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May 25 Market Talk
Posted: 05.25.2012 at 2:35 PM
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Corn prices made a decent recovery overnight, particularly the December contract which basically got back yesterday's losses. Weather is still a concern and crop conditions will likely decline significantly in Tuesday's report. Basis levels are stil dropping and coupled with yesterday's poor export sales, it is a real drag on the old crop market. Look for short covering ahead of the three day weekend. A dry extended forecast Monday night would be bullish.
WHEAT
The July KW continues to hold just above the 38% retracement of the last move up. The disappointing yields in Kansas may keep this market from falling much further as long as the old crop corn can avoid a deeper selloff. Analysts remain cautiously optimistic about the wheat market as long as we stay above the $6.85 level.
SOYBEANS
The soybeans were quiet overnight. Yesterday's gains were good, but the mid-range close really wasn't good enough to confirm a bottom in the market. Demand numbers are exceeding USDA's expectations despite the talk of cancelled purchases. Analysts plan on short covering and a little bear spreading today. The weekend's weather won't be good for the soybeans.
LIVE CATTLE
Live Cattle futures closed modestly to moderately higher on Thursday, with northern cash trade settling in at $194 in the beef. That trade was slightly below week ago levels, but higher than the regional trade on Wednesday. Futures were trading modestly higher this morning, as trade tries to line up ahead of the three day weekend. Open interest was up on the rally, in spite of some hedge lifting in the June. If overnight weakness in the Dollar can be sustained, we could see more bounce into the weekend. A stronger Dollar will weigh on live prices.
FEEDER CATTLE
Feeder Cattle futures saw moderate gains across the board on Thursday, supported by a sharp decline in corn futures. Cash index levels continue to gain for the week, resting above the 196.00 level. Overnight corn prices are recovering about a third of their losses from the previous day. Feeders were narrowly mixed on either side of unchanged. Analysts look for a thin trading day heading into the long weekend, which could produce volatility.
CRUDE OIL
July crude oil prices trended higher during the initial morning hours, helped by a slight easing in European debt concerns and prospects for concerted central bank intervention. An added factor supporting the crude oil market this morning appeared to be the breakdown in negotiations between Iran and Western nations. Western nations want Iran to stop their nuclear enrichment program before removing sanctions, and that has resulted in another meeting next month. The failed talks have the potential to inject a modest fear premium back into the crude oil market.
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.
