CORN
USDA raised old crop ending stocks to 851 million by cutting feed usage again. Apparently there is no reason for the record basis or record inverse in the market. for the new crop, USDA has started the season with 95.9 million acres and a record 166 bu/ac yield. They used the acreage figure from the Prospective Plantings report and that added to the already inflated trend line yield due to planting progress even though there is little correlation between planting progress and final yield. As usual, we will get many revisions through the year. Opening calls are steady to 15 lower.
WHEAT
Wheat ending stocks figures were somewhat friendly at 768 million for the old crop and 735 million for the new crop. New crop wheat feeding is expected to be large, which is part of the explanation for the lower old crop corn feed usage. The price certainly justifies more wheat feeding so that wouldn't be a surprise. Rallies, however are still selling opportunities according to analysts as we move into harvest.
SOYBEANS
The bullish figures of the report were found in the soybean tables. Old crop ending stocks were cut 40 million to 210 million due to higher crush and exports. New crop ending stocks are starting off at 145 million, which is very bullish, especially considering the record 43.9 bu/ac yield estimate. Any weather issues will result in record soybean prices this year. Analysts look for big gains today. Early calls are 20-40 higher.
LIVE CATTLE
Live Cattle futures once again reversed early weakness to close higher on the day. Wednesday's close was above last week's highs in the June contract. The rally came in the face of mostly negative outside rhetoric. Overnight activity was narrowly mixed, with bull spreading a feature. Traders will be monitoring this mornings' grain report for direction. Outside influences appeared more positive this morning. Cash trade is not likely to occur unless packers find more money.
FEEDER CATTLE
Feeder Cattle futures closed mixed on Wednesday, with good recovery in all but the lead May contract. Weakness in the corn market was supportive, along with another uptick in the cash index. Feedlots are reporting that replacement prices have jumped in the past few days. Traders will be monitoring the grain report and weekly exports for early direction in the feeders.
CRUDE OIL
June crude oil prices traded lower during the early morning hours, pressured by weaker than expected Chinese trade data, further concerns over the European debt situation and early strength in the US dollar. Some traders suggested that the soft April import data in China was seen as a force stoking fears over slowing economic growth. While the crude oil market received a lift yesterday in the wake of report that the EFSF was extending a payment to Greece from its bailout fund, growing US supplies and weak outside market backdrop kept gains in check. Yesterday's EIA data showed US crude stocks at 379.516 million barrels, which is the highest for this week since 2009. The weekly build of 3.652 million barrels was larger than expected. EIA crude stocks are 9.189 million barrels above year ago levels and 25.224 million barrels above the five year average. Crude oil imports for the week stood at 8.967 million barrels per day compared to 8.822 million barrels the previous week. The refinery operating rate was up 0.4% to 86.4%, compared to 81.7% last year and the five year average of 85.99%.
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.
