First Thing Today (VIP) -- October 3, 2013

October 3, 2013 01:05 AM


FIRMER TONE OVERNIGHT... As of 6:30 a.m. CT, corn futures are 1 to 2 cents higher, soybeans are 3 to 7 cents higher and wheat futures are 2 to 6 cents higher with SRW contracts leading gains. The U.S. dollar index is modestly lower this morning.

NO RESOLUTION AFTER WHITE HOUSE MEETING BETWEEN OBAMA,LAWMAKERS... The late-afternoon session between President Obama and House and Senate leaders at the White House on Wednesday was labeled "cordial but unproductive" by Senate Minority Leader Mitch McConnell (R-Ky.) with House Speaker John Boehner (R-Ohio) saying Obama again signaled he would not negotiate. Republicans, meanwhile, continued to insist on changes to Obamacare to which Senate Majority Leader Harry Reid (D-Nev.) said was an area where Democrats and the White House are "locked in tight." The session largely leaves things at a standstill in terms of getting the government reopened with neither side appearing to be willing to give. The government shutdown continues and means more data will not be released by the government, including mostly likely the Weekly Export Sales Report. However, MarketWatch and others are reporting that Weekly Jobless Claims data will be issued as states compile most of the data.

WEEKLY EXPORT SALES POSTPONED... USDA's weekly export sales data is very likely postponed until the government shutdown ends. The data for the week ended Sept. 26 exists, so we eventually expect it to be released.

FARM BILL SAVINGS COULD BE USED AS BUDGET OFFSETS FOR MEDICAL DEVICE COMPROMISE... Some sources signal an eventual new farm bill could be part of any major budget- and debt-limit increase compromise worked out by Congress and the White House. While nothing is official at this stage, sources say several farm-state lawmakers have brought this matter up in discussions on budget and farm bill matters. The tax applies to sales of taxable medical devices after Dec. 31, 2012. The tax is 2.3% of the sale price of the taxable medical device. About $29 billion in funding for the expansion of health coverage under the Affordable Care Act is expected to come from the device tax. Hip implants, MRI scanners and catheters to unclog heart arteries are all affected. Toothbrushes, contact lenses, hearing aids and other consumer products are exempt. Makers of medical devices have been adamant about wiping the tax from the IRS' books, saying it will harm job creation, deter medical innovation and increase the cost of health care.

FAO FOOD PRICE INDEX DROPS AGAIN... The world food price index calculated by the Food and Agriculture Organization of the United Nations (FAO) dropped for a fifth consecutive month to 199.1 in September. The decline was driven by a sharp fall in the international price of cereal grains, while all other components of the index rose slightly. Meanwhile, FAO slightly trimmed its forecast for 2013-14 global cereal grains output to 2.489 billion MT, 3 MMT lower than its previous estimate, but still 8% higher than 2012-13. FAO cut its forecast for world wheat output to 704.6 MMT from 709.8 MMT previously.

ICE PLANS GLOBAL COTTON CONTRACT... The IntercontinentalExchange (ICE) announced yesterday it plans to launch a global cotton futures contract in early 2014. The new global contract will trade in addition to the current U.S. cotton futures contract and will accept foreign-grown cotton along with U.S. cotton for delivery, though specific details of the contract and the delivery process are still being worked out, according to an ICE spokesperson.

CME OCTOBER LIVE CATTLE DELIVERIES NOT IMPACTED... CME Group announced yesterday deliveries against its October 2013 live cattle contract will not be affected by the government shutdown. A CME statement said, "We can now confirm both live and carcass grading performed by USDA graders will be available as needed for all live cattle deliveries against the October 2013 Live Cattle Contract. Until further notice, for any cattle deliveries occurring during the government shutdown, the most recently issued reports by USDA for adjustment factors will be used for calculating final invoice amounts for live and carcass deliveries."

OVERNIGHT DEMAND NEWS... South Korea purchased four cargoes of soybeans, each containing up to 60,000 MT -- two were U.S. origin and two were South American. Taiwan bought 60,000 MT of Brazilian corn. Japan purchased 118,456 MT of milling wheat in its weekly tender, including 72,054 MT of U.S. supplies. Japan also bought 55,640 MT of feed wheat and 36,320 MT of feed barley.


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