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May 23 Market Talk
Posted: 05.23.2011 at 10:18 AM
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CORN
The grain markets were very active overnight. the corn started higher on a bullish weather outlook, but eventually came under pressure due to a sharply higher US Dollar and weakness in the crude oil and metals markets. This afternoon's Planting Progress Report will show major delays in Indiana, Ohio and North Dakota. Yield potential, and probably acres, are being lost in those states. Analysts plan on a two sided trade today. There is no way to tell if the strong Dollar or bullish fundamentals will win out at the end of the day.
WHEAT
The wheat seems to be running out of upward momentum. It is always hard for a market to move higher going into harvest, no matter how bad the harvest may be. There was some rain in the HRW Belt last week, and there is some rain in the forecast this week, which is putting pressure on the market as well, but the bigger issue today is the strong Dollar and the outside market activity. Analysts look for the July KW to test Friday's low of $9.22 today.
SOYBEANS
The soybeans are still stuck in the same trading channel we have been looking at for weeks. Friday's low will be important support today and if it holds, the odds of a breakout will improve dramatically. Planting progress will be behind normal and acreage is still a big question mark, which will probably prevent the market from following through in either direction. Analysts plan on another choppy day.
LIVE CATTLE
Live Cattle futures closed mixed on Friday, with a majority of the pressure coming in the August and October contracts. Higher than expected placements during the month of April could extend the pressure on those two months. Futures are becoming very oversold, packers margins are improving and the heart of the grilling season is upon us. that being said, trade is likely to remain negative to begin the week.
FEEDER CATTLE
Feeder Cattle futures are likely to remain under pressure, even though they finished last week 6.75 lower in the active August contract. The oversold conditions may allow for a short covering bounce, but bounces remain a selling opportunity until further notice. Outside markets were lower in overnight trade including corn, after starting the session as much as 15 cents higher. Cash index levels are well behind the futures on the decline.
CRUDE OIL
A round of disappointing economic data in China and Europe overnight, a stronger US dollar and more Eurozone sovereign debt concerns appeared to pressure crude oil prices lower. It also seemed that the weakness in the crude oil complex was led by Brent crude oil, which was the most affected by weakness in the Euro currency. While there were fresh April implied oil demand figures out of China that showed a slight increase, outside market concerns and a pullback in risk appetites appeared to be the more dominant downside forces. The Commitments of Traders Futures and Options report as of May 17th showed non-commercial traders were net long 255,305 contracts, a decrease of 26,726. Non-commercial and non-reportable traders combined held a net long position of 285,336 contracts, for a decrease of 30,311 in their net long positioning.
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.
