First Thing Today (VIP) -- October 19, 2012

October 19, 2012 01:00 AM


WHEAT FUTURES LEAD GAINS OVERNIGHT... Wheat futures were boosted overnight by reports Ukraine will ban exports (see next item). While the move was anticipated at some point, it's still price-supportive. As of 6:30 a.m. CT, corn futures are trading 4 to 7 cents higher, soybeans 5 to 8 cents higher, Chicago wheat 10 to 14 cents higher, Kansas City wheat 9 to 13 cents higher and Minneapolis wheat mostly around 8 cents higher. The U.S. dollar index is modestly firmer this morning.

UKRAINE REPORTEDLY BANS WHEAT EXPORTS... Export sources say Ukraine will ban wheat exports starting Nov. 15, although there is no confirmation from the ag ministry yet. The trade sources say Ukraine will still honor its agreed-to 5-MMT cap on wheat exports prior to the start of the ban. Currently, Ukraine has exported an estimated 3.5 MMT of wheat.

JAPAN'S USE OF CORN IN FEED HITS 20-YEAR LOW... Japan's use of corn in animal feed dropped to 42.7% in August, down 0.2 percentage points from July and 2 points below year-ago. Wheat use in animal feed rose by like amounts to 4.3% in August. The high price and tight supply of corn has caused Japanese feedmakers to seek alternative sources.

INFORMA TO UPDATE 2013 ACREAGE FORECASTS THIS MORNING... Informa Economics will issue an update to its 2013 acreage estimates at 10:30 a.m. CT. U.S. production forecasts for the 2013 crop year will be included in the acreage report.

ARGENTINA TO INCREASE CORN EXPORT QUOTAS?... An Argentine government official told Bloomberg News the country plans to announce an additional 7 MMT of corn export quotas in late December or early January if planted area comes in at the estimated 4 million hectares, rain continues to benefit the crop and there’s no repeat of last year’s drought. Currently, Argentina has announced 15 MMT in corn export quotas for 2012-13.

NATIONAL JOURNAL LOOKS AT POSSIBLE AG SECRETARY UNDER ROMNEY, OR SECOND OBAMA TERM... With the presidential election just weeks away, the guessing game of possible Cabinet changes if Obama wins, or a new Romney Cabinet, has begun. National Journal (NJ), a respected Washington weekly magazine, has taken a look at this topic. For USDA's top spot, they say that with the farm bill stalled in Congress, the current Ag Secretary, Tom Vilsack, has taken on a higher profile than normal, "and the administration doesn’t seem to be afraid to put him front and center." Vilsack spoke at the Democratic National Convention in August. NJ says there is "more than a good chance that Vilsack will be sticking around." If not, possibilities include former Democratic Sen. Blanche Lincoln of Arkansas, and retiring Sen. Kent Conrad of North Dakota. Another wildcard possibility, depending on how his election goes, would be Democratic Sen. Jon Tester of Montana, who is in a very close reelection race. If Romney wins, NJ notes the front-runner we identified months ago -- Florida Agriculture Commissioner Adam Putnam, who co-chairs the Romney's ag advisory committee with Sen. Mike Johanns (R-Neb.). Putnam served five terms representing Florida’s 12th District, sat on the House Agriculture Committee, and was elected chairman of the House Republican Conference for the 110th Congress. If not Putnam, another possibility would be Chuck Conner, the president and CEO of the National Council of Farmer Cooperatives and a former deputy secretary of Agriculture under George W. Bush. Conner also sits on the Romney advisory committee.

CME GROUP IN INFORMAL TALKS ON TRIMMING GRAIN TRADING HOURS... CME Group is in "fairly informal" talks with the grain industry on the possibility of reducing grain trading hours, a source with knowledge of the talks told Reuters. The source says CME Group will soon survey market users for input and is considering moving back to a 1:15 p.m. CT close, although no change in trading hours would come prior to Jan. 1.

COF REPORT TO SHOW FEEDLOT INVENTORIES TIGHTENING... Traders expect USDA's Cattle on Feed Report to show On Feed at 97.8%, Placements at 85.0% and Marketings at 89.8% of year-ago levels. Typically expectations for a sharp reduction in Marketings would be a warning sign, but with feedlot inventories tightening and September Placements expected to be well below year-ago, feedlots can afford to be a little less diligent with Marketings without major ramifications.

WAITING ON CASH CATTLE TRADE... With USDA's Cattle on Feed Report out this afternoon and given the $5 to $6 spread between bids and asking prices in the Plains, active cash cattle trade is not likely until this afternoon. Cash sources are still anticipating higher cash prices compared with last week's mostly $125 trade unless futures plunge sharply.

SHARP DROP IN PORK CUTOUT... The pork cutout value dropped 92 cents Thursday, which may prompt more talk of a short-term top, especially from those who are most concerned about that happening. But the bulk of the price pressure came in loins, which were $7.38 lower, suggesting it's still too early to call a definite top in the pork product market.

OVERNIGHT DEMAND NEWS... South Korea purchased 63,000 MT of U.S. or South American corn. Taiwan tendered for 104,000 MT of U.S. wheat. Tunisia tenders for 50,000 MT of optional origin durum wheat. India tendered to sell 100,000 MT of wheat.


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