First Thing Today (VIP) -- October 22, 2013

October 22, 2013 01:28 AM
 

GOOD MORNING!

PROFIT-TAKING IN BEANS OVERNIGHT... The corn market traded in a very narrow range overnight. As of 6:30 a.m. CT, corn futures are fractionally to a penny lower in most contracts. The soybean market saw profit-taking overnight following gains yesterday; November through July contracts are roughly 7 to 8 cents lower. The wheat market saw light followthrough sales overnight and most contracts are down 1 to 4 cents. The U.S. dollar index is again favoring the upside as it chops around unchanged.

MARKETS AWAIT U.S. EMPLOYMENT DATA... The September Employment report was initially due out Oct. 4 and was postponed by the partial government shutdown. But the data will be released this morning and traders are looking for a rise in nonfarm payrolls of 180,000 after the August level of 169,000. The unemployment rate, calculated by a different survey, is expected to remain steady at 7.3%. The report looms large as a factor in the Federal Reserve's decision next week on the asset purchase program, but most observers think the partial government shutdown that ended Oct. 16 will keep the fed from tapering the asset purchase effort until at least its December meeting.

USDA STARTS MAKING CRP PAYMENTS; TO MAKE DIRECT/ACRE PAYMENTS THIS WEEK... USDA has already started making annual Conservation Reserve Program (CRP) payments to contract holders and will start making direct payments for 2013 crops and 2012 ACRE payments on Oct. 24. The direct payments will be reduced due to the sequester but USDA has not said how much that reduction will be, although other sequester-related reductions have been 5.1%. The CRP payments typically go out immediately after Oct. 1 and USDA had targeted making the direct payments earlier this month, but both were delayed by the partial government shutdown.

USDA ANNOUNCES ADVANCED BIOFUELS FUNDS... USDA announced $181 million in loan guarantees to build commercial-size refineries making advanced biofuels or to retrofit existing biorefineries to produce the cleaner-burning renewable fuels under the Biorefinery Assistance Program (BAP). Since 2008, BAP has provided $684 million to support projects in eight states. Applications for this round of the program are due Jan. 30, 2014.

FIRST WINTER WHEAT CROP RATINGS OF THE YEAR... When the numbers from USDA's Crop Progress and Condition Report are plugged into Pro Farmer's weighted Crop Condition Index (CCI, 0 to 500 point scale), the first HRW condition rating of the year comes in at 368 while the SRW crop stands at 376. Last year, USDA did not begin releasing crop condition data until Oct. 28.

 

CHINA'S COMMERCE MINISTRY ANTICIPATES RISE IN BEAN IMPORTS IN OCTOBER... China's Ministry of Commerce raised its soybean import forecast for the month of October by 2.22 MMT to 5.85 MMT. This would be a significant increase from September, for which the ministry estimates soybean imports totaled 3.35 MMT.

CME RESTARTS HOG, FEEDER CATTLE INDEXES... CME Group yesterday issued the first feeder cattle index reading since the government closed at the start of the month. It came in at $164.81 for the week ended Oct. 18, which is roughly $1 below the front-month feeder cattle contract. The exchange will release the lean hog index for the two-day period ended Oct. 18 on this morning. Its last reading was $96.38, which is around $9 above the December lean hog futures price.

SMALLER SHOWLISTS SPUR EARLY CASH MARKET OPTIMISM... Tighter showlists spurred higher cash cattle trade last week, and traders are cautiously optimistic the same may be true this week. Showlist are estimated to be tighter at all locations this week, with Kansas down 7,000 head and Texas guessed around 9,000 head lighter. October live cattle are steady with last week's cash action, while the December contract has a slight premium built into prices. However, there is some unease about whether higher prices are sustainable as packers are already dealing the deeply negative profit margins. But a surge in the boxed beef market to start the week could help with these. On Monday, Choice boxed beef cuts jumped $2.00 while Select firmed $1.67. This did slow movement to 121 loads, however.

PORK SURGE WIDENS PROFIT MARGINS... The combination of mostly steady cash hog bids and a $1.69 surge in the pork cutout value helped pull packer profit margins solidly into the black. This along with rising slaughter needs is expected to keep the cash hog market from slipping far, despite seasonally expanding supplies. Futures could see some corrective short-covering.

OVERNIGHT DEMAND NEWS... Taiwan tendered for up to 60,000 MT of U.S. or South American corn. Taiwan's Breakfast Soybean Procurement Association (BSPA) bought 120,000 MT of U.S. soybeans. South Korea's Nonghyup Feed Inc. (NOFI) tendered for up to 140,000 MT of corn and 60,000 MT of feed wheat. Algeria reportedly bought at least 150,000 MT of optional origin durum wheat in its tender last week, likely of Mexican and Canadian origin.

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