First Thing Today (VIP) -- October 1, 2012

October 1, 2012 01:32 AM
 

GOOD MORNING!

CORN FIRMER, BEANS AND WHEAT LOWER OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading fractionally to 3 cents higher, soybeans 10 to 17 cents lower, Chicago wheat 8 to 10 cents lower, Kansas City wheat 9 to 13 cents lower and Minneapolis wheat 12 to 13 cents lower. The U.S. dollar is under pressure this morning.

FOCUS THIS WEEK: BERNANKE TODAY, PRESIDENTIAL DEBATE WEDNESDAY, EMPLOYMENT REPORT FRIDAY... Key events on tap this week include comments today from Federal Reserve Board Chairman Ben Bernanke, the first of three presidential debates on Wednesday, and Friday's release of September employment data. Congress remains on their pre-election break with a lame-duck session on tap beginning a week following the Nov. 6 elections. Statistics Canada on Thursday releases its September survey of production of principal field crops. On the food price inflation front, the UN Food and Agriculture Organization releases its world food price index Thursday.

CHINA'S MANUFACTURING SECTOR STILL CONTRACTING... China's official purchasing managers' index (PMI) rose to 49.8 in September from 49.2 in August, but the country's manufacturing sector remains below the contraction line (50). Meanwhile, China's final HSBC purchasing managers' index (PMI) for September came in at 47.9 compared to a preliminary reading of 47.8 and 47.6 in August. That marks the eleventh straight month of contraction in China's manufacturing sector.

CHINA REMOVES VAT ON DISTRIBUTION OF MEAT, EGGS... Effective today, China has removed the value-added tax on wholesale and retail sales of meat (beef, pork, lamb and poultry) and eggs, according to the Ministry of Finance. The Chinese government is trying to protect consumers from rising prices while attempting to boost economic activity.

IKAR RAISES RUSSIAN CROP FORECASTS... The Institute for Agricultural Market Studies (IKAR) raised its Russian grain forecast to 70.5 MMT from 70 MMT and the wheat crop estimate to 40 MMT from 39 MMT, based on updated harvest data. IKAR says Russia has exported 7.9 MMT of grain since July 1 and sees October grain exports slipping to 2.5 MMT from 3 MMT in September.

JUDGE RULES AGAINST CFTC ON POSITION LIMITS RULE... Late Friday, U.S. District Judge Robert Wilkins said the Commodity Futures Trading Commission (CFTC) position limit rules for commodity markets, which would have gone into effect Oct. 12, weren't properly justified. "The Dodd-Frank amendments do not constitute a clear and unambiguous mandate to set position limits, as the Commission argues," Judge Wilkins said in his ruling. CFTC is now mulling its next action, with no decision at this time.

FOCUS ON BOXED BEEF TRADE... Boxed beef prices dropped sharply Friday and movement slowed to only 150 loads. If that poor performance extends into this week, traders will expect recent weakness in the cash cattle market to build. Traders will want to see proof of a short-term low in the boxed beef market before they look to actively buy cattle futures.

LIMITED REACTION LIKELY TO H&P REPORT... Last Friday's Quarterly Hogs & Pigs Report was mostly neutral as most categories were close to the average pre-report guesses. Once the report data is factored into the market, much of traders' focus will be on the cash hog and pork product markets as traders watch to see if recent strength builds. Cash hog bids are expected to be steady to firmer to start the week.

WEEKEND DEMAND NEWS... Exporters reported no tenders or purchases.

 

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