CORN
Corn was weaker again overnight and the front months of the corn are testing the 50 day moving average support. The big question, of course, is when will the Chinese buy more corn? The spread is widening and imports are profitable, so it is doubtful that we see much more pressure in the front months. The market has corrected, the bull spreads have corrected, and now it is probably time for the market to continue on with it's sideways/higher pattern.
WHEAT
Wheat is clearly the weak link. The July KW will test the $6.80 support and scare whatever bulls are in this market. There is just not any reason to be a wheat buyer if the corn and the French wheat aren't moving higher. Today will be an important technical test for the wheat market. Holding above $6.80 would mean we are going to continue on with the sideways pattern, while a failure would be disastrous.
SOYBEANS
Is a two day correction enough for the soybean market? Probably not. We do have talk about more Chinese buying so we are the end of the correction for the same reasons we are near the end in the corn, but the lack of enthusiasm in the outside markets and the bear spreading overnight suggests we could end up seeing pressure again today. The way to tell when the correction is over is when we shift back to bull spreading the market. When the happens that will be the all clear signal to buy beans.
LIVE CATTLE
Live Cattle futures closed moderately lower on Tuesday, as fears over world economies seemed to outweigh current fundamentals. Chart patterns are becoming quite negative on deferred contracts. Cutout values strengthened once again, keeping some hope for the bull camp. Overnight activity has been two sided, with mild bull spreading continuing to be a feature. We suggest producers continue to hold a protective until this week's cash activity is more established.
FEEDER CATTLE
Feeder Cattle futures struggled once again on Tuesday, with new lows for the move established across the board. Sharply lower closes in the face of 15 cent losses in the old crop corn futures does not look very supportive. The fact that recent close outs show losses for some cattle feeders at record high fat prices is pulling the string on some of the replacement spending. Feeders are trading lower in overnight trade in spite of further weakness in the corn. The market is becoming oversold, but there is no divergence in the indicators at this point.
CRUDE OIL
May crude oil prices traded higher during the overnight and early morning hours, supported by prospects that this morning's EIA stocks report could come in below expectations and an upbeat outside market tone. Yesterday's concern over waning Chinese demand appears to be offset by further evidence of an improving US recovery track. Chinese inventory data released overnight showed a decline in crude oil supplies, and that might have lent an added level of support to the market. There were some comments that the stock decline might have been the result of China building their strategic reserves. Market expectations for this morning's EIA inventory report are for crude oil supplies to have increased around 2.5 million barrels last week, quite different that private-industry data Tuesday afternoon that showed an unexpected draw.
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.
