First Thing Today: Strong Jobs Report Expected
Good morning!
Position evening overnight... Corn futures are narrowly mixed as of 6:30 a.m. CT, after holding to a 1- to 2-cent trading range overnight. Soybean futures are 1 to 2 cents higher. Wheat futures are narrowly mixed. The U.S. dollar index is bouncing around unchanged, while crude oil futures are posting heavy losses.
Strong jobs report expected... The much-anticipated May jobs report will be out at 7:30 a.m. CT today, and economists surveyed by Bloomberg expect the report to show around 182,000 nonfarm payrolls were added last month. But some economists are leaning up on their estimates after a separate private report released by ADP Research Institute and Moody's Analytics showed private employers added an impressive 253,000 jobs in May. If today's data is strong, it would likely solidify ideas the Federal Reserve will raise interest rates at its June 13-14 meeting. The unemployment rate is expected to hold steady at 4.4% and average hourly earnings are expected to push higher to an annual pace of 2.6%.
Export sales report out today... USDA will release its weekly update on export sales activity at 7:30 a.m. CT today. Traders expect the report to show corn sales between 450,000 MT and 850,000 MT, soybean sales ranging from 200,000 MT to 550,000 MT, wheat sales of 150,000 MT to 550,000 MT, soymeal sales between 50,000 MT and 200,000 MT, and soyoil sales ranging from 5,000 MT to 35,000 MT.
Dry weather in the 6 to 10-day forecast... Dry conditions are likely across the Corn Belt June 7-11, according to the National Weather Service. This is especially welcome news for farmers in eastern and southern areas of the Corn Belt who have been slowed by rains this planting season. In contrast, the NWS calls for wet weather for the western two-thirds of Kansas, Oklahoma and Texas. Cool temps are likely for the eastern Corn Belt, eastern Iowa and Missouri, as well as eastern areas of the southern Plains. Warm temps are expected for western areas of the country, including the Dakotas and western Nebraska.
French wheat crop ratings fall again... FranceAgriMer rates 75% of France's wheat crop in good to excellent condition the week ending May 29, down a point from last week and six points under year-ago. The slide in ratings signals high temps and dry conditions have taken a toll on the crop. The French farm office also lowered the amount of corn rated in top shape by a point to 86%. But the corn crop is still rated seven points higher than year-ago.
Canada provides aid to lumber industry... Canada will provide C$867 million ($642.2 million) to its softwood lumber industry in response to U.S. duties imposed on shipments of Canadian softwood lumber to the U.S., with the potential for additional help suggested by Canadian officials when the announced the aid Thursday. The effort focuses primarily on loans and loan guarantees, with Canada carefully avoiding direct subsidies. U.S. lumber industry reps chafed at the Canadian aid. With little progress reported in talks on the issue, it is another friction point in upcoming North American Free Trade Agreement renegotiations.
ICAC expects smaller ending stocks in 2017-18... The International Cotton Advisory Committee (ICAC) raised its 2017-18 global cotton production peg by 430,000 MT from last month to 24.01 MMT, which is up 1.12 MMT from its outlook for 2016-17. But increases in consumption should prevent stocks from building. ICAC calls for ending stocks to total 16.41 MMT in 2017-18, down 960,000 MT (5.5%) from the year prior. It details that consumption is likely to grow in China, India, Pakistan and Bangladesh in 2017-18, more than making up for a minor decline in Turkey's mill use.
Beef trade protocols to China coming soon... The cattle industry will find out soon what requirements they will have to meet to sell beef to China, USDA Secretary Sonny Perdue said during a panel discussion at a Montana event with Senate Agriculture Chairman Pat Roberts (R-Kan.). Perdue said he expects the details to be released within the next two weeks.
Strong gains for cash cattle market... Additional cash cattle trade got underway yesterday in Kansas and Texas at $136 to $137, up $4 to $5 from week-ago, with Nebraska, Colorado and Iowa seeing trade in the $135 to $137 range. Word of the higher cash trade prompted a limit surge in the cattle complex Thursday. Futures start the day still well below yesterday's cash cattle trade, signaling traders could take advantage of expanded limits today. On the other hand, the sharp price gains has futures bumping up against overbought territory, which could also lead to profit-taking preceding the weekend.
Momentum remains to the upside in lean hogs... Lean hog futures have extended the market's pronounced uptrend this week, with many contracts hitting new contract highs. Strength has largely stemmed from gains in the cash market and strong packer profit margins that have encouraged aggressive processing. Slaughter is running 14,000 head in advance of year-ago and packers are thought to be preparing for a big Saturday kill to make up for Memorial Day downtime.
Overnight demand news... South Korea bought 138,000 MT of corn and 64,000 MT of feed wheat from optional origins.
Today's reports:
- 7:30 a.m., Weekly Export Sales -- FAS
- 2:00 p.m., Latest U.S. Agricultural Trade Data -- ERS
- 7:30 a.m., Monthly employment summary -- Labor
