CORN
The December corn posted a new contract high early in yesterday's session, but didn't really make another test of that high the rest of the day and then traded lower overnight. Crop condition ratings were unchanged at 60% Good to Excellent, which is basically what traders were looking for. It is interesting to note that Iowa dropped 6 points and all of the major producing states with the exception of South Dakota are below last year. On the charts, we have a sideways/higher market and it doesn't look like that will change until we either see better demand or traders become convinced that USDA will cut production in the September report.
WHEAT
Wheat futures are trading sideways/higher as well. The September KW could be working into a wedge formation that could have bullish implications down the road, but it still seems that the wheat will be dependent on the corn market for direction since there is still very little wheat specific news at this time. The Spring Wheat condition rating was unchanged at 66% Good to Excellent, which is below last year and below the 5 year average.
SOYBEANS
The soybean condition was also unchanged at 61% Good to Excellent. The rating is equal to the 5 year average so one would say this is a "normal" crop. The forecasts aren't particularly threatening, so steady condition ratings are likely again this week. On the charts, the November contract is stalling out near the 50 day moving average. So far the bullish Supply and Demand Report hasn't provided any strength beyond the initial reaction, which doesn't bode well.
LIVE CATTLE
Live Cattle futures closed lower to sharply lower on Monday, in spite of higher equities, higher cutouts and smaller show lists. A rise in open interest on the selloff indicates that new sellers are willing to enter the market after the recent rally. . Look for confirmation of higher beef prices today according to analysts. If they continue to rise, additional strength could re-enter the market. Outside influences appear to be negative this morning with lower equities and a stronger Dollar.
FEEDER CATTLE
Feeder Cattle futures managed to dodge all bullets on Monday, closing higher in the face of higher corn and a retreating fat market. This Friday's placement report is expected to show lighter placements. A potential higher surprise like we saw last month is within reason. Overnight activity was mostly weaker, in spite of the lower corn trade. Choppy trade should continue. Keep an eye on the equities.
CRUDE OIL
This week began with a 4th straight day of new highs in the regular energy complex. A very weak US dollar and
an upside breakout in equity markets combined to make a recipe for the upside correction that started last
week to last at least one more day yesterday but the party may soon come to an end. Today will bring several
headlines that could be a short term defining moment. A barrage of economic reports will begin today starting
with housing and factory data here in the US. European data in the form of German GDP was also released
and was slightly disappointing as GDP was similar to our last round of GDP data. Their economy grew very
slightly (less than expected) and first quarter GDP was revised lower, reflecting a less than robust economy.
The presidents of Germany and France meet today to discuss economic options but are unlikely to reveal much
of anything concrete. Hurricane weather is finally beginning to catch some attention as the possibility of a
threatening storm may be trying to develop. Weather models yesterday showed this disturbance forming into
a hurricane with a storm track taking aim at the New Orleans/Mobile coast. This storm was projected to make
landfall just before Labor Day weekend however today’s weather model shifted considerably pushing the
storm track east towards the eastern coast of Florida. The next 48 hours should give us a better forecast of
this storm. Energy markets are weaker in early morning trade being pressured by the soft global economic
data however; a move below $ 84.00 in September crude oil will be needed to put control back into the bear’s
hands. That will be a tall order today.
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.
