Markets Waiting on Jobs Data

March 5, 2009 06:00 PM

Julianne Johnston Pro Farmer Senior Markets Editor

From Pro Farmer

Updated as of 7:00 a.m. CT

Awaiting jobs data... Grain futures were firmer overnight on dollar weakness and short-covering in the crude oil market. How outside markets react to this morning's jobs report will have an impact on grain trade this morning. The Labor Department is expected to announce another 648,000 jobs were lost in February, based on a Reuters survey, when they report monthly nonfarm payrolls this morning. Through January, the U.S. had already lost 3.6 million jobs since Dec. 2007. The unemployment rate is expected to rise to 7.9%. If the jobs data comes in more bearish, it will pressure financial markets, but if jobs data isn't quite as bad as thought, it could bring some short-covering. Kind of crazy the jobs report will have this much of an impact on the commodity markets, eh?

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Opening calls. These calls originate more than three hours before the open -- use caution, things change:

Corn: Steady to 4 cents higher. Futures were supported overnight by dollar weakness. Futures closed 5 to 6 cents lower yesterday, which was a mid-range close. Outside markets triggered profit-taking pressure following Wednesday's gains. How markets close the week will be determined by outside markets. Support for May corn lies at Monday's low of $3.44 1/2, with resistance at last week's high of $3.80 1/2.

Soybeans: 3 to 7 cents higher. Futures were higher overnight amid dollar weakness. Futures closed 10 to 16 cents lower yesterday, pressured by outside markets. Yesterday bean futures were hit with profit-taking pressure following Wednesday's corrective gains, as outside markets triggered widespread commodity selling. Strength in the dollar and weakness in the U.S. stock market triggered selling in the commodity markets.

Wheat: 4 to 6 cents higher. Futures were firmer overnight on spillover from neighboring pits. Futures posted a low-range close yesterday, finishing around 8 cents lower. The Continuous Commodity Index erased about half of the previous day's gains to remain within the month-long consolidation range. How commodity markets finish the week will be highly dependent on outside markets. May Chicago wheat briefly penetrated resistance at yesterday's high but posted a low-range close. Support lies at this week's low of $4.98 1/2.

Cash cattle expectations: Waiting on active trade. Nebraska feedlots actively sold cash cattle at steady prices with trade earlier this week, which was mostly around $1 higher than last week's price. Kansas and Texas feedlots haven't pulled the trigger yet, but traders are anticipating steady to firmer cash bids around $82 to $83.

Futures call: Mixed. Futures are called to open mixed on the possibility of short-covering, as traders wait on active cash trade to begin. Yesterday, June cattle posted a downside day of trade on the charts, but finished near the middle of the day's range. The contract is near the mid-point of the recent trading range that has support at the February low of $80.45 and resistance at last week's high of $84.42.

Cash hog expectations: Steady to weaker. Cutting margins have fallen very deep into the red, but cash sources expect packers to offer steady to slightly firmer bids for cash hogs to close out the week. Demand for hogs is said to be solid amid declining supplies. It's surprising packers haven't opted to reduce kill runs, which signals they may anticipate a near-term pickup in pork demand.

Futures call: Mixed. Futures are called to open mixed amid spreading. Traders factored in seasonal improvement amid tightening supplies, which lifted nearby futures. The CME lean hog index is projected up 76 cents to stand at $57.36. April hogs are trading at around a $5.00 premium to the cash index, which opens the door to significant near-term profit-taking.

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