SHORT-COVERING LIFTS CORN AND BEANS... Short-covering has returned to the corn market and most contracts are enjoying gains around 3 to 4 cents as of 6:30 a.m. CT. Soybeans moved well off their lows into the close yesterday and corrective short-covering continued overnight. Most contracts are 6 to 7 cents higher, taking back yesterday's losses and then some. Wheat futures are roughly 5 to 7 cents higher in the winter wheat markets as the market continues in its gradual uptrend, bolstered by crop concerns in Argentina, the Black Sea region and Australia. HRS wheat is seeing lighter gains.
CME DATA SIGNALS INTEREST RATE HIKE NOW APRIL 2015... Futures contracts on fed funds are now signaling the first interest rate hike by the U.S. Federal Reserve is now likely to happen in April, about two meetings later than thought just a month ago. Following the employment report, the CME futures put the probability of a rate hike in April 2015 at 54% compared to 58.7% on Monday.
CONSERVATIVE GROUPS OPPOSE HOUSE WATER BILL... A coalition of conservative and budget watchdog groups is calling for the House to defeat a water resources authorization bill, on the eve of floor debate on the legislation. Ten groups -- including organizations such as Heritage Action for America and FreedomWorks that are influential among the GOP caucus’s tea party faction -- sent a joint letter to House members Tuesday urging rejection of the bill. The issue again shows a growing split in the Republican Party between its traditional business interest groups like the U.S. Chamber of Commerce, and some far-right conservative groups and budget-watching organizations. Those opposing the bill (HR 3080) say it "fails to deliver on its ‘reform’ moniker." The House is expected to begin debate on the measure today, but a final vote may take into next week as the House will not be in session Thursday or Friday.
2013 CROP INSURANCE INDEMNITIES RISE... After a hiatus due to the partial government shutdown, data for the U.S. crop insurance program is again being released and showed that indemnities reached $4.604 billion for 2013 crops as of Oct. 21, up from just over $4.2 billion from when the data was last published at the end of September, according to Risk Management Agency (RMA) data. Of the major U.S. crops, only corn and wheat have seen indemnities of $1 billion or more, with wheat closing in on $2 billion. As of Oct. 21, the loss ratio for wheat also reached 1.0 -- the level of indemnities ($1.946 billion) matches the level of total premiums paid in ($1.947 billion). The relatively small increase in payouts still has 2013 running ahead of where 2012 stood at this point a year ago when indemnities had reached $3.017 billion on their way to the record mark of $17.413 billion.
MORE CALLS FOR CFTC TO LOOK INTO RIN PRICE VOLATILITY... A group of 13 lawmakers from major ethanol producing states sent a letter to the Commodity Futures Trading Commission (CFTC) asking it to "look into what extent fraud and manipulation" in the Renewable Identification Numbers (RIN) market have contributed to price volatility. This follows a similar letter by Senate Ag Committee Chairwoman Debbie Stabenow (D-Mich.) last month asking the regulator to examine volatility with these ethanol blend credits.
SPECIAL EQIP SIGN SIGNUP FOR SOUTH DAKOTA RANCHERS & FARMERS... USDA will offer a special signup through the Natural Resources Conservation Service's (NRCS) Environmental Quality Incentives Program (EQIP) to help farmers and ranchers impacted by the devastating blizzard that swept through South Dakota earlier this month, Under Secretary for Farm and Foreign Ag Services Michael Scuse announced yesterday. The EQIP signup will run through Nov. 15, 2013. USDA hopes to start providing assistance this week. Scuse also encouraged producers to submit forms to the Farm Service Agency to document their losses with the hope Congress will soon pass a Farm Bill to reauthorize the expired livestock disaster assistance programs. He also noted that NRCS is working in partnership with the state of South Dakota to provide assistance. NRCS is entering into an agreement with the state to share in the cost of deploying additional state and local personnel into the field to help producers perform impact assessments on their operations and identify sites for carcass disposal.
FRIENDLY EXPECTATIONS FOR CASH CATTLE ACTION... Feedlots are passing on bids around $126 to $127 as they feel higher prices are justified again this week by tighter showlists and strength in the beef market so far this week. Last week, this combination helped feedlots get $129 for cattle on the Southern Plains while northern locations saw even higher prices. But packers are dealing with negative cutting margins and high beef prices have slowed movement. Choice boxed beef values are within 67 cents of the key $200 per cwt. level that has slowed demand in the past.
LEAN HOG INDEX BOLSTERS FUTURES... Lean hog futures surged yesterday on the release of CME's Lean Hog Index for the first time since the government shut down on Oct. 1. The index revealed the cash hog market has declined less than traders anticipated, setting the stage for short-covering. Strong gains in the beef market also contributed to strength in the lean hog market as this could make cheaper pork more attractive to consumers. But a low-range close in the December contract signals the market could see some profit-taking today, especially with supplies on the rise.
OVERNIGHT DEMAND NEWS... Jordan bought 100,000 MT of milling wheat in its tender. South Korea's Nonghyup Feed Inc. canceled its tender for 140,000 MT of corn and 60,000 MT of feed wheat, citing high prices. The country's Corn Processing Industry Association also canceled its tender for 55,000 MT of corn. Taiwan bought 60,000 MT of Brazilian corn. Japan reportedly bought 49,830 MT of feed wheat in a simultaneous buy-and-sell tender -- the country's first feed wheat purchase in three weeks.