What Traders are Talking About:
* Jobs growth bigger than expected. The U.S. economy added 171,000 non-farm payrolls in October, which topped the average pre-report guess of 125,000 jobs added. There were also upward revisions for previously reported non-farm payrolls in August (+50,000) and September (+34,000). Despite the bigger-than-expected jobs growth last month and the upward revisions for the two previous months, the unemployment rate ticked up to 7.9% from 7.8% in last month's report. The labor force increased in October and the participation rate was up last month. Average hourly earnings were down last month and the average hourly workweek for production and non-supervisory workers was mildly lower.
The long and short of it: Market reaction has been relatively limited as there was a little for both bulls and bears in this data. The more long-lasting impact will be what this does (if anything) to the presidential election, which will determine our nation's leadership over the next four years. President Obama will undoubtedly tout the bigger-than-expected jobs growth and the upward revisions to past data, while GOP challenger Mitt Romney will likely focus on the fact the unemployment rate is now 0.1 percentage points higher than the day President Obama was sworn into office.
* South American planting delays getting a lot of attention. Unfavorable conditions -- too dry in central and eastern Brazil; too wet in southern Brazil and central Argentina -- are delaying corn and soybean seeding. The soybean seeding pace, in particular, is getting a lot of attention despite the fact the planting date for soybeans isn't nearly as critical to yield as is the corn planting date. The reason: The "small" crop in the U.S. this year after a short 2011-12 South American crop means the world's reliance on Brazilian and Argentine supplies will be even greater. That will keep traders extremely focused on crop prospects in Brazil and Argentina through the growing season. While most private forecasters are still expected record South American soybean production, many have already backed off on production forecasts given the unfavorable early season weather. Still, the market is very responsive to any potential production cuts.
The long and short of it: Unless conditions are extremely poor, soybeans will get planted in Brazil and Argentina because the planting window is wide and beans are their "national" crops. In fact, soybean acres could increase as not all of the intended corn acres are likely to get seeded. The key variable is yield.
* Preparations for November USDA crop reports underway. FC Stone raised its corn and soybean crop estimates from last month, pegging the corn crop at 10.881 billion bu. (124 bu. per acre yield) and the soybean crop at 2.959 billion bu. (39.1 bu. yield). Last month, the firm estimated the corn crop at 10.824 billion bu. (123.9 bu. yield) and the soybean crop at 2.849 billion bu. (38.2 bu. yield). Informa Economics will update its November crop estimates at 10:30 a.m. CT.
The long and short of it: Most traders feel USDA's soybean crop estimate will be bigger than October, but opinions are split on corn with seemingly most feeling a slight reduction from last month is likely.
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