Jobs Report Gives Solid View Of US Economy

4-4-14 – US stocks may retain overnight gains after the Bureau of Labor Statistics reported this morning that the economy added 192,000 jobs in March, and the unemployment rate held steady at 6.6%. \r\n\r\n   Investors had expected a figure of around 200,000 new jobs, but this may be close enough since it likely will avoid a faster tapering of the Federal Reserve’s economic stimulus program.  And, the figures may reinforce ideas that disappointing employment growth in January and February were the result of harsh winter weather.\r\n\r\n   European stocks are likely to remain under pressure after comments by European Central Bank President Mario Draghi Friday that revealed official fears about the European economy.\r\n\r\n   Investors took the hint and moved investments out of Europe and into the perceived safer haven of the Greenback, and the Dollar Index remains firm in overnight trading. \r\n\r\n   Draghi said ECB officials had discussed extraordinary stimulus measures like negative interest rates and large-scale bond purchases, leading investors to think the European Economy is nearly stuck rather than growing as needed.\r\n\r\n   Jobs and stocks are important to the agricultural community since non-farm payrolls are probably the most-watched economic signal in use, and the investment balancing act it spawns can dictate whether money flows into, or out of, grains, soybeans or livestock. \r\n\r\n \r\n\r\nCATTLE FUTURES NARROW DISCOUNT TO CASH\r\n\r\n \r\n\r\n   Nearby live cattle futures are up in overnight trading, continuing Thursday’s advances, as the market works to narrow the unusually large discount to a resilient cash market.  Futures tried to price in price declines ahead of what are thought to be larger fed cattle supplies in summer, but the cash market is holding tough, and traders appear to feel that futures are overdone for now.\r\n\r\n   Cash cattle are expected to trade lower this week, away from last week’s record prices that reached $154 per cwt on a live basis in some places.  Packing plant margins are falling with weaker beef prices, and buyers are bidding $147 per cwt on a live basis, $3 to $5 less than last week.\r\n\r\n   However, cattle owners were asking $153 live and $246 dressed, $1 to $2 higher than last week.  Many traders expect a late-week compromise.\r\n\r\n   The USDA reported its choice cutout value Thursday was down $1.69 per cwt at $231.95 and select was down $2.25 at $221.41.  Compared with Friday’s cutout, choice is down $2.51, and select is off $5.93.  There were 128 loads of fabricated product sold into the spot market.\r\n\r\n   Weekly slaughter was 467,000 head, compared with 466,000 last week and 473,000 last year.\r\n\r\n   The CME Feeder Cattle Index for the seven days ended Wednesday was $177.83, up $0.27 while the April futures contract settled Thursday at $178.82, up $1.60.\r\n\r\n   US beef export sales last week were showing the effects of a generally stronger US Dollar at 13,800 tonnes, compared with the 4-week running average of 14,625 tonnes.  Year-to-date sales are down 9.8% from last year at 252,100 tonnes.\r\n\r\n   Despite the latest moves to higher ground, technical traders say the longer-term market lacks bullish momentum.  However, a close above previous resistance levels around $145.00 to $145.50 could rekindle the fire.\r\n\r\n \r\n\r\nLEAN HOGS DROP WITH NEW PEDv REPORTS\r\n\r\n \r\n\r\n   The National Animal Health Laboratory Network Thursday reported a “general downward trend in positive (PEDv) case submissions,” and while many still feel the USDA undercounted the effects of this disease in its latest Hogs and Pigs report, the general market appears to be taking this as a sign the spread is slowing.\r\n\r\n   In the more immediate sense, lean hog futures are seeing pressure from technical indicators, and some are afraid of speculative long liquidation, and Thursday’s close below support may have led to the bearish overnight trade.\r\n\r\n \r\n\r\nIN OUR OPINION\r\n\r\n \r\n\r\n–HRW producer hopes for rain appear dashed for now as the latest storm moves east.\r\n\r\n–Drought conditions worsening in Texas – wheat yields may already be affected\r\n\r\n–Russia, Ukraine could have seed-availability problems as their currencies decline.\r\n\r\n–Russia rumored to be negotiating with Iran over an oil-for-goods deal that would circumvent Iran sanctions.