First Thing Today: China to Work Through Corn Stockpile in Three to Five Years

Firmer tone for corn, beans as overnight session winds down... Corn futures traded narrowly on either side of unchanged overnight, but as of 6:30 a.m. CT most contracts are favoring the upside in choppy trade. Soybeans also saw two-sided trade overnight, but most contracts are currently up 3 to 5 cents. Wheat futures are fractionally lower across all three flavors. The U.S. dollar index is slightly higher, as are crude oil futures.

WOTUS meeting today... Environmental Protection Agency (EPA) officials will hold a two-hour meeting at the agency's headquarters this afternoon with groups representing state and local officials to solicit their "input and wisdom" on the planned rewrite of the Waters of the U.S. (WOTUS) rule. In a letter extending the invitation last week, EPA Administrator Scott Pruitt said the consultation is a priority "to both myself and President Trump." Pruitt will not be at the meeting, since he will be traveling in the Midwest. More than 30 states filed suit against the rule, while others sided with EPA in support when the rule was released during the Obama administration.

Ossoff likely headed for a runoff election... Democrat Jon Ossoff led the field of candidates in a Georgia special election to replace former Representative Tom Price (R), but he is projected to come up short of the 50% majority needed to avoid a runoff election. President Donald Trump picked Price to head Health and Human Services. That means Ossoff will compete in a runoff election with second-place finisher Karen Handel (R) on June 20. Get more perspective on this race that is seen as an early test of Trump's political standing.

Boost in Chinese processing capacity to work through corn stockpile in three to five years... Chinese corn processing firms will boost processing capacity to use old corn stocks, helping the country to work through its massive stockpile of the grain in the next three to five years, says Tong Yi, general manager of COFCO Biochemical. Tong details that the country's total corn processing capacity will hit 70 MMT a year by the end of 2018 versus current capacity of 50 MMT. Experts estimate China has corn reserves of around 250 MMT.

Firm raises grain crop and export forecast for Ukraine... UkrAgroConsult now estimates Ukraine's 2017 grain crop at 61.410 MMT, up 500,000 MT from its latest estimate. And it adds that favorable weather could push production as high as 62.5 MMT. The production boost also prompted the firm to raise its grain export forecast by 700,000 MT to 39.5 MMT. In the 2016-17 marketing year, the Ukraine produced a 63.965 MMT grain crop with exports expected to hit 41.016 MMT, according to UkrAgroConsult.

Mexico expects to clinch trade deal with Argentina by year-end... Juan Carlos Baker, Mexico's deputy minister for foreign trade, says the country expects to finish negotiations on a trade deal with Argentina by year-end. Under the deal, Argentina would supply some grain to Mexico, free of tariffs. In exchange, Argentina would open its market to Mexican cars, according to Baker. Mexico has been working to find alternatives to the U.S. since Trump's election. In 2015 the U.S. supplied Mexico with $2.3 billion of corn and $1.4 billion of soy.

Trump pledges relief in Canada dairy trade dispute... Trump promised dairy farmers his administration would intervene to restore exports of American milk in the Canadian market. Trump on Tuesday responded to appeals for help from the dairy industry during an event in Wisconsin, where he also renewed his complaints about the North American Free Trade Agreement (NAFTA). Trade groups for U.S. dairy farmers have complained that a policy rolled out in Canada recently violates the trade agreement by creating incentives for Canadian processors to use local supplies. U.S, farm groups say that effectively blocks American dairy exports, adding to a glut of milk on the American side of the border. Canada's ambassador rejected the claims and said U.S. policies are more projectionist than Canada's.

South Korea to continue bringing in eggs as supplies stabilize... South Korea will likely continue to import eggs in the weeks and months ahead, despite a downgrade in the country's alert status over bird flu amid signs the outbreak is waning. After more than a fifth of the country's poultry population was culled, it will take time for domestic output to recover, according to government sources. An unnamed ag ministry official cited by Reuters says he expects the local egg supply to return to normal in the second half of the year, but until then, the country will continue to bring in eggs -- mainly from Australia.

Signals higher cash cattle prices may lie ahead... Cattle futures settled well off session highs yesterday as the market took note of futures' technically overbought condition. But boxed beef price gains and tighter showlists signal even higher cash cattle action is very much a possibility this week. And futures remain at a discount to last week's $128 (mostly) to $129 cash action. Today's online Fed Cattle Exchange auction will provide additional insight.

Cash market remains a source of pressure for lean hogs... Cash hog prices continue to slide as supplies are reportedly backed up after Easter, which remains a source of pressure for the lean hog market. But talk continues to filter that cash prices will soon put in a low, thanks to spring grilling demand and once farmers return to the field, tightening the availability of market-ready supplies.

Overnight demand news... South Korea's Major Feedmill Group purchased around 137,000 MT of corn from optional origins. Its Korean Feed Association issued an international tender to buy up to 130,000 MT of corn from optional origins.

Today's reports:

• 9:30 a.m., Weekly Ethanol Production -- EIA
• 1:00 p.m., Beige Book -- Fed
• 2:00 p.m., Broiler Hatchery -- NASS
• 2:00 p.m., Livestock Slaughter - Ann. -- NASS