The U.S. dollar index is lower while the stock market is firmer after this morning's September Employment Report showed the unemployment rate declined by 0.3 percentage point to 7.8%, whereas expectations were for it to tick up to 8.2%. The data also showed the U.S. added 114,000 non-farm payrolls in September, which was about as expected. The data was also revised for July and August to show the U.S. added 86,000 more jobs than reported last month.
Corn futures softened with the open of pit trading and is 3 to 5 cents lower.
- Traders are engaging in some light profit-taking as they even positions ahead of the weekend.
- It has been a long time since the market received news of a daily corn sale, signaling significant demand destruction has occurred.
- Also, basis levels have been slow to improve after harvest passed the halfway point, which some say could signal better-than-expected yields. Traders will watch for the release of Informa Economics crop estimate updates at 10:30 a.m. CT for more insight.
- In light of this, traders are hesitant to add risk ahead of USDA's Crop Production Report next week.
- Tight supplies and weakness in the U.S. dollar index are limiting selling in futures.
Soybean futures have seen choppy trade this morning. At present, nearby contracts are 8 to 13 higher while deferred months are slightly lower.
- Nearby soybean contracts are benefiting from what has been a steady stream of signals that prices are not slowing use.
- USDA this morning announced that China had purchased another 180,000 MT of soybeans for 2012-13. This follows news the country bought 21,000 MT of soybean oil on Wednesday and a strong weekly export sales tally yesterday.
- But buying interest is limited ahead of USDA's Crop Production Report Thursday. Traders are concerned USDA will raise its production estimate as the market has been hearing reports of "better-than-expected" yields.
- Gulf basis levels were up 1 to 8 cents for October through December delivery and a whopping 34 cents higher for February delivery. This signals more demand news may be on the horizon.
Wheat futures have softened slightly to post losses ranging from 1 to 4 cents at all three locations.
- Weakness in the corn market is making it difficult for wheat to find buyers this morning.
- Plus, traders are growing impatient waiting for the U.S. to receive a demand boost from tightening global supplies. Gulf basis levels softened this morning, emphasizing lackluster export demand.
- The latest news on this front favors market bears -- Russia plans to double its sales from government intervention stocks to 1 MMT to cool domestic prices. It is expected to sell up to 100,000 MT per week beginning Oct. 23 through year-end.
- More precip in the forecast for the U.S. Plains is another source of light pressure, though snow and cold in more northern regions is hampering winter wheat emergence.
Live cattle futures are split with nearby contracts slightly higher and deferred months slightly lower amid bull spreading. Feeder cattle futures are in a similar posture.
- Cash cattle trade got underway at $124 yesterday in the Southern Plains, which is $1 higher than last week. Trade was active yesterday and is thought to be complete for the week.
- Traders had economic worries on their mind yesterday, which limited buying interest. But today, friendly jobs data has boosted their risk appetite.
- But gains are being limited by an increase in slaughter weights and recognition that packers continue to cut in the red.
- Boxed beef action was mixed yesterday. Choice cuts rose 65 cents while Select cuts fell 44 cents. Movement was strong at 211 loads.
- Losses in the corn market are encouraging light short-covering in feeder cattle futures.
Lean hog futures are enjoying moderate gains in all but the front-month contract, which is weaker as traders work to narrow the premium it holds to the cash hog index.
- Lean hog futures continue to benefit from ongoing cash and pork market strength.
- Packers have consistently bid steady to higher prices for supplies that have tightened somewhat this week.
- And gains in the pork cutout market yesterday should keep demand solid as they improved packer profit margins. Pork cutout values rose $1.84 yesterday and movement was solid at 69.63 loads.
- Deferred months are also being pressured by ideas the recent rally in prices may encourage producers to reevaluate their plans to cut their breeding efforts.