CORN
A new high for the move overnight in the December corn as the market creeps back to the upper end of the trading range. Pro Farmer begins their crop tour this morning and traders will be monitoring the yield estimates closely looking for confirmation that USDA will have to cut the yield estimate in the September Supply and Demand Report. At the moment, there is little reason to expect to see the corn move out of the trading range according to analysts, but if the yield estimates come in worse than expected, then we could see new highs this week.
WHEAT
Wheat traded both sides of unchanged overnight as the market was caught between following the corn and being used as the short leg of spreads. Analysts say the charts suggest that the December KW is headed back to the upper end of the trading range and there is little reason to expect heavy selling pressure today as long as the corn is trading positive. As corn yield estimates shrink, the likelihood of large feed usage increases, and we still have moisture problems in the HRW belt, which is also supportive.
SOYBEANS
The soybeans posted solid gains in the overnight trade. The weather was a little disappointing over the weekend and basis levels have been very firm, which is supportive to the market regardless of the yield. Like the corn, traders will be watching the pod counts on the Pro Farmer tour to judge yield potential. The market hasn't done very well at slowing demand yet and if yields come in even lower, the market will have an even bigger job to do, say analysts. Additionally, they say it wouldn't be surprising to see November soybeans test the $17.00 level this week.
LIVE CATTLE
Live Cattle futures closed mostly higher on Friday, ahead of the Cattle on Feed Report that was generally as expected. Cash traded a dollar higher than a week ago, with highs of $121 reported in most regions. Higher placements of over 800 pound animals during July could pressure the December Live Cattle versus the more deferred contracts. Analysts say numbers are expected to remain tight over the next 45-60 days. Beef values will be monitored closely, as Labor Day features have likely been purchased during the recent $13 rise in choice values.
FEEDER CATTLE
Feeder Cattle futures closed moderately lower on Friday, with the October contract still up 1.00 for the week. Overnight corn prices continued to firm, with gains of as much as .11 moderating to .04-.05 gains by 7am. Closeouts on cattle coming out of the feedlots this past week remain deep in the red, which may limit replacement spending. July placements were historically high, even though they came in 10 percent below year ago levels.
CRUDE OIL
October crude oil prices traded modestly higher during the overnight and initial morning hours, supported by hopes that European leaders might be getting closer solution to their debt situation. Reports over the weekend to this point offered a modest lift to risk-taking sentiment during the early morning hours and a slight downtick in the US dollar. There also appears to be growing resistance to recent talk of a potential US Strategic Petroleum Reserve release. Additionally, concerns over falling North Sea production in September and ongoing uncertainty surrounding threats of an Israeli attack on Iran offer support to the crude oil market. The Commitments of Traders Futures and Options report as of August 14th showed non-commercial traders were net long 241,318 contracts, a decrease of 6,535. Non-commercial and nonreportable traders combined held a net long position of 242,217 contracts, for a decrease of 2,310 in their net long position.
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.
