What Traders are Talking About:
* Bird flu fears handcuffing soybean market. China has begun culling birds and shut down a market in Shanghai amid concerns with the H7N9 bird flu virus. According to the state-run Xinhua news agency, 20,000 birds have been culled as of early this morning. Meanwhile, the number of reported cases of H7N9 has increased to 14, with six of those resulting in deaths. All 14 cases of the new strain of bird flu have been in eastern China, but they expand over four provinces -- Shanghai (6), Jiangsu (4), Zheijiang (3) and Anhui (1). With concerns that this will eventually lead to massive culling of poultry herds (and possibly livestock), which would curb China's feed demand, the soybean and soybean meal markets are facing stiff pressure.
The long and short of it: While Chinese feed demand concerns may be overblown, it's hard for traders to look past a potential negative situation. In instances like this, it's very hard to find buying interest in the face of negative news.
* Fund selling continues in grains. Funds continue to dump long positions in the grain and soy complex, selling an estimated 11,000 contracts (55 million bu.) of corn and 4,000 contracts (20 million bu.) of soybeans and Chicago wheat yesterday. Since last Thursday, funds have dumped 92,000 contracts (460 million bu.) of corn and 32,000 contracts (160 million bu. of soybeans). Funds have been net buyers of 1,000 contracts (5 million bu.) of Chicago wheat over the five-day span thanks to a big day of buying on Wednesday.
The long and short of it: Fundamentals aside, grain and soy futures will struggle to gain traction until the fund selling subsides. Speculative money flow indicates attitudes are not healthy right now.
* Jitters ahead of jobs report. An initial poll by Reuters indicated economists believe the Labor Department would show non-farm payrolls up 200,000 in March. But after a disappointing private-sector jobs report from ADP and a four-month high in jobless claims, expectations are sliding. Some economists are now expecting non-farm payrolls to come in under 150,000 this morning. Unemployment is seen holding at 7.7%, but the key there is the participation rate, which has been declining, allowing the unemployment rate to decline.
The long and short of it: The key for commodities from this morning's jobs report will be the overall impact on investor risk appetite and what the data means for the U.S. dollar.
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