First Thing Today (VIP) -- September 17, 2012

September 17, 2012 01:21 AM


STRONG PRICE PRESSURE... Grain and soy futures are under pressure this morning as the euphoria from QE3 has eased and active harvest progress is weighing on corn and soybeans. As of 6:30 a.m. CT, corn futures are trading 5 to 13 cents lower, soybeans 16 to 29 cents lower, Chicago wheat 7 to 12 cents lower, Kansas City wheat 7 to 10 cents lower and Minneapolis wheat around 9 cents lower. The U.S. dollar index is slightly firmer this morning following choppy trade overnight.

SHORT WEEK IN CONGRESS AS LAWMAKERS GET SET FOR ELECTION CAMPAIGNS... The Senate and House will return to legislative session Sept. 19 as both chambers observe the Jewish holiday Rosh Hashanah. This week's focus in Congress will be Senate consideration of a continuing resolution (CR), while House GOP leaders hope to vote on an immigration bill, as lawmakers prepare to leave the capitol for election campaigns, returning after Nov. 6 elections for an undetermined lame-duck session of Congress. Meanwhile, House GOP efforts to extend the 2008 Farm Bill by three months will likely fail amid strong Democratic opposition in the House and Senate, leaving that topic as another potential post-election issue.

WHITE HOUSE TO FILE WTO COMPLAINT RE: CHINA AUTO/PARTS SUBSIDIES... The administration plans to announce during a campaign stop in Ohio by President Barack Obama that it will file new WTO complaints against China charging Beijing with violations on automobiles and automobile parts. One of the administration's complaints accuses China of putting U.S. manufacturers at a disadvantage by illegally subsidizing exports of automobiles and automobile parts, a senior administration official said. The other advances a WTO complaint the administration launched in July that accuses China of imposing unfair duties on some $3 billion in U.S. auto exports. The latest trade tiff could get some traders nervous about overall U.S.-China trade relations, but recent trade policy skirmishes have not resulted in long-lasting trade implications.

THINK-TANK: CHINESE ECONOMIC GROWTH WILL TOP TARGET... China's economy will grow at 7.6% to 7.8% in the third quarter and economic growth this year will top the government's target of 7.5%, according to the chief economist at the State Information Center, a prominent government researcher. Still, this would mark the first time since 1999 that China's economic growth would be under 8%. Meanwhile, China will increasingly base monetary policy on price-based mechanisms such as interest and currency rates rather than quantitative easing, according to an economic plan published today. The plan confirms recent speculation the Chinese government has shifted focus toward money market operations and away from using bank reserve requirements to control liquidity in the financial system.

AUSSIE WHEAT STOCKS DECLINE SHARPLY... Australia had wheat stocks totaling 9.1 MMT as of the end of August -- 6.8 MMT of milling wheat and 2.3 MMT of feed wheat. Total wheat stocks were down 20.1% from June and 7.1% lower than year-ago.

FOCUS ON BOXED BEEF TRADE... Cattle traders will pay close attention to boxed beef trade early this week as they form cash cattle opinions. Unless boxed beef prices are under pressure, packers may have to pay higher prices for cash cattle again this week as market-ready supplies are tightening.

CASH HOGS SEEN STEADY/WEAKER... Cash hog bids are expected to remain under pressure to open the week as plants are bought ahead on slaughter needs and market-ready supplies are abundant. While hog futures rallied last week, the upside will remain limited to corrective short-covering as long as the cash market remains under pressure.

WEEKEND DEMAND NEWS... Syria tendered for 100,000 MT of optional origin wheat.


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