CORN
The corn saw directionless trade yesterday and it looks like today's trade in the July contract will be another consolidation session in between the 50 and 62 percent retracements. The May/July spread set another record of 30 cents yesterday. There is no reason to deliver against the May contract with basis so strong. Analysts recommend buying breaks in the old crop.
WHEAT
The Kansas wheat tour is finding very good yield potential, which isn't a surprise. The wheat they find in SW Kansas will probably be a little disappointing after what they saw yesterday, but the overall production for Kansas will still be very high. The wheat really needs to see a rally in the corn to avoid a test of the recent lows.
SOYBEANS
The soybeans saw profit taking in the bull spreads, but the July contract is still trading near the $15.00 level and is in position for new highs today with only a little bit of buying interest. The indicators are overbought, but can stay that way for a long time. The market is being fed a steady diet of friendly demand news, which should keep support under the market. Analysts recommend buying breaks when we get them.
LIVE CATTLE
Live Cattle futures closed mixed on Tuesday and are expected to see a mixed opening this morning. June was weaker, while deferred contracts improved on Tuesday. Overnight, spreads had favored the June, posting slight gains while deferred contracts traded lower. It is still expected that Packers will take advantage of May contracts this week, limiting the cash trade volume, unless they can spring cheaper cash interest. Analysts expect Feedlots to keep asking prices in the $121-123 neighborhood.
FEEDER CATTLE
Feeder Cattle futures closed moderately higher on Tuesday, finding support in lower corn values and a decent technical picture. Cash index levels continue to decline, with current basis levels nearly 250 under futures. Placement levels continue to appear slow, as cattle feeders hesitate to spend big money for the feeders with feedlot closeouts turning quite red according to analysts.
CRUDE OIL
June crude oil prices trended lower during the overnight and early morning hours, perhaps in response to private inventory data that showed another weekly build. Other factors weighing on the crude oil market were gains in the US dollar, modest equity market weakness and lackluster European economic data. March Euro zone unemployment was pegged at record high levels and April manufacturing activity contracted for the ninth consecutive month. Some traders viewed the soft European economic data points as a force worthy of limiting demand prospects for the crude oil market, which is seen as a negative for prices. Private industry data late Tuesday showed the fifth build in the past six weeks, while EIA data later this morning is expected to show its sixth consecutive build. So far, US crude oil inventories have increased 7.7% since the week of March 16th, bringing supplies to a new record high level for this time of the year.
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.
