Corn
Corn futures are trading 12 to 15 cents higher. There is an 80% chance of rain for Iowa over the weekend starting in the west on Saturday and moving east Sunday. The U.S. Drought Monitor indicates a moderate to severe drought in 7 of the corn states with others abnormally to moderately dry. The Southeast is seeing excellent shower activity but is not a major corn production area. The USDA surprise drop in projected yield to 146 bushels takes the 2012/13 crop ending stocks projections to 1.183 billion bushels. Weekly export sales were reported by USDA to be 172,700 MT for 2011/12 with net sales of 492,100 MT for 2012/13. High current prices are destroying demand. The weekly ethanol production was the smallest since July 2010. Goldman apparently raised its 3 and 6 month price targets for Dec corn to $6.90. Chinese futures this morning were 9 cents higher.
Soybeans
Soybeans are trading 14 higher on the July contract which expires today and 24 cents higher on new crop. Prices have moved into a consolidation pattern with wide swings over the past six days. Today is the last trading day for July grain futures. There is about a fifty cent spread between expiring July soybeans and August soybeans, the next contract month. USDA ending stock projections for 2012/13 were reduced to 130 Mbu from 140 Mbu on the June report. USDA had to cut export estimates for new crop to keep the stocks at pipeline level. Weekly US export sales, which are actual bookings, were 332,100 MT for 2011/12 and 427,100 MT for 2012/13 for the week ending July 5. This was above the average trade guess. Chinese futures plunged yesterday, but gained back 29 cents of the 50 lost today.
Wheat
Wheat futures are trading 12 to 14 cents higher on September contract forward. July futures expire today. Winter Wheat was 75% harvested as of last Sunday. Rain has interrupted some of the more northern winter wheat harvest activities. USDA reported weekly export sales of 311,800 MT for 2012/13 marketing year. Weather services are talking about a potential El Nino event for Australia and the US later this year which is in a neutral stage at the moment. World ending stocks have been declining ever since the big jump up in 2009. That production increase came following double digit futures prices that made growers all over the world say “I can grow wheat for that!â€
Cattle
Cattle futures are trading 40 to 50 cents lower on Globex on follow through selling after the sharply lower move on the spot month yesterday and limit lower on the first three contracts of Feeder Cattle. Cash cattle trade developed in KS at $115 on around 13,000 head with TX sales near the same price on 4,000 head. Sales in NE were around 10,000 head at $182 to $183 in the dressed and $115 on a live basis. Those prices were weaker than last week. Wholesale beef prices were down again on Thursday. Choice was down $1.78 and Select was down $0.24. Beef weekly export sales were 17,300 MT up 1% from the previous 4 week average. The monthly export total for May finally came out, and was down 11.6% from the previous year at 207.65 million pounds.
Hogs
Lean Hog futures are trading lower on Globex. Pork trading was termed slow to moderate with light to moderate demand and mostly moderate offerings yesterday. The cutout value was lower once more on 113.63 reported loads. Estimated week to date slaughter is 1.571 million head vs. 1.622 million last year. The Lean Hog Index moved 0.58 lower as of July 10th to 99.84, moving closer to the futures. Cash hogs were $2.54 lower in IA/MN, $2.50 lower in the WCB and $2.04 lower in the ECB which should drop the CME Index, but remember that cash was higher the day before. The Economic Research Service reported May 2012 pork exports were 448.2 million pounds compared to 408.7 million pounds in May 2011.
Cotton
Cotton futures are trading 184 points higher moving back above the 21 day moving average this morning. Weekly US export sales were 8,800 RB for 2011/12 (must be shipped before July 31 and thus a narrow window) and 95,100 RB for 2012/13 delivery of Upland Cotton. Combined Pima sales for both marketing years were 8,600 RB. The biggest importers of Upland cotton so far this year are China (5.2 million RB), Turkey (891,200 RB), Mexico (626,700 RB) and Vietnam (468,000 RB). World cotton ending stocks for 2012/13 were put at 72.39 down from 74.51 million bales (2.85%) in the June report. That is still a 5.71 million bale increase from 2011/12 ending stocks which are now reported as 66.68 million bales. Certificated stocks were at 128,738 with 874 new certs and 2,986 awaiting review. There were also 3,858 decerts. The Cotlook A index was unchanged at 83.45.
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.
