First Thing Today (VIP) -- September 26, 2013

September 26, 2013 01:29 AM


CORN AND BEANS LOWER, WHEAT MIXED OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading mostly 1 to 3 cents lower, soybeans are mostly 5 to 9 cents lower and SRW wheat is mostly around a penny lower, while HRW and HRS wheat are steady to 3 cents higher. The U.S. dollar index is firmer this morning.

ARGENTINE WHEAT DAMAGE MAY NOT BE AS SEVERE AS THOUGHT... The impact from frost that hit parts of Argentina's wheat crop earlier this week was probably overstated, according to a Reuters story citing a couple Argentine farmers and statements from an Argentine Pro Farmer Member. While there was undoubtedly some damage from the cold temps and another cold wave is coming this weekend, the coldest temps were seen outside of the main production areas. Argentine wheat production is still expected to be up from last year's small crop due to increased acreage.

SENATE CONTINUES WORKING ON MEASURE TO THWART GOV'T SHUTDOWN… The battle over a government shutdown continues, as senators offer amendments to a House-passed continuing resolution (CR) they are expected to send back to the House this weekend. House Republican leaders already are anticipating big changes, and laying plans to send back an amended CR if Senate Democrats, as expected, strip out a provision to withdraw funding for implementation of the health care overhaul. That measure could contain a one-year delay of the health care law that would draw broad Democratic opposition and a White House veto threat. The House GOP is also reserving the option of passing a "clean" one-week CR to avoid a partial government shutdown while negotiations continue.

The study of USDA reports such as the Quarterly Grain Stocks and Supply & Demand being conducted by University of Illinois economists is likely to be completed sometime later this fall, with most expecting it to come after the annual data users meeting that USDA hosts each fall in Chicago. The report was ordered by USDA Chief Economist Joe Glauber and focuses on issues raised by the trade relative to the divergence between trade expectations and actual USDA data.

2008 FARM BILL EXPIRATION AHEAD… Unless Congress passed a new farm bill by Oct. 1 (highly unlikely) or lawmakers pass a short-term extension of the 2008 Farm Bill, expiration of the prior extension would impact some USDA programs immediately, including two programs for promoting U.S. farm products overseas -- the Foreign Market Development Program and the Market Access Program. There will also be no new enrollments in the Conservation Reserve Program and the Wetlands Reserve Program. And the Senior Farmers Market Nutrition Program also will be closed down until a new farm bill or extension is passed. As we've noted previously, the most significant impact would not come until early 2014 when USDA would be required to start taking steps under permanent law to increase milk prices. If Congress does not extend the 2008 farm legislation or address the issue in some other way, the cost of dairy price supports would double, raising the possibility that milk prices eventually could increase sharply.

WEEKLY EXPORT SALES OUT THIS MORNING... For the week ended Sept. 19, traders expect: corn sales between 400,000 and 600,000 MT; wheat sales between 500,000 and 700,000 MT; soybean sales between 2.3 MMT and 2.8 MMT; soymeal sales between 95,000 and 230,000 MT; and soyoil sales between 10,000 and 20,000 MT.

CHINA TO RELY MORE ON CORN IMPORTS MOVING FORWARD... China's corn self-sufficiency could fall to 93% by 2018 and to 90% by 2020, according to an executive in the corn division at state grain trading firm COFCO. Currently, China strives for 95% self-sufficiency on corn. This is the third time recently a Chinese official has indicated the country will rely more on corn imports moving forward. Earlier this month, China's ag minister said the country will need to boost corn imports to meet growing demand needs and then the head of rural development at China's Development and Research Center said the country could tweak its grain security strategy by lowering the self-sufficiency rate for corn.

CHINESE SOYBEAN SALES DROP DESPITE LOWER SELLING PRICE... China sold 250,002 MT of soybeans out of 501,006 MT put up for auction this week. That marked the smallest sale of state-owned soybeans since Aug. 22, while the average sale price of 4,032 yuan ($660) per ton is also the lowest since that date.

CHINA COTTON OUTPUT DOWN FROM YEAR-AGO... China's cotton production is expected to fall 5.1% from year-ago to 6.315 MMT, according to an ag ministry official quoted in a China Cotton Association story. The combination of less acreage and drought spurred the decrease in production. Meanwhile, a National Development and Reform Commission official told there is no decision on when the Chinese government will resume state cotton sales.

UKRAINE EXPECTS RECORD GRAIN CROP... Ukraine is expected to harvest a record grain crop of 60 MMT, up from 46.2 MMT last year, according to the country's Prime Minister Mykola Azarov. The ag ministry previously forecast the crop at 58 MMT.

SLOW CASH CATTLE NEGOTIATIONS... Packers and feedlots remain far apart on bids and asking prices in the Plains, suggesting Friday cash cattle trade is likely again this week unless packers raise bids today. Cash cattle are expected to trade steady to firmer compared to last week's $124 trade, though price strength is already factored into futures.

PORK MARKET STRENGTHENS... The pork product market strengthened yesterday following two days of price declines. The cutout value surged $1.40, largely on sharp gains in belly and ham prices, and packers moved a strong 466.69 loads of product on the day. That will keep packer margins solidly in the black and limit pressure on cash hog bids.

OVERNIGHT DEMAND NEWS... South Korea purchased 55,000 MT of optional origin feed wheat and tendered to buy 60,000 MT of optional origin corn.


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