CORN
Both old crop and new crop futures made new highs for the move overnight, but had given up most of the gains. The news hasn't changed much and traders still have concerns about old crop tightness and basis levels, while new crop traders are looking at less than ideal forecasts. The indicators are said to be overbought and it is a concern that the December contract stalled out at the $5.50 area, which in the past acted as strong support. A set back can occur at any time, but analysts recommend a "buy the breaks" thought process at this time.
WHEAT
Wheat was extremely volatile overnight. If you tuned into the markets last night, wheat made a big move higher, followed by a collapse, looking very negative, but there is still a whole session left to trade today. Forecasts for extremely high temperatures in areas of the HRW Belts and declining crop condition ratings are still supportive to the market, but harvest is in swing, which will temper buying enthusiasm.
SOYBEANS
The soybeans were firm overnight, but like the other markets, the beans have given up most of the gains by this morning. The July contract is struggling with the 40 and 50 day moving average resistance and there is concern that if the Chinese do not step up their old crop buying, the old crop futures will be subject to selling pressure. Bear spreading was said to be active overnight and traders look for this continued action during the week.
LIVE CATTLE
Live Cattle futures had a strong week, closing up more than 4.00 in the lead June contract. Cash trade was up $3.00 in most cases and the Monthly Cattle on Feed Report was supportive enought to boost calls significantly higher this morning. Placements of 85 percent and on feed numbers below a year ago for the first time in well over a year is lending the support for the strong opening. Asking prices are expected to rise to $126 in the south and $198 in the north. Packers will be buying for a shortened kill week, with next Monday the Memorial Day Holiday.
FEEDER CATTLE
Feeder Cattle futures posted solid gains for the week, gaining 3.20 in the August contract in spite of .54 gains in the corn futures. Lower than expected placements, along with expanding open pen space should produce demand in the country sales. Strength in deferred cattle will be a key factor in continued strength with the feeders. Cash is anticipated to be a huge discount to futures when the May goes off the board next week.
CRUDE OIL
July crude oil prices fell to a new low for the move overnight but have since reversed into positive territory. Some traders indicated that gains in the crude oil market came from an improvement in risk-taking sentiment, with a rally in global equity markets and weakness in the US dollar. It is possible that some of the early support in the crude oil market came from hopes for more economic stimulus out of China. Meanwhile, a weekend G-8 meeting indicated willingness to release strategic oil reserves should the situation involving Iran put further pressure on global supplies. The Commitments of Traders Futures and Options report as of May 15th showed non-commercial traders were net long 248,634 contracts, a decrease of 686. Non-commercial and nonreportable traders combined held a net long position of 270,061 contracts, for a decrease of 4,088 in their net long positioning.
There is substantial risk of loss to futures and options trading. Past performance is not indicative of future results.
By Donna Hughes
Lone Star Portfolio Advisors, Inc. was founded by Donna Hughes. Donna began her career in the industry in 1978 after graduating High School as a member of the Chicago Mercantile Exchange’s Inspection and Delivery Department where she was responsible for scheduling and facilitating the USDA grading and delivery for various Exchange Commodities. After 1 ½ years, she was offered a position working with George Segal, a prominent hedger in the Pork Belly market. It was through this relationship that she was mentored and taught the hedging process by working with Mr. Segal as well as other leaders of the Pork Industry. In 2004, Donna moved to Texas where her skills in the industry were utilized to help individual and corporate producers with their Risk Management Goals. Her Daily Market Commentaries are heard on the AllAgNews.com Radio Network broadcasting throughout Texas. She also contributes to magazines and periodicals including PetroEvents and Ag Monthly.
Donna created Lone Star and implemented strategic relationships with Daniels Trading and R.J. O’Brien leveraging their services to enable Lone Star to Build Lasting Relationships Thru Information, Execution and Research.
