CORN
We are hard pressed to find news today. December corn made a new high for the move overnight. As expected, corn crop condition ratings declined another 2 points making the Good to Excellent category 24%. The crop is still shrinking, so prices should keep rising until conditions stabilize. The forecasts are warm and dry so we have to expect conditions to decline in the next report as well. Analysts plan on a day of choppy/higher trade.
WHEAT
Production cuts in eastern Europe could end up making the wheat balance sheets very bullish. Our competition in the export market is shrinking and our need for feed wheat is increasing. Sometimes it seems that the US is the supplier of last resort, which is generally negative to prices, but when you have the last wheat in the world, it is very bullish. Analysts say $9.50 is still the key resistance area for the December KW. Additionally, a close above that level would be considered very bullish.
SOYBEANS
The November soybeans still haven't reached last week's highs, but the market is headed that way. The condition ratings declined 2 points to 29% Good to Excellent, which was expected and like the corn we have to expect another decline next week. One story to watch is the Indian monsoon. If world vegetable oil prices begin to pick up, it will only make the fundamentals more bullish for the US soybeans. Analysts say we should see $17.00 in the November contract soon.
LIVE CATTLE
Live Cattle futures posted modest to moderate gains on Monday, as short covering and higher cutouts provided a boost. Show lists appear to be smaller across the board. Packers started the week with an aggressive kill of 129,000. August continues to hold a large premium to last weeks' cash highs of $115. It appears that cash has a chance to make some significant progress over the next few weeks. Exports remain active and school food programs are about to get started for the year.
FEEDER CATTLE
Feeder Cattle futures closed moderately lower on Monday, with pressure stemming from sharply higher corn prices and new contract highs. Overnight corn values are modestly higher, with feeders both sides of unchanged. Country prices seem to be firming slightly over the past few days, as replacements become harder to come by. Analysts continue to watch feeders in regard to their inability to break in the face of record corn prices.
CRUDE OIL
September crude oil prices experienced a choppy trade during the initial morning hours. Early support for the crude oil market seemed to come from a rally in global equity markets and slight weakness in the US dollar. While the current focus on the market is on US economic data, the US Fed and ECB meetings this week, violence in Syria continues. The situation with Iran's uranium program and new round of US sanctions up for a vote this week keeps the geopolitical risk premium from going away. The latest monthly report from the EIA showed an increase in May US oil demand of nearly 2.0%, compared to year ago levels, which was a bit higher than expected.
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.
