Markets Await USDA Reports

Corn and wheat futures are lower in overnight trading while soybeans are up ahead of the January USDA crop reports due at noon ET.  Volume is light, indicating traders are executing a few last-minute trades before the reports.  Trading may be choppy ahead of the reports and volatile afterward.\r\n   Traders will be watching corn ending stocks and the factors that influence this number – 2013 production, which is expected to be up from November’s estimate, and demand, including exports, ethanol production and feed, which is uncertain.  \r\n   Soybean yields also could be changed in the report.  Most expect production to be up, although demand could keep US ending stocks tight.  Complicating the soybean numbers will be world supplies, which likely will grab some of the world import business and limit US prices for the rest of the crop year.\r\n   Wheat’s planted acres appears to be the major point of interest for this crop.  \r\n   Beef cutout values were higher again Thursday as packers passed on the higher cost of cattle over the last few weeks.  Cash prices this week are expected to be steady to higher again, although packers, who are operating with negative margins, have been reluctant bidders so far this week.\r\n   No cash cattle trading was reported in the Plains Wednesday.  Packer bids of $135 per cwt on a live basis failed to entice sellers who were asking $139 to $140 as futures markets and beef markets move higher.  \r\n   The USDA reported record-high cutout values Thursday with its choice beef cutout value Thursday at $210.13 per cwt, up $1.92 on the day.  The select cutout was $209.05, up $1.98.  The choice/select spread narrowed to $2.99, and there were 101 fabricated loads sold into the spot market.\r\n   The CME Feeder Cattle Index for the seven days ending Wednesday was $171.30 per cwt, up $0.26 on the day.  By contrast, the Jan Feeder Cattle contract closed Thursday at $169.15, up $0.67.\r\n   The US Dollar was up overnight, although volume was light as traders looked to US data releases today for guidance.  Probably foremost among the reports were the non-farm payrolls figure and the unemployment rate.  \r\n   The report said the US added just 74,000 new jobs in December, far short of the 193,000 to 205,000 expected after the ADP report on Wednesday.  It suggested the US economy was less healthy than many expected and could mean the Federal Reserve will delay further tapering efforts since employment was one of the goals.\r\n   Despite the limp job growth, unemployment dropped to 6.7% from 7.0% as people dropped out of the labor force, the Labor Department said.\r\n   Traders are looking for comfortable jobs growth, maybe 195,000 to 205,000 new jobs, as too much job creation could cause the Federal Reserve to back out of its stimulus program more quickly than expected, which could cause the Dollar to rise sharply.  However, limp jobs growth could cause the Fed to stick with its program for longer than expected.\r\n