Market Snapshot, 10:00 a.m. CT (VIP) -- April 5, 2013

April 5, 2013 04:59 AM
 

The Labor Department reports non-farm payrolls in March increased by just 88,000 for a little-changed unemployment rate of 7.6%. Investors had hoped the report would show 200,000 non-farm payrolls were added in March. Also concerning is that the labor-force participation rate fell to a 35-year low. The report is weighing on the stock market this morning.

Corn futures have softened to trade steady to 4 cents lower in most contracts.

  • Broad risk-aversion is setting the tone to wrap up the week thanks to a disappointing labor market report.
  • Pressure is being limited by news of a 120,000-MT corn purchase to an unknown destination for 2013-14. This signals some bargain buying may be occurring.
  • The forecast is also limiting selling interest. There is precip in the forecast early next week for parts of the Corn Belt (including snow) and the 6- to 10-day forecast calls for below-normal temps and above-normal precip chances for the Nebraska, Iowa and Minnesota.
  • While the precip is welcome, the forecast as a whole points to planting delays and possibly fewer corn acres than anticipated.

 

Soybean futures have softened to trade roughly 7 to 12 cents lower in old-crop futures, while deferred months are seeing slightly lighter losses.

  • A lack of indications that recent price declines have encouraged bargain buying signals more downside may be ahead for the bean market. Thus, traders are favoring the downside as they even positions for the weekend.
  • Pressure also stems from news China has begun culling birds and has shut down a market in Shanghai amid concerns the H7N9 bird flu virus is spreading.
  • Plus, prospects for corn planting delays increase the odds more acres will be switched to soybeans.
  • The market expects South American shipments to increase, significantly slowing demand for U.S. soy products.

 

Wheat futures have softened slightly to trade 3 to 6 cents lower in Chicago, 2 to 3 cents lower in Kansas City and mixed in Minneapolis.

  • Wheat futures are seeing light profit-taking amid a general risk-off attitude across the marketplace thanks to today's highly disappointing jobs report.
  • While the five-day forecast calls for precip for the Southern and Central Plains, the extended forecast is much less favorable for precip.
  • Traders also expect Monday's Crop Condition Report to remind traders of the poor state of the HRW wheat crop, limiting selling interest.
  • Forecasts for chilly temps and snow in the northern Plains is encouraging light short-covering in Minneapolis wheat futures.

 

Live and feeder cattle futures are posting slight to moderate losses this morning.

  • A risk-off stance after a disappointing jobs report this morning is weighing on cattle futures as this adds to existing beef demand concerns.
  • The labor participation rate hit its lowest level since May of 1979. This, plus higher gas prices and taxes, could cause consumers to throw cheaper pork or poultry on the grill.
  • Plus, there is snow in the forecast for some areas of the nation's northern tier Sunday.
  • Yesterday, boxed beef prices were mixed, with Choice up 24 cents and Select down 36 cents; movement was also relatively light at 144 loads.
  • But pressure on nearby futures should be limited as April cattle ended yesterday at a slight discount to this week's $128 cash cattle trade. Additional cash sales took place at $128 to $129 yesterday at northern locations. This was steady with the week prior.

 

Lean hog futures are mostly moderately lower in early trade.

  • Heavy losses in the stock market on disappointing jobs data is encouraging profit-taking ahead of the weekend. This sign of poor economic growth raises concern about red meat demand in the face of declining disposable income for consumers.
  • Plus the cash hog market is mostly steady this morning as packers have seen profit margins dip into the red this week and most are well supplied for near-term needs.
  • Plus, the pork market has not yet put in a seasonal low.
  • The voluntarily reported pork cutout value declined 33 cents yesterday and movement was light at 27.75. In the mandatory reported market, the pork cutout value slid $1.32 on movement of 445.5 loads.
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