CORN
Export sales were good with 937,600 MT of old crop and 185,100 MT of new crop sales. China was the biggest buyer, which is supportive. Bull spreaders were active again in the overnight trade, which is encouraging. We have seen a couple of days of consolidation and a loss of upward momentum, so the bulls need to see some strength today. We will eventually see a test of the $6.75 level in the May and July contracts according to analysts, but it is beginning to look like that won't happen until after next week's Supply and Demand Reports.
WHEAT
Wheat is still the weak link. Export sales were good at 408,300 MT of old crop sales and 103,400 MT of new crop, but this is not enough to get anyone excited. The wheat market needs something besides the corn market keeping wheat and feed grain in order to produce consistent gains. Analysts plan on a retest of the lows.
SOYBEANS
Export sales were good at 406,900 MT of old crop and 706,000 MT of new crop sales. Importers are obviously concerned about tight new crop supplies. On the charts, the July contract looks like it is set up for day number four of consolidation. This looks like a pause before another move higher according to analysts....they say plan on a move to $14.70 in the July contract.
LIVE CATTLE
Live Cattle futures continued their weeklong selloff on Wednesday, with triple digit or near triple digit losses posted in most months. the new lows for the move have technical indicators deep in oversold territory and showing some divergences for the first time in a while. Cash trade in the north was very disappointing, with most sales in the beef quoted at $194. The cash trade, though disappointing, remains well above the settlement on the lead April contract. First notice day for deliveries on the April contract is after the close on Monday. At current levels, no deliveries are expected.
FEEDER CATTLE
Feeder Cattle futures lost ground again on Wednesday, with deferred contracts posting triple digit losses. The active May contract finished just .02 lower for the day, which was 1.75 off of session lows. The rebound in the front months came as corn futures backed away from their early morning gains. The combination of softening corn and oversold feeders gave way to the recovery. Overnight activity is similar, with the front two months firmer and deferred contracts weaker.
CRUDE OIL
May crude oil prices experienced a choppy to lower trade during the early morning hours, pressured by a weak macroeconomic backdrop, with renewed European debt concerns, gains in the US dollar and a selloff in equity markets. Meanwhile, some trades suggested that the crude oil market might be drafting support on talk of a Chinese ship insurance company dropping coverage for tankers carrying Iranian crude oil. There were also reports of explosions at two pipelines carrying crude from Iraq to Turkey. Yesterday's EIA inventory data showed a much larger than expected build in weekly supplies of 9.009 million barrels. EIA crude stocks are 4.735 million barrels above year ago levels and 17.536 million barrels above the five year average. A factor behind the large build might have come from upward revisions made by the EIA showing an increase in US crude oil production of 228,000 barrels per day, which they attributed to greater output from oil shale. Crude oil imports for the week stood at 9.774 million barrels per day compared to 9.269 million barrels the previous week. The refinery operating rate was up 1.2% to 85.7%, which compares to 84.4% last year and the five year average of 84.43%.
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.
