CORN
Corn was weaker overnight and analysts believe we will see a test of Tuesday's low. The market lacks fresh bearish news, so we probably won't see new lows for the move. Export sales were poor, at 103,900 MT for the old crop and 208,200 MT for the new crop, but this was expected. Look for a choppy trade today and watch the key support level of $7.10 1/2 in the December contract.
WHEAT
The December KW continues to consolidate at the lower end of the trading range. Export sales were poor at 314,600 MT. The trade needs to see sales in the 500,000 to 600,000 MT range to avoid another cut in the export estimate. There is hope that the world will turn to us soon, but it has not happened yet. The market is due for a bounce back towards $9.00 say analysts, but with the pressure in the soybeans and the lack of enthusiasm in the corn, it will be tough to get that done today. The wheat should be the favored leg of the spread trade.
SOYBEANS
Back on track for export sales with the number coming in at 559,700 MT, which is about double what we need each week. Meal and oil sales were good and we can plan on very large oil sales in next week's report say analysts, so it still looks like demand is solid. Analysts are still of the opinion that we will use all of the beans we produce. The charts, however, look negative and the January contract is testing the $13.75 downside objective. The market is said to be oversold, but the momentum is clearly down.
LIVE CATTLE
Futures settled moderately higher on Thursday, supported by some firmer cash trade in Nebraska. Dressed trade in the north of $195-$196 was not enough to clean up show lists in eastern Nebraska, but it did give other feeders hope of higher cash trade today. Asking prices in the south remain in the $127-$128 level, with remaining northern cattle near $198. This afternoon's Cattle on Feed Report expects On Feed to be down 5-6%, placements off 13-14% and marketings to be 3% higher.
FEEDER CATTLE
Feeders closed .20-.30 higher on Thursday, with softer corn and higher live cattle supporting the trade. Overnight action was similar, with corn down another nickel and Feeders moderately higher. Support from the impending low placement number could add to friendly sentiment. Beef exports for the week were smaller, which could weigh on the complex.
CRUDE OIL
January crude oil prices were contained inside of a choppy range during the initial morning hours, under modest pressure from yesterday's negative reversal action. Some traders pointed to outside market weakness this morning in response to European debt concerns and debate surrounding the fiscal cliff as limiting forces. It appears that slowing economic growth concerns is putting added strain on global oil demand prospects. That along with ample physical supply is keeping crude oil pricing under pressure and helps offset supply disruption threats coming out of the Middle East. EIA crude stocks rose 1.089 million barrels last week, which as smaller than expected. This leaves current inventory levels 38.902 million barrels above last year and 44.222 million barrels above the five year average. Crude oil imports for the week stood at 7.87 million barrels per day compared to 8.011 million barrels the previous week. The refinery operating rate was up 0.6% to 86.0%, which compares to 84.8% last year and the five year average of 84.03%.
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.
