CORN
Another session begins with directionless trade. Traders are waiting on the USDA report that will be released on Friday morning. The average trade guess anticipates a 2 billion bushels cut in corn production and new crop ending stocks to be cut to 651 million. More demand will be attracted on price dips, which is something we can't have until more is known about the size of the crop.
WHEAT
Wheat traders were disappointed that the Russians didn't ban wheat exports so the market sold off overnight. The market is still stuck in a sideways pattern ad the drop overnight did nothing to change that. It is surprising to analysts that the average trade guess calls for a small increase in new crop wheat ending stocks considering how much corn production will be lost and how much extra wheat feed usage there could be. This could be setting the market up for a bullish surprise.
SOYBEANS
Soybeans have been under pressure this week due to ideas that the weather has/will improve enough to salvage some of the bean crop. Judging by the percentage of poor to very poor soybeans, analysts are skeptical. Price breaks will only attract more demand and basis levels were strong yesterday, which is a good indication that is happening.
LIVE CATTLE
Live Cattle futures closed narrowly mixed on Tuesday, but got a strong boost overnight, as 66 of the 71 retenders from Monday were demanded. There were 10 fresh deliveries in Tulia, but the August contract led the overnight rally, gaining well over 1.00 as of this morning. The bull spreading and cash enthusiasm received additional support from sharply higher cutouts on Tuesday. Cash asking prices are firming to the $121-$122 level at midweek. Outside markets are leaning toward a risk off day.
FEEDER CATTLE
Feeder Cattle futures closed steady to .22 higher on Tuesday, supported by weaker corn prices and additional rains in the forecast. Thoughts that beneficial rains could be headed for wheat pasture country will have follow up forecasts monitored closely. Overnight corn values are modestly lower, adding to the support from the Live Cattle futures. Feeders remain range bound heading into Friday's grain report.
CRUDE OIL
September crude oil prices grinded lower during the early morning hours, pressured by a weakening outside market tone and a measure of profit-taking after recent gains. Early pressure came after the Bank of England's downwardly revised their 2012 growth outlook, from a lack of details on ECB bond buying program and the larger than expected decline in June German import activity. Growing hopes that central bankers in the US, ECB and China would offer up more monetary stimulus has been instrumental in helping September crude oil breakout of its recent trading range. Meanwhile, the latest monthly report from the EIA raised their 2012 global oil demand forecasts by 90,000 barrels per day. Expectations for this morning's EIA crude inventory report are for draw in the range of 750,000 to 1.5 million barrels. There is a chance that the EIA draw could be a bit larger than expected given the closure of the Enbridge pipeline 14 into the Midwest last week.
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.
