Corn
Corn is trading 6 to 9 lower this morning after closing 22 ¼ to 37 cents higher yesterday in the run up to the weekly USDA crop progress and crop condition updates. USDA showed 50% of the crop silking, vs. only 19% average for this date. Only 40% of the crop is rated good or excellent, with the Brugler500 index dropping to 304 from 327 last week. Things are not yet as bad as 1988, when the index was at 247 for this week. The CFTC Commitment of Traders report showed the large funds adding 64,641 new futures and options long positions in the week ending July 2. That brought them to 173,183 contracts net long. The monthly USDA crop report on Wednesday morning is expected to show a drop in projected corn yield, and also ending stock. A Reuter's survey puts estimated ending stock at 1.279 billion bushels. The average trade guess for USDA yield is 154.1 bpa. Corn on the Dalian was down 5 cents.
Soybeans
Soybeans are currently 11 to 13 lower. The July contract made record all time high for soybeans, at $16.79 ½ on Monday. It was helped higher by another big week for the export inspections report that showed 18.906 million bushels exported vs. only 6.594 Mbu a year ago for the same week. Rain expected this week will tremendously benefit double crop soybeans, along with full season beans in the southern end of the Corn Belt. After the close, USDA reported 44% of the crop blooming, ahead of the 25% average pace. The crop declined from 45% good/ex last week to 40% this week. The new Brugler500 index is at 309 vs. 322 last week. The CFTC Disag report showed the large Managed Money funds net long 250,082 contracts of futures and options on July 3. Yes, that is 1.25 billion bushels of paper ownership. Swaps dealers were net long another 99,147 contracts or 495 million bushels. Soybeans were 17 lower on the Dalian Exchange.
Wheat
Wheat futures are trading 13 to 15 cents lower this morning. The US export inspections report yesterday was disappointing at 14.898 Mbu compared to 22.677 Mbu last week and 21.323 Mbu a year ago. A Reuter's analyst poll puts likely US all wheat production in the Wednesday USDA report at 2.247 billion bushels, with winter wheat at 1.672 billion. USDA reported that 75% of the US winter wheat crop is now harvested. Spring wheat is 88% headed vs 55% average for this date. Spring wheat condition ratings dropped to 66% good/excellent.
Cattle
Cattle futures are currently trading 25 higher on Globex. Feeder cattle hit an 8 month low, and the October closed ¼ cent off the daily limit lower, largely due to the continued strength in the corn market. Wholesale beef prices closed mixed with Choice down $2.14 and Select 36 cents higher. Estimated slaughter for Monday was 127,000 head. USDA reported a further decline in pasture condition, to 21% good/excellent from 24% the prior week. Feeder steers and heifers at the Oklahoma City auction were $2 to $6 lower on Monday.
Hogs
Lean Hog futures are trading 40 cents lower on Globex this morning after being higher across the Board on Monday. High temperatures and rising corn costs appear to be bringing down average hog weights. Futures still remain at a discount to the CME Lean Hog Index with which they need to converge on July 16th. The Index moved 0.24 lower yesterday to 100.66 as of July 5th. Cash hogs were a dollar lower in the ECB, $2.49 lower in IA/MN, and $2.28 lower in the WCB. That will tend to pull the Index down by midweek. The pork carcass cutout value was down 26 cents. Estimated slaughter for Monday was 393,000 compared to 383,000 a year ago.
Cotton
Cotton futures are trading 80 points higher this morning. The USDA crop progress report showed 70% of the crop is squaring compared to 56% last year and 23% of the crop is setting bolls compared to 18% last year. In other words, on paper the crop is developing normally. New reports out of India say that planted area is likely to fall in 2012/13 as a result of the decline in prices and rise in soybean prices. Certificated stocks were at 129,974 with 452 new certs and 2,111 awaiting review. The Cotlook A index was at 83.25, unchanged from the previous day. There were 21 delivery notices vs. July futures, again with 100% of them stopped by Dreyfus.
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.
