First Thing Today (VIP) -- October 1, 2013

October 1, 2013 01:17 AM


FOLLOWTHROUGH SELLING OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading around 1 cent lower, soybeans are mostly 5 to 10 cents lower and wheat futures are generally steady to 3 cents lower. The U.S. dollar index is weaker this morning.

IMPACTS FROM GOVERNMENT SHUTDOWN… First, this shutdown is different than what unfolded in 1995-1996 in that the shutdown then was over spending and taxes, not policy as is now the case -- Obamacare. Many government employees will be in offices this morning for a time to conduct shutdown-related activities such as putting together out of office messages, placing messages on websites, etc. USDA has already enacted its plans, with their main website -- -- already replaced with a message stating in part "Due to the lapse in federal government funding, this website is not available." Other government agency websites are available, but it's not clear how long they will be and they will not have updated information on them. Weather and climate service updates from the National Oceanic and Atmospheric Administration will continue. Government economic data releases are suspended, but private-sector-generated economic data will still be released.

IMPACTS FOR AGRICULTURE/USDA... The host of data produced by USDA related to markets such as items like dressed beef and pork prices, slaughter data and other market information produced by the Ag Marketing Service will not be released. Also, the data gathering will be temporarily halted relative to the Oct. 11 Crop Production Report and whether that report is delayed will depend on how long the shutdown extends. Direct payments could also be affected, although those payments were to start being processed "on or about" Oct. 4, according to USDA. But those payments will also be subject to a sequester-forced reduction and USDA said the sequestered percentage would "be announced later." As we have noted, those linked to food inspections at slaughter plants or inspecting items that come into this country are still on the job despite the shutdown. Conservation Reserve Program payments will not go out until the shutdown is over.

CORN, BEAN CCI RATINGS IMPROVE... When USDA's weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale), the corn crop improved 3 point to 347, while the soybean crop rose 4 points to 339. Illinois paced the ratings improvement for both crops. Click here for more.

CHINA'S OFFICIAL PMI TICKS UP, BUT FALLS SHORT OF EXPECTATIONS... China's official purchasing managers' index (PMI) inched up to 51.1 in September from 51.0 in August as new orders and export orders strengthened. But the official PMI came in lower than expected and the sub-index measuring smaller manufacturers declined from August.

EXTENDED CASH CATTLE NEGOTIATIONS AGAIN LIKELY... Feedlots are looking for higher cash cattle prices after back-to-back weeks of price strength in the Plains and smaller showlist supplies in all but Colorado. But packers have been reluctant to extend cash cattle bids for multiple weeks in the past and are working with negative cutting margins. Another week of extended cash cattle negotiations seems likely.

CASH HOGS CALLED STEADY/WEAKER... Packers are expected to offer steady to weaker cash hog bids across the Midwest today as most plants are thought to be well supplied for the week. But with cutting margins deep in the black, some plants may opt to increase kill runs if they can get enough hogs. That would limit pressure on cash hog bids.

OVERNIGHT DEMAND NEWS... South Korea purchased 55,000 MT of U.S. soymeal and 25,000 MT of Indian soymeal. Israel tendered to buy 40,000 MT of optional origin corn. Bangladesh tendered to buy 50,000 MT of optional origin wheat.


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