First Thing Today (VIP) -- September 18, 2013

September 18, 2013 01:09 AM


CORN AND WHEAT HIGHER, BEANS LOWER OVERNIGHT... As of 6:30 a.m. CT, corn futures are fractionally to 1 cent higher, soybeans are 3 to 5 cents lower and wheat futures are steady to 2 cents higher. The U.S. dollar index is anchored near unchanged this morning.

FED MEETING CONCLUDES THIS AFTERNOON... The Fed will wrap up its two-day Federal Open Market Committee meeting around 1 p.m. CT, with Chairmen Ben Bernanke's quarterly press conference to follow a half hour later. Economists and traders are anticipating the Fed will announce it is mildly tapering its bond buying, likely by $10 billion to $15 billion per month, though it will maintain the bulk of its economic stimulus.

CROP INSURANCE PAYOUTS CLOSE IN ON $3.6 BILLION FOR 2013 CROPS… Indemnities for 2013 crops reached $3.585 billion as of Sept. 16, still far below the record payouts of $17.407 billion made for 2012 crop losses, according to Risk Management Agency (RMA) data. Wheat remains the largest payout so far at $1.663 billion and is the first crop to break the $1 billion mark for the 2013 crop year. Indemnities for corn stand at $648 million and another $569 million for cotton with soybean payments put at $213 million. The tallies for those crops in 2012 were $759 million for wheat, $11.825 billion for corn, $1.093 billion for cotton and $2.129 billion for soybeans. The payouts so far have put the loss ratio (total premiums paid in against indemnities paid out) at .31, well below the 1.57 mark registered for 2012. The 2012 crop year marked the first time since 2002 with a loss ratio of 1.0 or greater.

CRS REPORT: COOL CASE MAY LAST INTO 2015... The World Trade Organization (WTO) case challenging the U.S. country-of-origin labeling (COOL) program for meat may not be concluded before 2015, according to a Congressional Research Service (CRS) report. Timing of a WTO finding in the case may depend "on the outcome of the compliance ruling(s), procedural timelines, and whether or not the case progresses to the retaliation phase and arbitration," according to the CRS report. Canada and Mexico on Aug. 19 informed the WTO Dispute Settlement Body (DSB) they would seek a compliance panel. The U.S. blocked the first request at the Aug. 30 DSB meeting, but Canada and Mexico will make the request again at the Sept. 25 DSB meeting. The U.S. will not be able to block the second request, the report said. The compliance panel may issue a report within 90 days after being established, the report said. Under an agreement among the parties, the compliance panel findings may be appealed to the Appellate Body (AB) and the AB report may be issued within another 90 days, the report detailed. If the WTO finds that USDA's new rule does not address the WTO findings, the U.S. Congress could deal with the matter.

CBO: U.S. RISKS FISCAL CRISIS DESPITE CUTS... Notwithstanding $2.1 trillion in spending cuts that Congress passed in 2011, entitlement spending will continue to rise over the next 25 years -- "unless substantial changes are made" -- and could at some point cause a fiscal crisis, the Congressional Budget Office said in a report. One of the main problems is that an aging population will put strains on Medicare and Social Security, and will cause public debt to balloon.

CHINA COTTON IMPORTS DOWN SHARPLY... China imported 276,000 MT of cotton in August, a 9.7% reduction from year-ago, according to the country's National Development and Reform Commission. Through the first eight months of this calendar year, cotton imports at 3.03 MMT are down 19.7% from year-ago.

BOXED BEEF TRADE REMAINS SLUGGISH... Packers saw beef movement improve to 179 loads on Tuesday, but that's far from impressive and prices were lower on the day. Unless boxed beef prices and movement strengthen, packers may be reluctant to raise cash cattle bids, as cutting margins are tight.

PORK MARKET STRENGTHENS... The wholesale pork market strengthened Tuesday as the cutout value bounced back from Monday's decline to post a $1.96 rise and movement improved to 405.12 loads. Until the pork product market shows signs that a seasonal top is in place, pressure on the cash hog market and lean hog futures will be limited.

OVERNIGHT DEMAND NEWS... Japan purchased 67,000 MT of feed barley and 1,280 MT of feed wheat. Taiwan is seeking to buy 92,350 MT of U.S. wheat in two separate tenders Bangladesh tendered to buy 50,000 MT of optional origin wheat.


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