First Thing Today (VIP) -- October 24, 2012

October 24, 2012 01:07 AM


FIRM TONE OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading mostly 1 to 2 cents higher, soybeans 8 to 10 cents higher, Chicago wheat 2 to 5 cents higher and Kansas City and Minneapolis wheat mixed to mostly firmer. The U.S. dollar index is mildly firmer this morning after earlier being under pressure.

FOMC MEETING CONCLUDES THIS AFTERNOON... The Fed will wrap up its two-day Federal Open Market Committee (FOMC) meeting around 1:15 p.m. CT. The Fed is widely expected to reiterate its stance to keep interest rates low for years to come and also continue its bond-buying program to boost economic activity.

CHINESE MANUFACTURING SECTOR SHOWS SIGNS OF STABILIZING... China's flash purchasing managers' index (PMI) rose to a three-month high of 49.1 in October from a final reading of 47.9 in September. While still in contraction, China's manufacturing sector is showing signs of stabilizing as new orders, output and export orders all upticked in addition to the rise in the flash PMI.

UKRAINE CONFIRMS WHEAT EXPORT BAN... Ukraine's Ag Minister Mykola Prysyazhnyuk confirmed there will be a "full ban" on wheat exports starting Nov. 15, as was reported last Friday. Exporters are relieved to have an official confirmation with one telling Reuters, "Everything is clear and we can claim force majeure."

CFTC'S GENSLER WORKING ON PROPOSALS RE: HIGH-FREQUENCY TRADING... Commissioners of the Commodity Futures Trading Commission (CFTC) may "shortly" receive a series of proposals from CFTC Chairman Gary Gensler that seek to address the issue of high-frequency trading. The package would initially take the form of a concept release which the agency would use to open a public debate on the issue. Based on that public input, CFTC could then come forward with new proposed rules. High-frequency trading activity has impacted several futures markets, including ag commodities.

CANADA ALLOWS XL FOODS PLANT TO REOPEN... The XL Foods plant in Brooks, Alberta, was allowed to reopen Tuesday after a review of the plant's operations by the Canadian Food Inspection Agency (CFIA). CFIA said it lifted the suspension of the plant's operating license based on a series of improvements that the plant has made and can now gradually resume its slaughter operations where it has the capacity to slaughter and process 4,500 animals per day. The plant was closed Sept. 27 after it was suspected of being the source of E coli contamination.

BULLISH CASH CATTLE HOPES... Given continued strength in the boxed beef market, most cash sources are anticipating higher cash cattle prices compared with last week's $127 to $127.50 trade. But since packers and feedlots have yet to establish bids and asking prices, active cash cattle trade won't likely be seen until late in the week.

PORK CUTOUT SOFTENS AGAIN... The pork cutout value followed up Monday's 41-cent decline with a $1.23 drop yesterday as all cuts except ribs were under pressure. With the pork product market showing signs of topping and a plentiful supply of market-ready hogs, cash hog bids will remain steady to weaker. Weakening fundamentals will likely put additional pressure on lean hog futures as they correct from the recent highs.

OVERNIGHT DEMAND NEWS... Japan purchased 20,000 MT of feed wheat and tendered for another 120,000 MT of feed wheat and 200,000 MT of feed barley. Syria tendered for 100,000 MT of optional origin milling wheat.


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