CORN
No new all time highs in the corn yet this morning, but the hot and dry forecasts suggest that new highs could be seen soon. All eyes will be on the $8.00 price level in the December contract today. Analysts say a close above $8.00 will give buyers a fresh boost of confidence. Plan on lower crop condition ratings Monday and plan on the trend remaining higher.
WHEAT
Wheat futures were not nearly as strong as the corn or soybeans, but other than spread trade, there is little reason to expect any pressure in the wheat. We have seen multiple moves over $9.50 in the December KW, which makes the $9.93 - $10.00 area the next upside objective for this market according to analysts.
SOYBEANS
Soybeans are shooting higher and the August contract could reach $18.00 today. Yield potential is still being lost and a sub 35 yield would call for a great deal of rationing that end users are probably not prepared for. There is no sign of a top in this market and there is no sense in trying to pick a top. Trends will remain higher until the crop quits shrinking.
CATTLE COMPLEX
The market will need to absorb a Cattle-on-Feed, Cattle Inventory report and Cold Storage reports for release after the close today. The market has seen an impressive two-day recovery ahead of these key reports and in the face of new all-time highs for corn. Feeder cattle recovered to fill gaps in the charts. October cattle closed sharply higher on the session yesterday and matched the close from June 29th, which was the highest close since June 12th. The market saw some lower trade early in the day reacting to the sharp drop in beef prices late Wednesday. Traders are seeing increased concerns for demand but also the market is finding support from severe weather impact for the plains with 100's expected each day for the next week. Strength in the hogs, a surge in buying support from other commodity markets and ideas that the east coast could see better demand weather ahead helped to firm the market. Temperatures in Kansas and north look to hold near 105 for the next week, and this is expected to spark very poor weight gains. Weekly U.S. beef export sales for the week ending July 12 came in at 15,500 metric tonnes, compared with the prior 4-week average of 16,950. Cumulative sales for 2012 have reached 546,900 metric tonnes, up 2.9% from last year's pace. Slaughter came in slightly higher than expected at 127,000 head. This brings the total for the week so far to 506,000 head, unchanged from last week at this time but down from 511,000 a year ago. Boxed beef cutout values were down $1.13 at mid-session yesterday and closed $1.58 lower at $180.58. This was down from $186.03 the prior week and is the lowest beef market since April 13th. Average dressed steer weights for the week ending July 7th came in at 859 pounds, up from 856 the previous week and up 2.5% from a year ago. Traders are expecting weights to drop sharply in the weeks just ahead and the high weights for early July are a bit of a bearish surprise. If the western Corn Belt crop conditions continue to deteriorate, poultry, pork and beef producers will all be under the gun to cut costs and move un-needed animals to the market. Consumer demand is sluggish and lower beef prices may be necessary to entice consumers to eat more beef during a heat wave.
CRUDE OIL
September crude oil prices came under pressure during the overnight and initial morning hours. Some traders thought the weakness might be justified after the recent seven day winning streak and rally to the highest level since May 22nd. An additional source of weakness could be coming from data showing China's June crude inventories increased nearly 5.0% on the month, largely from a third monthly decline in throughput and waning demand. The outside market tone has also taken a softer tone this morning, and that could be putting an added drag on risk-taking sentiment. While geopolitical risks have offered support, it might take more supply disruption concerns to drive prices higher.
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.
