First Thing Today (VIP) -- November 8, 2013

November 8, 2013 12:09 AM
 

GOOD MORNING!

QUIET TRADE OVERNIGHT AHEAD OF USDA REPORTS... As of 6:30 a.m. CT, corn futures are trading around 1 cent higher, soybeans are 1 to 2 cents lower and wheat futures are narrowly mixed. The U.S. dollar index is anchored near unchanged this morning following light, two-sided trade overnight.

NOVEMBER CROP REPORTS OUT THIS MORNING... Traders have had to wait two months since USDA's last production and supply/demand updates. In the Crop Production Report, traders expect USDA to raise its estimate of the corn and bean crops, with corn production guessed at 14.022 billion bu. and soybean production at 3.225 billion bushels. The average pre-report guesses show corn carryover rising to 2.056 billion bu., soybean carryover increasing to 183 million bu. and wheat ending stocks declining to 527 million bushels.

WEAKER JOBS REPORT EXPECTED... Economists polled by Reuters expect this morning's jobs report to show the U.S. economy added 125,000 non-farm payrolls last month. That would be down from the initial reporting of 148,000 jobs added in September. Economists generally feel the 16-day government shutdown likely cost the economy 50,000 jobs. The unemployment rate is expected to tick up to 7.3% from 7.2% in the last report.

$10 BILLION CUT TO FOOD STAMP FUNDING UNDER REVIEW BY CONFEREES... Farm bill conferees are mulling a food stamp funding cut of around $10 billion over ten years, a compromise between the Senate's proposed $4 billion cut and the House's $39 billion in savings. The final tally could change depending on what policy changes are eventually included in a coming farm bill conference report, and that depends on whether farm bill principals believe the changes can garner enough Republican and Democratic votes for passage. The next thorny area is potential policy changes for food stamps, including requirements for some recipients to find a job or enroll in work-training programs to get benefits. Republicans also want to allow states to drug-test SNAP applicants. They also want to eliminate the option states have of seeking a waiver from rules that require able-bodied adults to work or participate in job training to get extended food-stamp benefits.

CHINESE SOY IMPORTS DROP IN OCTOBER... China imported 4.19 MMT of soybeans last month, according to official customs data, down 11% from September. For the first 10 months of this calendar year, China has imported 49.9 MMT of soybeans, up 3.3% from year-ago. State-run think-tank China National Grain and Oils Information Center forecasts Chinese soybean imports will total 62.5 MMT this year.

UPBEAT CHINESE TRADE DATA... China's trade surplus surged to $31.1 billion in October from $15.2 billion in September and came in much higher than expected. October Chinese exports rose 5.6% while imports jumped 7.6% over year-ago. The upbeat trade data should help ease concerns with the Chinese economy, especially on the export side, after a surprising decline in September.

BRAZIL RAISES BEAN, CORN CROP FORECASTS... Brazilian statistical agency Conab raised its 2013-14 Brazilian soybean crop estimate to a record 87.9 MMT to 90.2 MMT from a forecast range of 87.6 MMT to 89.7 MMT in October. Conab now sees the 2013-14 Brazilian corn crop at 78.5 MMT to 79.8 MMT, up modestly from a forecast range of 78.4 MMT to 79.6 MMT last month.

EPA, CORPS PROPOSE CLEAN WATER ACT JURISDICTION OVER ALL STREAMS, WETLANDS LINKED TO NAVIGABLE WATERS... The Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers are proposing to assert Clean Water Act (CWA) jurisdiction over all natural and man-made tributary streams, lakes, ponds and wetlands that affect the chemical, physical, and biological integrity of larger, downstream navigable waters. The agencies said the purposes of the proposed rule is to ensure protection of aquatic resources and make the process of identifying which are federally protected waters, or "waters of the United States," less complicated and more efficient. Wetlands are also considered in the report, as they can influence downstream factors by providing floodwater storage, natural nitrogen reduction, groundwater recharge and various other benefits or impairments. These aspects of the report, if finalized, have the potential to drastically alter the reach of the Clean Water Act, which currently extends only to waters defined as "navigable". The National Cattlemen’s Beef Association (NCBA) is concerned the rule could eventually force farmers and ranchers "to get permits to do anything on their ranches and farms," said Tamara Thies, a spokeswoman on environmental issues. EPA counters that the rule is limited to clarifying uncertainties over Clean Water Act jurisdiction that have arisen from recent U.S. Supreme Court decisions and doesn’t propose changes to existing regulatory exemptions, including those for agriculture, spokeswoman Stacy Kika said. The potential expansion of the CWA has already triggered legislative attention, with Wyoming's Senator John Barrasso formulating the Preserve the Waters of the United States Act.

CASH CATTLE TRADE LOWER... Cash cattle trade got underway at $131 in the Plains Thursday, $1 below the bulk of last week's cash activity. December live cattle futures finished yesterday's session at a slight premium to the initial cash sales. With a short-term top in place, the contract could face pressure today, though it's unlikely it will move below the cash market unless funds actively sell.

PORK CUTOUT REBOUNDS... After two days of price pressure, the pork cutout value rebounded with a $1.05 gain yesterday. While pork supplies are building and that will put more pressure on demand, pork still holds a competitive price advantage over beef, which may be enough to limit near-term pressure on the product market.

OVERNIGHT DEMAND NEWS... Algeria purchased 650,000 MT of optional origin milling wheat. Ethiopia tendered to buy 35,000 MT of optional origin milling wheat.

 

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