First Thing Today (VIP) -- October 18, 2012

October 18, 2012 01:23 AM
 

GOOD MORNING!

FOLLOWTHROUGH BUYING OVERNIGHT... Grain and soy futures built on Wednesday's gains overnight, with soybeans leading the price advance. As of 6:30 a.m. CT, corn futures are trading 3 to 6 cents higher, soybeans 12 to 16 cents higher, Chicago wheat 3 to 7 cents higher, Kansas City wheat 1 to 5 cents higher and Minneapolis wheat 3 to 4 cents higher. The U.S. dollar index is firmer this morning.

CHINESE ECONOMIC GROWTH CONTINUES TO SLOW... China's third quarter GDP rose 7.4% from year-ago, which matched expectations but was the slowest growth rate since the first quarter of 2009. In falling from 7.6% growth in the second quarter, this marked the seventh consecutive quarter of slowing economic growth. Meanwhile, Chinese September industrial output rose 9.2% from year-ago, which was greater than expected and up from an 8.9% rise in August. China's National Bureau of Statistics says the economy stabilized in September and should see a mild recovery in the fourth quarter, which will allow GDP to top the government's annual growth target of 7.5%.

FIRM CUTS EU GRAIN PRODUCTION... Private firm Strategie Grains cut its 2012-13 European Union grain crop forecast by 1 MMT to 269.5 MMT, as declines in the corn and wheat crops were only partially offset by a bigger barely crop estimate. Strategie Grains cut its EU corn crop forecast by 900,000 MT to 52.8 MMT and lowered its wheat crop forecast by 700,000 MT to 123 MMT.

WTO ARBITRATOR ON DEC. 4 WILL SET DEADLINE FOR U.S. TO COMPLY WITH COOL RULING... WTO Director-General Pascal Lamy has appointed an arbitrator to announce on Dec. 4 the deadline for the U.S. to comply with a WTO ruling against U.S. country-of-origin labeling (COOL) requirements for meat and meat products. A WTO Appellate Body ruled June 29 the COOL rules violate WTO policy by treating imported livestock from Canada and Mexico less favorably than U.S. livestock. If the U.S. does not meet the eventual deadline, we understand Canada has put together a list of around $1.4 billion in products for potential retaliation.

WEEKLY EXPORT SALES REPORT OUT THIS MORNING... For the week ended Oct. 11, traders expect: corn sales between 100,000 and 300,000 MT; wheat sales between 250,000 and 375,000 MT; soybean sales between 650,000 and 850,000 MT; soymeal sales between 150,000 and 250,000 MT; and soyoil sales between 10,000 and 15,000 MT.

CHINESE PORK PRODUCTION RISES... Chinese pork production through the first nine months of this year totaled 37.54 MMT, an increase up 5.2% from year-ago. Increased pork production is a key reason inflationary pressure is easing in China as pork prices are the key driver of the food portion of the country's consumer price index.

BOXED BEEF STRENGTH BUILDS BULLISH CASH HOPES... Boxed beef prices were another 20 to 61 cents higher Wednesday and movement improved to 214 loads. Given the strength in the product market, cattle traders are anticipating higher cash prices compared with last week's mostly $125 trade in the Plains. But active cash trade is expected until Friday.

CASH HOGS CALLED STEADY... Cash sources signal supply and and demand are in balance in the hog market. As a result, cash hog bids are expected to remain steady at most Midwest locations. Profitable cutting margins are keeping packers from lowering cash bids.

OVERNIGHT DEMAND NEWS... South Korea purchased 55,000 MT of optional origin feed wheat and tendered for up to another 70,000 MT of optional origin feed wheat. Japan purchased 128,144 MT of wheat in its weekly tender, including 100,076 MT of U.S. supplies. Taiwan tendered for 23,000 MT of U.S. corn and 12,000 MT of U.S. soybeans.

 

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