CORN
The corn was basically flat overnight, but the market is falling out of the bottom of the trading range. There will be a lot of talk about heading to the $7.18 level in the December contract and with days like yesterday, it wouldn't take long to get there. The weakness is most likely generating new demand and end users will view this as a buying opportunity. The market is oversold and due for a bounce, but trying to pick a bottom will be dangerous.
WHEAT
The wheat is the only market trying to make up for yesterday's terrible close. With the fundamental outlook for the wheat still improving and the fund position very small, the wheat is in good position to win the spread battle for a while, so look for traders to buy wheat and sell the other markets in the short run. Analysts look for December KC Wheat to reach $9.25 again quickly.
SOYBEANS
The soybeans were under heavy selling pressure gain overnight. The November soybeans are currently trading below the 50 day moving average, which is an ominous sign, but the market is now in oversold territory so perhaps we can see a corrective bounce. Meanwhile, demand doesn't seem to be slowing and end users have to be looking at this break as a gift. The fundamentals of the market suggest we need higher prices, so buying breaks is still wise, say analysts.
LIVE CATTLE
Live Cattle futures closed sharply lower on Monday, with heavy liquidation of longs seen throughout the session. Open interest was off 9,815 contracts on the break. Overnight activity has moderated, with narrow two sided trade in the Live Cattle. Better basis for producers could initiate some activity at steady to slightly lower levels in the cash market, if packers make an attempt at securin cattle in the first half of the week. Overnight lows in the October contract approached the 40 day moving average support level.
FEEDER CATTLE
Feeder Cattle futures managed to close moderately higher on Monday, supported by the sharply lower trade in the corn market. Futures remain premium to the cash index and appear out of line with Live Cattle pricing. Analysts say we are nearing the top of the daily channel in the October feeders, which may offer a lower risk hedging opportunity for producers.
CRUDE OIL
November crude oil trended lower during the initial morning hours, pressured by uncertainty surrounding yesterday's late-day sell-off and a weaker macroeconomic tone. It appears that the crude oil market has grown more concerned over slowing economic growth in recent sessions, and the impact that could have on oil demand. Another force seeming to tamp down crude oil prices this morning comes on reports from a Saudi oil official indicating that the country was expected to keep output around 10.0 million barrels per day, with the hopes of lowering prices. They view the crude oil market as amply supplied and that prices are too high.
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.
