Corn
Corn futures are trading a few cents lower this morning. Trade estimates for US weekly export sales ranged from 600 to 900,000 MT, with most under 850,000. USDA put the actual figure for combined old and new crop sales at 282,700 MT. EU corn exports total 2.81 MMT YTD compared to only 980,000 MT for the same period last year. Brazil has begun harvest of their second corn crop with an estimated 20% more acres planted than a year ago. Weekly ethanol stocks as of May 25th were up .1 million barrels from the previous week and up 1.3 million barrels from last year at 21.5 million barrels. Production was down but blending activity was up. Despite larger gasoline use in recent weeks, consumption is still down 5.3% and thus limiting the quantity of ethanol that can be blended into gas. Chinese futures at Dalian are down 1 cent.
Soybeans
Soybeans are currently down 17 to 20 cents. The new crop is beginning to build a modest carrying charge into year's end as some traders believe that an extra million acres will be planted thanks to the recent rainfall in winter wheat areas. Our view is that an extra 30-35 million bushels won't make that much difference in the long run. The key question is how much the world needs to consume before the 2013 South American harvest. Trade estimates for the weekly export sales report ran from 500 to 900,000 MT. USDA put the actual net sales for the week ending May 24 at 418,700 MT. One major index fund roll period (out of July futures) is wrapping up, with the other two beginning next week. Chinese futures at Dalian are down 30 cents.
Wheat
Wheat futures are trading 7 lower across the three front contracts. Rain amounts over the five days could hamper harvest in much of Oklahoma and Kansas. Harvest progress is currently ahead of the five year average, however the crop is ripe and more susceptible to damage the longer it remains in the field in those states. The EU wheat exports are down 32% from a year ago at 12.03 MMT. Trade estimates for USDA weekly export sales report ranged from 250 to 550 TMT. The actual figure was 319,200 with a 6,400 MT reduction for 2011/12. The marketing year for wheat ended May 31, but export sales for that last week won't be out until next week.
Cattle
Cattle futures are currently trading a few cents lower in thin Globex trading. Cash cattle sales in the South and the North are basically at a standstill with not enough activity for an adequate market test. Asking prices are higher this week, but the basis is also attractive for hedgers to accept lower cash cattle prices than they would otherwise. Wholesale beef prices were mixed on Thursday. Choice beef was $0.31 higher and Select was down $1.05. Week to date slaughter is at 393 thousand vs. 394 thousand a year ago. Weekly beef export sales reported by USDA totaled 20,300
Hogs
Lean Hogs are trading around 30 cents lower after a sharply higher close on Thursday. Several technical buy signals have fallen into place this week. Pork trading was slow to moderate with light to mostly moderate demand and light to moderate offerings. The Carcass cutout value was up another $1.17 yesterday and up $3.98/hundred pounds in only three days. Week to date slaughter is 1.271 million head on the shortened holiday week vs. 1.667 million head last week and 1.266 million head a year ago. Cash hogs were $1.15 higher in IA/MN, $1.07 higher in the WCB and $1.41 higher in the ECB. The Lean Hog Index was down $0.47 at 84.51 on Tuesday but lags the cash hog market by two days.
Cotton
Cotton futures are trading lower again this morning, currently at 69.99. The USDA weekly export sales report showed net old and new crop sales of 310,000RB, China was in for 89,500RB for 2011/12, and 226,700RB for 2012/12. July futures made new contract lows Wednesday, and then firmed on Thursday due to month end profit taking. Prices were down more than 20% for the month. There is no rain in the forecast for dryland cotton farmers in West Texas in the five day prediction. Certificated stocks were 133,317 bales with 684 new certs. Macro markets traded on both sides of steady today but ended the session lower ahead of tomorrow's economic reports. Weakness in crude oil is a background factor by making synthetic fiber cheaper to produce.
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.
