First Thing Today (VIP) -- September 20, 2012

September 20, 2012 01:26 AM


PRICE PRESSURE OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading mostly 3 to 6 cents lower, soybeans 8 to 10 cents lower, Chicago wheat 2 to 9 cents lower, Kansas City wheat 1 to 7 cents lower and Minneapolis wheat steady to 2 cents lower. The U.S. dollar index is sharply higher this morning.

CHINA FLASH PMI BETTER THAN EXPECTED, BUT MANUFACTURING SECTOR STILL CONTRACTING... China's HSBC flash PMI ticked up to 47.8 in September from 47.6 last month, but the preliminary data signals the eleventh consecutive month of contraction in the manufacturing sector. The modest uptick came amid stabilization in the new export orders sub-index and modest gains in several other sub-indexes. Meanwhile, the euro-zone flash PMI dropped to 45.9 from 46.3 in August -- the lowest since June 2009.

SENATE TO CONSIDER SIX-MONTH SPENDING BILL... The Senate today will resume debate on a stop-gap spending measure that would fund the federal government for six months. The Continuing Resolution (CR), which the House passed 329-91 last week, would increase spending for most programs and agencies by 0.6%. It would fund the government from Oct. 1 through March 27, 2013. The Senate is expected to clear the measure, which is the last item of business expected before the chamber recesses. Sen. Rand Paul (R-Ky.) has halted Senate business until his colleagues vote on his proposal to cut off foreign aid to Pakistan, Egypt and Libya. With many lawmakers set to go home and campaign for reelection, the earliest timeline for a new farm bill would be the post-election, lame-duck session of Congress, but many are predicting the farm bill will be bumped to 2013, with a likely one-year extension of the 2008 Farm Bill.

FDA RELAXES AFLATOXIN RULES FOR IOWA GRAIN HANDLERS... The Food and Drug Administration (FDA) has relaxed rules for Iowa grain handlers pertaining to the blending of corn containing aflatoxin, according to the Iowa Department of Agriculture and Land Stewardship. FDA will allow grain dealers in Iowa who sign a compliance agreement to blend corn containing more than 20 parts per billion (ppb) of aflatoxin with "clean" corn. FDA granted Iowa similar requests in 2003 and 2005.

JAPANESE CORN USE IN FEED CONTINUES TO DECLINE... Japan's use of corn in feed production fell for the seventh consecutive month in July to a 20-year low of 42.9%, down from 43.3% in June and 45% in July 2011. Meanwhile, wheat use in feed production is on the rise, increasing to 4.1% in July from 3.9% in June and 1.2% in July 2011.

WEEKLY EXPORT SALES REPORT OUT THIS MORNING... For the week ended Sept. 13, traders expect: corn sales between 350,000 and 450,000 MT; wheat sales between 350,000 and 550,000 MT; soybean sales between 550,000 and 750,000 MT; soymeal sales between 150,000 and 200,000 MT; and soyoil sales between 10,000 and 20,000 MT.

CME TO ADJUST PIT TRADING HOURS ON USDA REPORT DAYS... When USDA starts releasing crop reports at 11 a.m. CT in January, the CME Group says pit trade for grain and soy futures and options will shift to a 9:30 a.m. CT open. CME Group currently opens pit trade at 7:20 a.m. CT on USDA report days.

CASH CATTLE UNCERTAINTY... Opinions are still split on whether cash cattle prices will come in higher or lower than last week's $126 to $127 trade in the Plains. While packers would like to get cattle bought cheaper given negative margins, showlist supplies are tighter this week and the boxed beef market remains strong. Most cattle traders are not expecting active cash cattle trade until Friday.

CASH HOGS CALLED STEADY/FIRMER... Packers are expected to pay steady to firmer prices for cash hogs again today as many plants still need supplies for late-week slaughter runs as they try to take advantage of highly profitable margins. While market-ready supplies are plentiful, they aren't as heavy this week as they have been.

OVERNIGHT DEMAND NEWS... South Korea purchased 110,000 MT of U.S. soymeal and tendered for up to 140,000 MT of optional origin corn. Japan bought 101,158 MT of wheat in it weekly tender, including 82,103 MT of U.S. supplies. Taiwan purchased 60,000 MT of Argentine corn. India tendered to sell 50,000 MT of wheat.


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