Sharp gains in the U.S. dollar index following a stronger-than-expected addition to non-farm payrolls for October continue to weigh on the commodity sector. Revisions to August and September data also showed more jobs created those months, but the unemployment rate still rose from 7.8% to 7.9%.
Corn futures have pared losses slightly to trade 5 to 9 cents lower through the September contract; deferred months remain choppy.
- Dollar strength and spillover pressure from soybeans are encouraging profit-taking ahead of the weekend.
- In addition, Informa Economics reportedly expects USDA to raise its November crop production forecast from last month by 32 million bu. to 10.738 billion bushels. This includes a 0.4 bu. increase in its yield estimate to 122.4 bu. per acre.
- FC Stone also upped its corn production estimate by 57 million bu. from last month to 10.881 billion bushels.
- And while this morning's weekly corn export sales tally 167,600 MT for 2012-13 met expectations, it still reflects lackluster demand.
Soybean futures continue to see double-digit losses in most contracts, with nearbys leading to the downside with losses in the low 20s.
- Soybean traders are taking advantage of a firmer dollar by booking profits to wrap up the week as the market has been unable to find sustained buying interest above the 100-day moving average this week.
- Pressure also stems from recent estimates that signal USDA may reveal a larger crop than earlier thought.
- Informa Economics reportedly expects USDA to raise its yield estimate from October by 0.8 bu. to 38.6 bu. per acre. It also expects USDA to raise its production estimate from 2.86 billion bu. to 2.925 billion bushels in November.
- FC Stone raised its bean crop estimate by 110 million bu. from October to 2.959 billion bushels.
- Improved chances for much-needed rain in northern Brazil add to the negative tone.
- Traders are ignoring this morning's weekly export sales data that showed stronger-than-expected sales of 741,200 MT for 2012-13 and sales of 19,400 MT for 2013-14. This may signal traders view strong demand as factored into prices.
Wheat futures have rebounded to post slight gains in most contracts at all three locations.
- Early profit-taking pressure in wheat gave way to bargain buying thanks to ongoing concerns about tighter supply prospects in Australia and the Black Sea region, which should eventually improve demand for U.S. supplies.
- A poor start to the U.S. winter wheat crop and little chance for drought-relieving precip adds to such concerns.
- But that boost in U.S. wheat demand may not materialize for some time, limiting the wheat market's upside potential.
- Reminding the market of this, this morning's weekly wheat export sales of 362,900 MT for 2012-13 matched expectations, but was not an impressive tally.
Live cattle futures are slightly lower in most contracts. Feeder cattle futures have improved to post slight to moderate gains.
- Traders are taking advantage of strength in the U.S. dollar index by booking profits.
- Declines in boxed beef prices are encouraging of this, though movement has remained strong. This morning Choice cuts plunged $1.70 while Select cuts fell 85 cents. This again encouraged impressive movement of 121 loads.
- Also, the market remains concerned that beef demand may suffer due to power outages and destruction along the East Coast.
- Losses in nearby contracts are being limited by the fact that the front-month is at a slight discount to this week's cash prices.
- Weekly beef export sales of 14,600 MT for 2012 and 600 MT for 2013 were down slightly from last week's tally, but this still represents solid demand.
- Feeder cattle futures extended gains as corn prices softened. The market is also benefiting from ideas the downside was overdone yesterday.
Lean hog futures have softened to trade slightly lower across the board.
- Pressure on December lean hogs is being limited by the steep discount it holds to the cash hog index.
- Front-month futures are also benefiting from resiliency in the pork market despite the seasonal trend for sluggish demand.
- But deferred months are facing profit-taking pressure amid dollar strength and uncertainty how pork demand will fare in the wake of Superstorm Sandy and ahead of Thanksgiving.
- Also, supplies will continue to build into year end. This has kept the cash hog market mostly steady to lower this week. This will likely be the trend in the weeks ahead.