MMT to 14 MMT range.

KAZAKHSTAN CUTS GRAIN EXPORT FORECAST... Kazakhstan's 2012-13 grain exports are now expected to reach 7 MMT, according to the country's ag ministry, down from a prior forecast of 8 MMT. The ag ministry says grain production totaled 14.718 MMT.

WEEKLY EXPORT SALES REPORT OUT THIS MORNING... For the week ended Nov. 1, traders expect: corn sales between 150,000 and 250,000 MT; wheat sales between 300,000 and 500,000 MT; soybean sales between 600,000 and 800,000 MT; soymeal sales between 100,000 and 150,000 MT; and soyoil sales between 20,000 and 40,000 MT.

CASH CATTLE NEGOTIATIONS JUST GETTING STARTED... Initial packer cash cattle bids surfaced at $124 Wednesday, while Plains feedlots are said to be asking $128 to $130 for this week's supplies. Given the wide spread of bids and asking prices, active cash cattle trade is not expected until late in the week. Most traders are anticipating lower cash prices compared with last week's $126 to $127 trade in the Plains as showlist numbers are bigger than week-ago and packer margins are deep in the red.

PORK CUTOUT REBOUNDS... After a $1.16 drop Tuesday, the pork cutout value was 67 cents higher yesterday with loin prices continuing to drive overall price action in the pork product market. While the rise in the pork cutout value will help packer margins, cash hog bids will remain steady to weaker across the Midwest on limited packer demand.

OVERNIGHT DEMAND NEWS... South Korea passed on a tender for up to 210,000 MT of corn and up to 70,000 MT of feed wheat due to high prices. South Korea also passed on a tender for 55,000 MT of corn.


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