Market Snapshot, 8:30 am CT (VIP) -- November 2, 2012

November 2, 2012 03:41 AM
 

The U.S. dollar index strengthened in reaction to this morning's monthly employment report, which showed non-farm payrolls of 171,000 were added in October, which was more than expected. Revisions to August and September data showed more jobs created those months, but the unemployment rate still upticked from 7.8% to 7.9%.

Corn futures are mixed, with December through September down 3 to 5 cents. Far-deferreds are mostly firmer.

  • Strength in the U.S. dollar index is weighing on nearby corn futures, with additional pressure coming from spillover weakness in nearby soybean futures.
  • Weekly corn export sales of 167,900 MT were an improvement from the previous week and met expectations, but they still represent lackluster demand.
  • Additional pressure is also coming from FC Stone's higher corn crop estimate of 10.881 billion bu. (124 bu. per acre yield), which is up from the firm's October peg of 10.824 billion bushels.

 

November through July soybean futures are 7 to 14 cents lower, with far deferreds mostly 2 to 3 cents higher amid spreading.

  • Strength in the U.S. dollar index has resulted in widespread selling in the commodity sector and is adding to pressure on nearby futures.
  • Soybeans are also being pressured by improved rain chances in northern areas of Brazil. These are needed to spur planting.
  • Traders are generally ignoring this morning's weekly export sales data that showed sales of 741,200 MT for 2012-13 and sales of 19,400 MT for 2013-14, which came in above traders' expectations.
  • FC Stone's higher soybean crop estimate of 2.959 billion bu. (yield of 39.1 bu. per acre) is also adding pressure. Last month the firm estimated the crop at 2.849 billion bushels.

 

Wheat futures are favoring a weaker tone. Chicago wheat is mostly 4 to 5 cents lower and Kansas City is mostly 2 to 4 cents lower. Minneapolis futures are narrowly mixed.

  • Upside potential for wheat is being limited to short-covering due to strength in the U.S. dollar index.
  • Wheat remains in a follower's role and pressure on nearby corn and soybean futures has traders on the defensive in the wheat pit this morning.
  • Weekly wheat export sales of 362,900 MT for 2012-13 came within traders' expectations but are down from last week's tally.

 

Live cattle futures are expected to be mixed due to the possibility of some short-covering on ideas yesterday's losses were overdone.

  • This week's sharp losses in the boxed beef market will limit buying to short-covering.
  • While firmness in the U.S. dollar index is negative for commodity markets this morning, the U.S. stock market is expected to see a boost from the better-than-expected monthly jobs report.
  • Choice beef values declined another $1.27 yesterday while Select softened 35 cents. Impressively however, movement has improved; 196 loads changed hands yesterday.
  • This week's cash cattle trade is thought to be complete for the week at steady to $1 lower levels than last week.
  • Weekly beef export sales of 14,600 MT for 2012 and 600 MT for 2013 were down from last week's tally.
  • Weakness in corn futures could inspire some short-covering for feeder futures this morning.

 

Lean hog futures are expected to be choppy again this morning as traders even positions ahead of the weekend.

  • The U.S. stock market is expected to be higher on the monthly jobs data, which could bolster buying in livestock futures this morning.
  • The large discount December lean hog futures hold to the cash index could also spur some corrective buying this morning.
  • Pork cutout values slipped 13 cents yesterday, but it came with strong movement. In fact, pork movement has improved this week overall -- alleviating concerns that Superstorm Sandy had a big impact on overall meat demand.
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