First Thing Today (VIP) --December 18, 2012

December 18, 2012 12:42 AM
 

GOOD MORNING!

GRAINS UNDER PRESSURE... As of 6:30 a.m. CT, corn futures are trading 1 to 4 cents lower, soybeans mostly 15 to 18 cents lower, Chicago wheat 2 to 5 cents lower and Kansas City wheat around 2 cents lower. The exception is Minneapolis wheat, which is trading around 1 cent higher. The U.S. dollar index is modestly weaker this morning.

MAJOR MOVEMENT IN FISCAL CLIFF TALKS… President Obama and House Speaker John Boehner (R-Ohio) met late-Monday on fiscal cliff issues, and progress was made on several key areas. Obama reportedly has dropped the demand that households earning more than $250,000 would pay higher taxes, with reports saying that mark is now $400,000. Current discussions also do not include an extension of the payroll tax reduction, but do include provisions to patch the Alternative Minimum Tax and the so-called "doc fix" for Medicare. Key issues remaining are important, including a GOP push for entitlement reform and the length of an increase in the debt limit. Boehner is to brief Republicans today, the first time since the cliff talks resumed post-election. However, differences remain between the two sides, so calling the finish line on the situation is still unclear but most see a resolution unfolding on or before Jan. 3, 2013 -- when the new Congress is in place. Also, a new farm bill is still a component in the situation with the level of savings in a new bill eyed as a way to pay for a portion of the hoped-for package.

ARGENTINA TO LIMIT WINTER WHEAT EXPORTS... The Argentine government and exporters agreed to limit wheat shipments to 2 MMT in January and February following a meeting on Monday. Continued excessive rains and flooding are dimming crop prospects. The Argentine government has capped 2012-13 wheat exports at 4.5 MMT, although some believe that figure will increase after harvest results are fully known.

RIN PROPOSAL GOES TO WHITE HOUSE/OMB... EPA on Saturday sent the Office of Management and Budget a proposed RIN (Renewable Identification Number) quality assurance plan. EPA has been under pressure from refiners to take steps to prevent the marketing of fraudulent biodiesel credits, or RINs. The EPA plan is intended to ensure that RINs on the market were validly generated.

U.S., CHINA TRADE TALKS ON TAP TODAY, TOMORROW... U.S. Trade Rep Ron Kirk and Rebecca Blank, acting secretary of Commerce, begin two days of meetings today in Washington where they are expected to continue pressing Chinese Vice Premier Wang Qishan for more reforms in the Asian economy. USDA Sec. Tom Vilsack will join the confab to address any agricultural trade concerns. The meeting is part of ongoing sessions to make progress on issues such as theft of intellectual property and the treatment of U.S. agriculture products -- as part of the U.S.-China Joint Commission on Commerce and Trade (JCCT).

U.S. DECISION TODAY ON SPAT WITH CHINA... The U.S. Commerce Department will give its final ruling today on whether to slap Chinese firms with anti-dumping penalties on utility-scale wind tower imports. The tariffs could be as high as 73% for Chinese wind towers that generate at least 100 kilowatts, and up to 60% for Vietnamese imports. The decision is part of a larger clean-energy trade spat between the Obama administration and China.

CHINA OPTIMISTIC ON INFLATION... China has set its annual inflation target around 3.5% for 2013, according to state-run China Securities Journal, citing unnamed government sources. While inflation increased to 2% in November, China is apparently optimistic consumer prices won't shoot higher next year as the outlook is slightly lower than this year's 4% target.

RUSSIA HAS FOUND NO RACTOPAMINE IN U.S. MEAT YET... Russia is checking imported U.S. pork and beef for ractopamine but has not halted any meat shipments since the inspections began, according to the head of the country's veterinary and phytosanitary agency. The U.S. has vowed not to bow to Russian requests it test meat shipments for ractopamine, citing international science standards allowing small amounts of the additive in meat.

BULLISH CASH EXPECTATIONS, BUT SOME UNCERTAINTY... Optimism is relatively high cash cattle prices will come in steady to firmer compared to last week's $124 to $125 trade in the Plains after Monday's strong gains in front-month futures. But there are some question marks as the boxed beef market got off to a sluggish start to the week, packers are buying cattle for a shortened holiday kill schedule next week and cutting margins remain well below breakeven. Active cash cattle trade is not expected until late in the week.

CASH HOGS SEEN MOSTLY STEADY... Packers are expected to pay mostly steady prices for cash hogs across the Midwest today, although some firmer bids could carry over from Monday. But cash sources expect cash hog bids to soften later in the week as packers will run reduced slaughter schedules the next two weeks.

OVERNIGHT DEMAND NEWS... Japan is seeking 121,026 MT of U.S. and Canadian wheat in its weekly tender.

 

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