Market Snapshot, 8:30 am CT (VIP) -- August 3, 2012

August 3, 2012 03:51 AM
 

 

Outside markets are positive on a better-than-expected monthly jobs report, which showed 163,000 non-farm payrolls were added in July (economists expected around 100,000 jobs to be added). The unemployment rate upticked from 8.2% in June to 8.3% last month.

September through May corn futures are 3 to 5 cents higher, with far-deferred contracts mostly 1 to 2 cents lower.

  • The U.S. dollar index is sharply weaker, which is supportive for the commodity markets this morning. Otherwise, there's little fresh news for the corn market to digest, with focus on position squaring ahead of the weekend.
  • Early buying is being limited by light rains moving across areas of the Corn Belt yesterday and forecasts for additional precip this weekend, although rains at this point would do little more slow early harvest which has begun in some of the worst-struck drought areas.

 

Soybean futures are 10 to 13 cents higher on supportive outside markets.

  • New-crop contracts are posting fresh session highs amid widespread commodity buying due to sharp dollar weakness. Traders' focus is on pre-weekend position squaring.
  • Traders are concerned weekend rains won't be widespread enough to benefit the soybean crop, which has begun its key pod-filling stage.
  • China sold all of its 400,907 metric tons (MT) of state soybean reserves up for auction at a record average price. This signals demand remains strong and traders expect more near-term purchases of US soybeans to be made despite historic prices.

 

Wheat futures at all three exchanges have moved to fresh session highs to post double-digit gains.

  • Weakness in the US dollar index is attracting fresh buying in the wheat pit this morning, as all signs point to strong demand for US wheat given tightening global supplies.
  • September Chicago wheat is trading at around an 80-cent premium to September corn futures to keep wheat as a competitive source of feed.

 

Live cattle futures are called mixed, although firmer trade is possible on positive outside markets and higher cash cattle trade.

  • Yesterday's high-range close gives bulls the upper hand heading into this morning's open, with strength in the US stocks market in reaction to a better-than-feared jobs report expected to add to early strength.
  • Cash cattle trade is likely done after trade turned active at $118 to $119 in the Central and Southern Plains yesterday afternoon, which was up $3 to $4 from last week.

 

Lean hogs are called higher on short-covering and spillover from outside markets

  • Ideas yesterday's losses were overdone are expected to spur shot-covering this morning. Strength in outside market should also make it easier for hog futures to post an upside correction this morning.
  • But traders are comfortable with the discount contracts hold to the cash index, as traders expect sow liquidation to pose a burden as pork supplies increase seasonally this fall.
  • The cash hog market is called steady to $1 lower as packers are having no difficulty securing needed supplies.
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