CORN
The corn pushed higher on continued rumors of Chinese corn purchases in yesterday's trade, but slipped lower overnight. The March contract traded at the highest level since late September, the May moved through last week's high, while the July December contracts are still range bound. The March contract goes off the board today and it will be interesting to see where that contract ends up. The spread trade still looks bullish for the long term. Old crop corn still has plenty of upside potential.
WHEAT
Wheat proved once again that it is the weak link. There is still very little wheat specific news that suggest one should be long wheat. Improved exports and rising corn prices are still the best hopes for the wheat market but it will be impossible to draw down stocks enough this crop year to turn the market bullish. The $6.80 support has to hold in the July KW to avoid further losses.
SOYBEANS
July soybeans made a new high for the move overnight. This market is relentless and waiting for a significant pull back seems futile. The next major upside objective is the $13.97 area. The market has to go something to slow exports and take acres from the corn, otherwise stocks could be extremely tight next year. As usual, buy breaks if we get them.
LIVE CATTLE
Live Cattle futures closed sharply higher on Tuesday, with short covering the April and new buying in deferred contracts the features. Cash trade appears to be a ways away, with bids of $123-$124 and asking prices $128-$130. Cutout values dropped, with the choice select spread widening out. The early warm weather is expected to promote early grilling in many locations. Outside influences were mixed overnight, with equities and the Dollar both firmer. Some sort of well supported setback is likely following the recent recovery.
FEEDER CATTLE
Feeder Cattle futures closed with triple digit gains across the board on Tuesday, evidence of new buyers working back into the market. Overnight saw two sided trade, with a slightly weaker bias. Corn prices could lend support, if overnight weakness holds up. Cash trade appeared to be firming up over week ago levels. Index averages for the seven day period dropped modestly for their 6th consecutive lower day. The active April contract closed back above the 50 day moving average on Tuesday.
CRUDE OIL
April crude oil prices waffled around unchanged levels throughout the overnight and early morning hours. The outside market tone was mixed, with higher global equity markets and optimism surrounding the US Fed and reports that 14 of 19 banks passed stress tests. Meanwhile, a new seven high in the US dollar might have curbed demand for crude oil. Early morning data from the IEA reduced non-OPEC supplies for 2012, but that had a muted reaction in the crude oil market. It is possible that the crude oil market has maintained a tight overnight trading range ahead of EIA inventory data that calls for a weekly build in crude stocks of around 2.0 million barrels.
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.
