Corn
Corn is trading higher after the monthly USDA report this morning. There was more corn available than the average trade estimate for 2011/12 ending stocks. Old crop pre-report estimates averaged 844 million bushels and the USDA estimate is 903 million bushels. New crop ending stocks are projected at 1.183 billion with the average trade estimate above that number at 1.279 billion bushels. Global corn ending stocks for old crop were reported as 129.37 MMT, slightly higher than the ave trade guess and the June WASDE number of 129.19. World ending stocks for 2012/13 are projected at 134.09 MMT, 10.859 MMT lower than the average trade estimate of 144.949. The 2012/13 national average yield was lowered to 146 bpa with a new average farm price of $5.90.
Soybeans
Soybeans are currently trading higher with more gain in the new crop. Projected ending stocks for 2011/12 were reduced to 170 Mbu from 175 Mbu in June and the 2012/13 figure was also reduced to 130 Mbu from 140 Mbu on the June report. The average pre-report trade estimate was 170 Mbu for old crop and 141 Mbu for new. Soybean yields for 2012/13 were reduced by 3.4 bu to 40.5 BPA with a new average farm price of $14.00. Global soybean ending stocks for old crop were reported as 52.51 MMT, which was slightly below the average pre-report estimate of 52.749 MMT and down .85 MMT from the June WASDE. World ending stocks for 2012/13 are projected at 55.66 MMT, 1.393 MMT lower than the average trade estimate of 57.053.
Wheat
Wheat futures are higher on all three exchanges. USDA put all wheat production at 2,224 million bushels down from 2,234 in June. New crop domestic ending stocks were dropped 30 million bushels from 694 on the June report, and 54 mbu below the average trade estimate of 718 Mbu. Food use increased and both feed and export figures were lowered. US old crop ending stocks were 743 million bushels versus 728 in the June report. The new average farm price is estimated at $6.80 for 2012/13. World wheat 2011/12 ending stocks were raised to 197.18 MMT from 195.56 MMT in the June report and were above the average pre-report estimate of 196.248 MMT. The 2012/13 ending stocks dropped to 182.44 MMT from 185.76 MMT in the June report and were slightly lower than the average pre-report estimate of 182.52.
Cattle
Cattle futures are currently trading 20-30 higher. Beef Production for 2013 was lowered slightly and increased for 2012. Cash cattle trade is at a standstill with offers at $120 in TX and NE. Show lists are larger overall this week. Live sales last week were $117 in the live and $186 to $188 in the dressed. Feeder cattle were also lower with the weekly continuation chart showing the second week below uptrend line support. The CFTC disag report showed Managed Money had gone to a moderate net long of 2,539 contracts in the Feeder Cattle halving their position from the previous week. Wholesale beef prices took another hit with Choice down $2.16 and Select down $0.73, over a $5 drop in the last three days. Estimated slaughter for Tuesday is 128,000 head compared to 129,000 a week ago and a year ago.
Hogs
Lean Hog futures are trading 20 – 50 higher after remaining in consolidation over the past 8 days. Pork Production for 2013 was lowered slightly, but was raised more than that for 2012. Prices are currently above the moving averages above support. Average hog slaughter weights in IA/MN have been declining seasonally and have dropped 8 pounds since the peak in January. Lighter weights translate into less pork available to the market. The Lean Hog Index moved 0.08 lower as of July 6th to 100.58, still $5 above the futures. Cash hogs were $3.70 lower in IA/MN, $3.27 lower in the WCB and $1.26 lower in the ECB. That will tend to pull the Index down. Pork trading is slow to moderate with mostly light to moderate demand and mostly moderate to heavy offerings. Cooler temps this week will likely encourage livestock movement. The cutout was lower on 141.75 loads. Estimated Tuesday slaughter is 395,000 compared to 423,000 last week.
Cotton
Cotton futures are trading higher. The USDA monthly WASDE report for domestic new crop ending stocks came in at 4.8 million bales down from 4.90 Million bales in the June report. Pre report estimates were 4.6 million bales. Pre-report estimates for exports were 11.9 million bales and USDA came in at 12.10 (up from 11.8 in June). World cotton ending stocks for 2012/13 were put at 72.39 down from 74.51 million bales in the June report. That is a 5.71 million bale increase from 2011/12 ending stocks which are now reported as 66.68 million bales. Cotton maturity is running a little ahead of average, with 70% of the crop squaring vs. a 64% average for this date. 23% of the crop is setting bolls compared to the 19% average at this point in the season. The dollar is trading lower today. Certificated stocks were at 132,090 with 2,116 new certs and 3,232 awaiting review. The Cotlook A index was unchanged at 83.25.
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.
