CORN
Corn export sales were horrible at 19,300 MT of old crop and 134,200 MT of new crop sales. It is thought that the old crop number was so low because of cancellations by "unknown destinations" and that China was listed as a buyer again. Overnight weakness is mostly due to profit taking ahead of the weekend. There will be a lot of traders talking about the open chart gap between $6.76 and $6.85 1/2 on the December chart. Analysts believe that we will test at least the top of the gap at the very least.
WHEAT
Wheat export sales were solid at 418,900 MT. Though a good number, it isn't something that will get traders overly excited. The wheat is following the corn lower this morning due to profit taking and the fact that the wheat fundamentals still aren't good enough to warrant independent strength. It is interesting to note that the December KC Wheat stalled out at the 78% retracement. Analysts look for a move down to $8.25 in the December KW.
SOYBEANS
Soybean export sales were great at 298,700 MT of old crop and 1.46 MMT of new crop sales. There was also a daily announcement of 120,000 MT of old crop soybeans to China. USDA is underestimating old crop sales and therefore overestimating both old crop and new crop ending stocks. The weather has to improve soon to avoid all time highs in the market. Right now, it is the markets job to slow demand.
CATTLE COMPLEX
Live cattle were mixed overnight, possibly finding a positive spin from lower grain prices, as that helps ease concerns over herd liquidations. A slight increase in the boxed beef cutout yesterday also reverses the lower beef trend from earlier in the week. Cooler weather is expected to move across the eastern half of the US over the weekend and into early next week, and this may help beef consumption and improve the outlook for the cattle market. August live cattle traded choppy to lower yesterday on concerns that the record heat over the July 4th holiday cut into beef demand. The boxed beef cutout was down Tuesday, as packers lowered prices in an apparent bid to generate sales, but retailers are reported to be taking a "wait and see" attitude until they determine how sales went. The situation improved somewhat yesterday, with cutout values up 55 cents at mid-session and 35 cents higher by the close to $193.57. This was still down from $197.93 the prior week. Retailers may actually see a boost in beef sales in areas that were hit by power outages, as consumers look to restock. The sharply higher dollar yesterday damages prospects for US beef exports. The estimated cattle slaughter came in at 128,000 head yesterday. This brings the total for the week so far to 385,000 head in this holiday-shortened week, down from 506,000 last week at this time but unchanged from a year ago.
CRUDE OIL
August crude oil prices were under pressure during the initial morning hours, weighed down by a cautious outside market tone, rising borrowing costs in Spain and renewed efforts by Norway to resolve the oil workers strike. Yesterday's EIA inventory report showed a much larger than expected draw in crude oil stocks of 4.270 million barrels, largely in response to reduced flows from Tropical Storm Debby. EIA crude stocks are 24.316 million barrels above year ago levels and 40.787 million barrels above the five year average. Crude oil imports for the week were down from disruptions caused by Tropical Storm Debby to 8.774 million barrels per day compared to 9.118 million barrels the previous week. The refinery operating rate was down 0.6% to 92.0%, which compares to 88.4% last year and the five year average of 88.87%. A disappointing June Non-farm Payroll report this morning has the potential to bring the US Fed off the bench and offer up more monetary stimulus.
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.
