Market Snapshot, 8:30 am CT (VIP) -- December 7, 2012

December 7, 2012 02:45 AM
 

A better-than-expected monthly employment report from the Department of Labor is supporting the U.S. dollar index, which is negative for the commodity markets this morning. The report showed non-farm payrolls of 146,000 were added in November, which was well above expectations of around 93,000 added. The unemployment rate edged down from 7.9% to 7.7% -- the lowest since December 2008.

Corn futures are 2 to 5 cents lower on strength in the U.S. dollar index.

  • Corn is seeing followthrough from yesterday's losses as there's little fresh news for the market to digest.
  • Strength in the U.S. dollar index is adding to the negative tone.
  • Gulf corn basis is steady to 1 cent lower for February and March delivery to suggest there is no fresh export business in the works.
  • Additionally, news that Taiwan purchased 60,000 MT of Brazilian corn reminds traders of ongoing demand destruction of the U.S. corn market.

 

Soybean futures have reversed course to trade 7 to 11 cents lower, with nearbys leading losses.

  • A better-than-expected employment report is bolstering the dollar index, which caused soybean futures to reverse early gains.
  • Meanwhile, demand from China remains strong. This morning USDA announced a 115,000-MT sale to China for 2012-13 -- reminding traders current prices are not adequately rationing demand.
  • Gulf soybean basis is steady this morning, with bids more than a dollar above January futures for immediate shipment.
  • January soybean futures came within 1 3/4 cents of the $15.00 level in overnight trade and softened. But the uptrend from the November low remains in place.

 

Wheat futures at all three exchanges are mostly 1 to 4 cents lower on strength in the dollar index.

  • Wheat is weaker on spillover from neighboring pits and strength in the U.S. dollar index.
  • Wheat needs a dose of fresh demand news to lift futures, as weather concerns from wet conditions in Argentina and dryness in the U.S. Plains is not creating much bullish enthusiasm at this time.
  • March Chicago wheat futures are hovering above support at the November low of $8.45.

 

Live cattle futures are expected to see a choppy start as traders anxiously wait on the start of this week's cash cattle trade.

  • Bids and asking prices remain several dollars apart in the Plains, signaling active cash cattle trade could be delayed until this afternoon.
  • Given this week's larger showlist and the fact boxed beef values have drifted lower this week, most are expecting cash trade to come in around $1 lower with last week's $125 to $126 trade.
  • Meanwhile, strength in the dollar is pressuring grain futures, which is supportive for feeder futures.
  • The U.S. stock market is set for a stronger start in reaction to the better-than-expected jobs report, which is supportive for livestock markets this morning.

 

Lean hog futures are expected to be mixed on a combination of followthrough pressure from yesterday's losses and short-covering on ideas losses were overdone.

  • Price action is expected to be choppy in the hog pit as traders even positions after an active week of trade.
  • Buying will be limited by indications the cash hog market has posted a near-term high, although strength in the U.S. stock market could trigger some short-covering.
  • The cash hog market is called steady to weaker as packers work to improve negative profit margins and have this week's slaughter needs secured.
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