CORN
It should come as no surprise that there are rumors that the Chinese are looking to buy more corn since that is what they do every time there is a break in the market. The corn market is becoming oversold, but we still have no indication of a bottom. A move down to $6.02 is still a possibility for the July corn according to analysts. The December contract is testing the March low already, so the bulls need to see that support hold today. The planting progress numbers have been delayed until this afternoon. Traders are looking for about 20% of the corn to be planted.
WHEAT
The May KW is closing in on the $6.26 weekly chart support, the market is oversold, and funds are very short in Chicago which means they should be running out of room to sell. Other than that, there still isn't much to say about the wheat that is supportive. This afternoon's Crop Progress Report will show that the maturity of the HRW crop is ahead of normal, which would make the crop susceptible to freeze damage, but that would not be a very fun way to get a rally. Analysts say sell strength, particularly in the deferred contracts.
SOYBEANS
The soybeans posted a sizable rebound overnight. The charts suggest we have potential for further corrective weakness, but like the corn, all that lower prices will do is attract more demand, and at this point we probably can't stand to see new crop stocks get any tighter. Analysts recommend buying breaks.
LIVE CATTLE
Live Cattle futures closed narrowly mixed on Monday, with bull spreading the feature of the day. April led the way, with gains of .20 at the close, while some deferred contracts traded as much as .30 lower. Cutouts were sharply higher, with choice and select up 2.75 and 3.16 respectively. Show lists remain tight, with Kansas' list off 20 percent from a week ago and 30 percent from the same week last year. There appears to be a window for better cash trade ahead of May contracts becoming available.
FEEDER CATTLE
Feeder Cattle futures finished Monday higher, with the exception of the lead April contract. Cash index levels are on the rise, as we projected, with cash trade in Oklahoma City called 3-5 higher on very light offerings. Continued weakness in corn futures has added to the resolve of feeder cattle producers. Overnight activity was modestly higher on Feeders, with corn narrowly mixed.
CRUDE OIL
May crude oil prices traded higher throughout the initial morning hours, supported by gains in European and US equity markets, a successful Spanish debt auction and better than expected German sentiment readings. Some traders also suggested that support for WTI crude oil might be coming from an active spread trade between Brent and WTI crude oil, which is down nearly $6.00 from the April high. Yesterday's breakdown in the June Brent vs. WTI crude oil spread came on news that the Seaway Pipeline reversal might come sooner than expected. The reversal would enable the flow of crude oil supplies from Cushing Oklahoma down to the Gulf coast, helping to relieve supply constraints for Brent crude oil.
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.
