CORN
The selling pressure in the corn market slowed in overnight trade. Traders are disappointed by USDA increasing the old crop ending stocks estimate and the strange variations in feed usage from year to year. Basis is still strong and the May-July spread is still wide, which is still telling us that it is hard to find corn, so it is hard to be bearish old crop corn. The new crop corn is another story with the massive production estimate and no present weather threat in the Corn Belt. Analysts look for traders to go back to bull spreading.
WHEAT
The wheat made a new low for the move overnight. The new crop ending stocks estimate of 735 million bushels isn't terribly bearish, but it is still more than adequate. Unless there is a surge in demand, we will have no concerns about wheat supplies. Harvest is basically upon us, which will keep pressure on the wheat. Analysts advise to sell rallies. $5.90 - $6.00 is the next major support in the July KW.
SOYBEANS
The soybeans gave up the bulk of yesterday's gains in overnight trade. One can blame a lot of the weakness on the outside markets and general commodity weakness. A retest of Wednesday's low is a possibility, but I wouldn't plan on more weakness than that with the current supply and demand outlook. Breaks are for buying, particularly in the new crop.
LIVE CATTLE
Live Cattle futures struggled into the close on Thursday, as higher world beef production and lower 2012 export projections weighed on the market. Near term, weekly beef exports were very good at 20,809 mt. Weakness in boxed beef along with the Supply/Demand numbers continue to lead the way in overnight trade. Most contracts are currently off .50 - .60 in early morning activity. Outside market influences are going to make it difficult to see anything better than steady cash this week.
FEEDER CATTLE
Feeder Cattle futures closed mixed on Thursday, with the front month lower and deferred contracts steady to moderately higher. Overnight activity was weaker across the board. Economic influences remain negative, with softer corn prices unable to offset so far. Analysts look for weakness to develop as long as cash feedlot closeouts continue to lose money. Overnight corn prices closed modestly lower.
CRUDE OIL
June crude oil prices came under pressure overnight, weighed down by a pullback in risk appetites after JP Morgan reported that it incurred a $2.0 billion hedge-related trading loss. The crude oil market came under added pressure in the wake of Chinese Industrial production data that lent more evidence that their economy was slowing more than expected. The latest IEA monthly report this morning pointed to an active global oil production pace, raised global oil demand forecasts fractionally and made note of geopolitical risks.
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.
