First Thing Today (VIP) -- October 16, 2013

October 16, 2013 01:19 AM


FIRMER TONE OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading fractionally to 1 cent higher, soybeans are 5 to 7 cents higher and wheat futures are steady to 1 cent higher. The U.S. dollar index is weaker this morning.

CHINA BUYS MORE U.S. CORN... China has purchased four to five cargoes (up to 300,000 MT) of U.S. corn this week and is shopping for more, export sources told Reuters. The purchases are reportedly for spring 2014 delivery at prices that are around 25% cheaper than domestic Chinese prices. These purchases come on top of the 420,000 MT a private Chinese firm purchased last week.

SENATE LEADERS 'VERY CLOSE' ON BUDGET/DEBT LIMIT DEAL AFTER HOUSE APPROACH FALTERS... Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) have reportedly agreed on a bipartisan fiscal plan to reopen the government and raise the debt ceiling after a House alternative was pulled back Tuesday due to a lack of GOP support. The Senate agreement details were being finalized late Tuesday, but procedural questions, such as the number of amendments to be allowed, were being discussed. It could be unveiled as early as this morning.

RATINGS AGENCY SENDS WARNING TO WASHINGTON... Fitch Ratings, one of the three largest credit ratings agencies, put the AAA credit rating of the U.S. on Ratings Watch Negative (RWN) due to the congressional uncertainty. "Although Fitch continues to believe that the debt ceiling will be raised soon, the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default," Fitch said. "Negotiations over raising the debt ceiling (following the episode in August 2011) risks undermining confidence in the role of the U.S. dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the U.S.," the statement said. "This ‘faith’ is a key reason why the U.S. ‘AAA’ rating can tolerate a substantially higher level of public debt than other ‘AAA’ sovereigns." Standard and Poor’s is not likely to downgrade the United States' credit rating, Marie Cavanaugh, the firm’s lead analytical manager, said Tuesday.

OBAMA SAYS WILL PUSH IMMIGRATION AFTER FISCAL CRISIS OVER... President Obama said on Tuesday that stalled immigration reform would be a top priority once the fiscal crisis has been resolved. "Once that's done, ... the day after, I'm going to be pushing to say, call a vote on immigration reform,' he told the Los Angeles affiliate of Spanish-language television network Univision. While the Senate has already passed comprehensive immigration reform, the House is expected to continue its piecemeal approach to the topic -- despite the president's goal.

CHINESE COTTON IMPORTS DROP SHARPLY... China imported 201,300 MT of cotton in September, down 27% from August and 23.4% less than year-ago, according to the China Cotton Association. Chinese cotton imports the first nine months of this calendar year have totaled 3.23 MMT, down 19.9% from year-ago.

SIGNS POINT TO STEADY/FIRMER CASH CATTLE TRADE... Cattle showlist numbers are tighter than week-ago and boxed beef prices are firming. That suggests packers will again pay steady to firmer prices for cash cattle in the Plains. But with packers working with negative margins, they won't be quick to raise cash bids again this week.

PORK MARGINS TIGHTEN... The pork cutout value was $1.44 lower Tuesday, according to Urner Barry, which tightens packer margins. With packer margins falling and market-ready hog supplies building, packers' incentive to bid for cash hogs is declining. Cash hog bids are expected to trend steady to weaker the remainder of the week.

OVERNIGHT DEMAND NEWS... Israel tendered to buy 80,000 MT of optional origin corn and 25,000 MT of optional origin feed wheat. Japan made no purchases in a tender to buy 180,000 MT of feed wheat and 200,000 MT of feed barley, but issued a similar tender for next week.


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