First Thing Today (VIP) -- October 7, 2013

October 7, 2013 01:27 AM
 

GOOD MORNING!

CORN MIXED, BEANS WEAKER AND WHEAT FIRMER THIS MORNING... As of 6:30 a.m. CT, corn futures are narrowly mixed, soybeans are 2 to 3 cents lower and wheat futures are 1 to 4 cents higher. The U.S. dollar index is lower this morning.

UNCERTAINTY IN WASHINGTON THIS WEEK... An uncertain week lies ahead for markets as they continue to monitor the government shutdown. In Washington, it’s all about the shutdown and that is starting to merge into a focus on the debt limit. The latter is seen as a much bigger potential impact. While the government has shut down before, the U.S. has never defaulted on its obligations -- something the U.S. Treasury Department says will happen if nothing is done by Oct. 17. And the hearings that are on tap may not unfold as scheduled as it was a mixed bag over the past week on which hearings actually took place and didn’t happen. A Senate Ag subcommittee is scheduled Tuesday to look at the need for a farm bill and the impact on small communities, while the House side has a hearing set on maritime transportation regulations. As with the first week of the shutdown, more economic data may potentially not be released in the week ahead. Wednesday’s release of the Federal Open Market Committee minutes will be combed through for the debate on tapering the stimulus efforts. Otherwise, Fed speakers are on tap Tuesday and Thursday, with the attention now focused more than likely on any comments they make on the debt limit issues and how the government shutdown impacts the odds for tapering of the Fed’s asset purchases. For agriculture, markets are going to be left without a batch of data unless the shutdown is resolved. That includes today's Crop Progress and Grain Inspections reports, Thursday’s Export Sales data and most importantly, the October Crop Production and Supply & Demand Reports. Even if the government were to reopen, it’s not clear that the latter two reports would be able to be released on time as the shutdown halted the survey work for the production data in particular.

STOCKS FALL AS BOEHNER TIES BUDGET, DEBT CAP TO CUTTING DEFICIT... Global equities and oil futures are lower after House Speaker John Boehner (R-Ohio) on Sunday said he won't introduce legislation to finance the government or raise the debt ceiling until Democrats agree to "a serious conversation" about cutting the deficit. Boehner also said the U.S. is on "the path" to a debt default, a stance that is in contrast to reports last week saying he wouldn't let such an event occur.

HEAVY RAINS TO CUT RUSSIAN WINTER GRAIN PRODUCTION... Russian winter grains seedings will be cut to 13 million to 13.5 million hectares (32.1 million to 33.4 million acres) due to heavy fall rains, according to private firm SovEcon. The Russian ag ministry forecasts winter grains seedings at 16.4 million hectares (39.5 million acres). Given average winter wheat yields, SovEcon says Russian winter grains production would decline by 7 MMT to 7.5 MMT. Meanwhile, private firm the Institute for Agricultural Market Studies (IKAR) says winter wheat losses will be 3.5 MMT to 11 MMT, compared to 4 MMT to 10 MMT previously.

BRAZIL MULLING RETALIATION IN COTTON DISPUTE WITH UNITED STATES... A Brazilian technical group has been tasked to meet and determine by the end of November whether the country will pursue retaliation against the U.S. for interrupting the payments the U.S. agreed to make after losing a WTO case Brazil successfully won against U.S. cotton subsidy programs. Under a September 2010 agreement, the U.S. is paying Brazil $147 million per year to aid the Brazilian cotton industry but those payments have been suspended. The payments are in lieu of Brazil requesting authorization for $830 million in sanctions against the U.S. for failing to alter its programs to bring the U.S. in compliance with the WTO ruling.

CAUTIOUS CASH CATTLE EXPECTATIONS... Last week's disappointing cash cattle trade is likely to cause traders to be cautious about this week's cash expectations. With October live cattle futures finishing last week at a $2 premium to the bulk of cash cattle trade, buying interest is likely to be limited until traders have a better handle on the cash market.

CASH HOGS CALLED STEADY/WEAKER... Packers are expected to open the week offering steady to weaker bids for cash hogs at most Midwest locations. But with cutting margins deep in the black, it wouldn't be surprising to see some scattered firmer bids in areas where supplies are tight.

WEEKEND DEMAND NEWS... Bangladesh tendered to purchase 50,000 MT of optional origin wheat. Jordan tendered to buy 100,000 MT of optional origin milling wheat and 100,000 MMT of optional origin feed barley. Iraq tendered to purchase at least 50,000 MT of optional origin wheat. Algeria tendered to buy 50,000 MT of optional origin milling wheat.

 

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