Market Snapshot, 8:30 am CT (VIP) -- October 5, 2012

October 5, 2012 03:44 AM
 

The U.S. dollar index has weakened considerably in reaction to this morning's monthly Employment Report, which states the U.S. added 114,000 non-farm payrolls in September, which was about as expected. But upward revisions to July and September payrolls data added 86,000 more jobs than reported last month, resulting in a 0.3 percentage point decline in the unemployment rate to 7.8%.

Corn futures are 2 to 4 cents lower, but they have seen choppy trade.

  • Weakness in the U.S. dollar index is limiting pressure on corn futures, but price action remains lackluster as futures continue to consolidate around last Friday's high.
  • Gulf corn basis is steady for October and November shipment this morning, but December has softened 3 cents. Basis for early 2013 shipment is 1 cent firmer.
  • While corn harvest has crossed the halfway mark, basis has been slow to improve which traders say suggests some better-than-expected yields. Demand destruction is also to blame.

 

Nearby soybean futures are 1 to 5 cents higher, while deferred futures are mixed.

  • Traders are having a muted reaction to this morning's news that China has purchased another 180,000 MT of soybeans for 2012-13. This follows Wednesday's sale of 21,000 MT of soybean oil and a strong weekly export sales tally yesterday to suggest prices are not rationing demand.
  • A weaker U.S. dollar index is also supportive this morning, but buying is being limited by reports of "better-than-expected" soybean yields and expectations USDA will raise its crop estimate in next week's Crop Production Report.
  • Soybean futures are testing downtrending resistance, but remain within the boundaries of the downtrending channel.

 

Chicago and Kansas City wheat futures are mostly around 1 to 2 cents lower, with Minneapolis 2 to 5 cents lower.

  • Weakness in the U.S. dollar index is limiting pressure on wheat futures, but traders are focused on evening positions ahead of the weekend.
  • Additional pressure is coming from news Russia plans to double its sales from government intervention stocks to cool domestic prices. It now plans to sell around 1 MMT and is expected to sell up to 100,000 MT per week beginning Oct. 23 through year-end.
  • Traders are also keeping an eye on global weather developments, as more rains are needed in the U.S. Southern Plains, Australia and areas of the Black Sea region to recharge soils for wheat establishment.

 

Live cattle futures are expected to see a lift from higher cash cattle trade.

  • Cash cattle trade got underway at $124 yesterday in the Southern Plains, which is $1 higher than last week. While traders had a muted reaction to that yesterday amid position squaring, ideas the cash market has posted a near-term low should support futures today.
  • Cattle futures are also expected to see a lift from the U.S. stock market, as investors react to the drop in the unemployment rate.
  • Weakness in the corn pit is also seen as supportive for feeder cattle futures, although gains could be tempered by lackluster calf demand.

 

Lean hog futures are called mixed amid bull spreading.

  • Nearby lean hog futures saw a lift yesterday from strong packer demand for hogs. Improved technicals for nearby contracts is seen building on itself this morning.
  • Meanwhile, the cash hog market is called steady to $1 higher based on improved packer profit margins. Pork cutout values rose $1.84 yesterday.
  • The correction in deferred futures is expected to continue, helped along by expected strength in the U.S. stock market.
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