The U.S. dollar index plummeted after a highly disappointing employment report from the Department of Labor this morning. It showed fewer-than-expected non-farm payrolls of 96,000 jobs added in August, plus downside revisions to June and July data. While the unemployment rate for August edged down from 8.3% in last month's report to 8.1%, this was due to a decline in the number of people actively seeking employment. The softer dollar may eventually encourage bargain buying in the commodity sector.
Corn futures have pared losses to around a penny in most contracts.
- Net weekly export sales reductions of 104,200 metric tons (MT) for 2011-12 were barely offset by sales of 129,200 MT for 2012-13. This is a reminder that major price rationing has occurred.
- Also, harvest-related hedge pressure is building, though any declines will be limited by the tight supply outlook. This has caused basis levels to soften.
- But dollar weakness has encouraged light bargain buying on the price dip as the market recognizes some countries are still buying corn as they expect higher prices ahead.
Soybean futures have trimmed losses to roughly 9 to 13 cents.
- Weekly soybean export sales of 5,100 MT for 2011-12 and 520,600 MT for 2012-13 fell short of expectations, as did sales of soymeal and soyoil. This signals some resistance to lofty soy prices, though much more rationing will be needed to stretch the small crop.
- Traders are also reducing risk exposure ahead of the weekend and next week's USDA Crop Production and Supply & Demand Reports.
- Also, FC Stone's upside revision to its yield and production estimates earlier this week have some traders feeling the crop may not be quite as bad as anticipated.
Wheat futures have improved to post modest gains in most contracts at all three exchanges.
- As pressure on corn and soybeans eased, wheat rallied around a decent weekly export sales tally of of 554,400 MT for 2012-13 and 19,000 MT for 2013-14. Total sales matched expectations.
- Light support also comes from ongoing concerns about Black Sea region production and exports. Aggressive export sales so far in 2012-13 have the market expecting a marked slowdown from the region by the second half of the marketing year.
- Dryness in Australia remains another underlying source of support.
Live cattle futures are choppy with a slight upside bias, while feeder cattle futures are enjoying slight to moderate gains.
- Expectations cash cattle trade will take place at higher prices this week are already factored into prices, leaving the market to chop sideways until trade begins.
- This expectation can be attributed to consistent gains in boxed beef prices this week along with strong movement.
- Global beef demand also remains strong. Weekly beef export sales of 18,200 metric tons were an improvement over week-ago.
- Feeder cattle futures are benefiting from weakness in the corn market.
Lean hog futures gapped lower on the open and are posting moderate to sharp losses.
- Traders are adding to short positions in lean hog futures as fundamentals point to more downside risk ahead.
- Supplies are expanding seasonally and producers are actively reducing herd size.
- Consequently, packers are keeping cash hog bids steady to lower today despite strong profit margins.
- While pork prices did improve yesterday, they have trended steadily lower in recent weeks, though this has encouraged stronger movement.