First Thing Today (VIP) -- October 25, 2013

October 25, 2013 01:37 AM


GRAINS FAVOR UPSIDE IN QUIET OVERNIGHT SESSION... Corn futures were little changed in the overnight session and as of 6:30 a.m. CT most contracts are around a penny higher thanks to spillover from the wheat market. Wheat futures are roughly 2 to 4 cents higher this morning. Soybean futures saw two-sided trade overnight and at present most contracts are 2 to 5 cents lower. The U.S. dollar index is slightly higher this morning, but so are crude oil futures.

USDA: REFINERS FORFEIT 296,500 TONS SUGAR; AMOUNT IN LINE WITH TRADE EXPECTATIONS... U.S. refiners forfeited of 296,500 tons of sugar they had pledged as collateral for loans under the U.S. sugar program during the government shutdown, USDA said. The loans matured Sept. 30 but the forfeitures were not confirmed until Thursday. Expectations had been for around 300,000 tons of sugar loans that matured Sept. 30 would be forfeited to the government instead of the loans being repaid.

WHY FAS IS PUBLISHING TWO 'EMPTY' WEEKLY EXPORT SALES REPORTS... While USDA’s Foreign Ag Service plans to release what will be a large Weekly Export Sales report on Oct. 31 that will cover sales for the week’s ending Oct. 10, 17 and 24, the agency yesterday released reports that cover the weeks ending Oct. 10 and 17. However, those data releases show "zeroes" for weekly exports, gross sales and net sales for both the current and next marketing year. While the reports contain figures for accumulated exports, outstanding sales and total export commitments, those are simply carryover numbers from the report released yesterday covering the week ended Oct. 3. Sources signal the agency was largely forced into publishing the reports for those weeks as it was required by the computer system and process that FAS uses to compile the sales data on a weekly basis.

FROST CONCERNS FOR AUSSIE WHEAT CROP... Frost in Australia's eastern grain belt has raised concerns about damage to the wheat crop with harvest getting started in Queensland and New South Whales. This follows a hot summer, that resulted in lower yields but high protein content for the grain. This could boost demand for premium U.S. wheat supplies. But the U.S. will continue to face competition on the export front. India's cabinet is expected to consider cutting the floor price for wheat exports by 13% in the near future, which could spur increased demand from Asian feed millers.

TYSON STOPPED BUYING SLAUGHTER CATTLE FROM CANADA DUE TO COOL... Tyson Foods Inc., the largest U.S. meat processor, says it has stopped buying slaughter-ready cattle from Canada as of mid-October due to the higher expense of Country of Origin Labeling (COOL) rules that require labels showing where an animal was born, raised and slaughtered. But the company will continue purchasing cattle born in Canada that are finished in U.S. feedlots. The contentious COOL rule could be dealt with in a new farm bill. Meanwhile, the World Trade Organization (WTO) is expected to rule whether U.S. revisions to COOL are in compliance around February 2014.

NORTH CAROLINA SAW UPTURN IN PEDV CASES THIS FALL, BUT REPORTS AGAIN DECLINING... Porcine Epidemic Diarrhea Virus (PEDV) has spread to about 250 farms in North Carolina (the second largest hog producing state) since June, Director of Livestock Health Tom Ray told Reuters, noting that three or four weeks ago, the went from seeing two to three cases a week to three new cases in a day. "That has actually started to go back to smaller numbers per week," Ray said, adding that up to 150,000 sows could be affected in the state. The disease causes baby pig death, but it has no impact on human health. Tracking its spread is challenging as reporting is not required for PEDV. The partial government shutdown has hampered the updates on the situation.

BOXED BEEF SURGE CONTINUES... Market fundamentals are fully bullish for the cattle market this week. The boxed beef market has staged an impressive rally, and Choice boxed beef cuts edged another 28 cents higher yesterday to $201.07 per cwt., and Select cuts firmed another 77 cents to $185.68 per hundredweight. While prices have slowed movement, it has not been too shabby considering lofty price levels. This along with tighter supplies spurred record-high cash trade mostly around $131 to $132 on the Southern Plains with a few sales taking place at even higher prices. Packers have seen margins improve this week, but they remain in the red, which raises some questions about the sustainability of recent cash prices.

RENEWED PEDV TALK LIFTS HOGS... Talk that additional cases of PEDV could trim next year's herd pushed the lean hog market and especially deferred contracts sharply higher yesterday. Key will be if market views the upside as overdone or if traders book profits to wrap up the week. The front-month remains at a discount the cash hog index, but quite a few weeks remain before the contract's expiration and supplies are building seasonally.

OVERNIGHT DEMAND NEWS... South Korean flour millers purchased 80,600 MT of U.S. and Canadian wheat. India floated a tender to export 60,000 MT of wheat.

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