CORN
Crop condition ratings declined more than expect to 48% Good to Excellent. The only year with lower condition ratings was 1988, which bottomed out at 14% Good to Excellent next week. Keep in mind, the NWS had announced that they are comparing the 2011/12 year to that of 1978/88. If it were to rain, the condition ratings may have a chance to stabilize, but at the moment, significant rainfall does not look likely. The December corn reached $6.72 overnight so the test of the contract highs is underway. A close over $6.75 would suggest a move to the $7.50 area according to analysts.
WHEAT
The wheat made another new high for the move overnight. The December KW is testing last fall's highs which are just above $8.00. The corn and soybeans are dragging the wheat market higher for the most part. Acreage losses this fall due to a combination of dry weather and the need for corn and soybeans to hold on to acreage next spring is something traders will be thinking on. Wheat should be the short leg of spreads today according to analysts, but gains in the corn will keep support under the wheat.
SOYBEANS
Soybean conditions also declined 8 points falling to 45% Good to Excellent. There is no way USDA can justify using a record yield with below average condition ratings, so analysts plan on a production cut in the July Supply and Demand Report. November beans have moved through $14.50 and are making new contract highs. The next major objective is the $15.00 level, say analysts.
CATTLE COMPLEX
Cattle futures are trading slightly higher on Globex. Cash cattle trade was nil on Monday, and likely quiet until after the holiday. Most packers will be dark tomorrow for the July 4th holiday. Wholesale beef was a little weaker on Monday, with Choice boxes quoted 3 cents lower. We're still in the light demand period ahead of the holiday where retailers already have the product but don't know how much they will need to refill the cases after Wednesday. Feeder cattle were down on Monday because of higher corn prices and lower cattle futures, a major squeeze on already negative feeding margins.
CRUDE OIL
August crude oil prices traded sharply higher during the initial morning hours, supported by hopes for more global central bank intervention to stimulate growth and better than expected Chinese service sector data overnight. Other crude specific fundamentals supporting the morning gain come from the ongoing oil workers strike in Norway that has reduced North Sea output and a growing fear premium in the market in response to reports that Iranian lawmakers have drafted a bill to cut oil tanker traffic in the Straits of Hormuz. Expectations for this week's delayed EIA crude stocks report are for a draw in the range of 2.25 to 2.5 million barrels.
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.
