CORN
July corn was trading 6 cents higher late in the overnight session. Outside market forces looked slightly positive overnight as equity markets are higher. Deteriorating wheat conditions and a strong recovery from an oversold condition for soybeans helped to support a bounce in corn overnight. Sluggish export demand news, talk of cheaper corn available from South America, cheaper feedwheat and expectations of a bumper crop season ahead are all seen as negative forces. However, traders see the market as short-term oversold basis traditional technical indicators. The weekly Corn Planting report showed that 87% of the crop is planted compared to 71% last week and 56% last year. The 10 year average for this time of year is 72%. The highest percent complete was 89% in 2004. Emergence is at 56% as compared with 28% as the 5-year average.
WHEAT
July wheat was trading 9 cents higher late in the overnight session. Outside market forces look somewhat supportive with a bounce in equity markets. Short-covering emerged overnight with a slight recovery in outside market forces and crop deterioration helping to support. The weekly winter wheat conditions report showed that 60% of the crop was rated in good/excellent condition compared to 63% last week and 32% last year. The 10 year average for this time of year is 47%. Kansas crops saw a drop to 52% good/excellent from 60% last week. The weekly spring wheat planting report showed 94% of the crop is planted compared to 84% last week and 33% last year. Bearish outside market forces clashed with talk of the oversold condition and talk that the recent set-back in prices could attract increased demand. A bearish tilt to outside market forces with financial problems in Europe and political issues in Greece and Germany helped to drive the US dollar higher and other commodity markets lower. Ideas that the market is oversold and talk that the market has already priced-in a large crop ahead helped to support the bounce to higher on the day.
SOYBEANS
July soybeans were trading 21 1/4 cents higher late in the overnight session. China futures closed down 0.7% overnight as the European situation helped keep the bears in control. The focus of the trade later today is likely to center on the US retail sales report, which is expected to post a very minimal gain. July soybeans fell 9% in just 9 trading sessions before finding support and 1376 early yesterday. Massive fund and spec long liquidation selling was noted in recent days as the focus of attention appears to be on the global economic slowdown and the new crop supply outlook. The 2012/13 balance sheet is already very tight and any weather which might spark a "less than optimal" yield outlook for soybeans this year could spark significant new buying. The weekly soybean planting report showed that 46% of the crop was already planted which was about 3% higher than expected. This compares with 24% complete last week and 17% last year. The 10 year average for this time of year is 27%. The highest percent complete was 54% in 2000. Traders see the current fast start to the crop and a lack of dry areas in the country as a bearish force.
CATTLE COMPLEX
Cattle futures settled higher yesterday on better than expected fed cattle sales last week, higher boxed beef markets, and ideas pre-Memorial Day beef business could be supportive to the cash market this week. Also, we are going to have a cattle on feed report Friday afternoon that is expected to show 100% on feed, 88% placements, and 99% marketing’s, all of which would be friendly numbers if they come out this way. On feed and placement numbers should continue to run below year ago levels until we get into late summer, which is going to continue to be supportive to Oct-April live cattle futures. However, beef demand will be a key factor on how well the live cattle market performs when we get into late 2012/early 2013. In the front of the board, June live cattle continues to find support from commercial interests that are buying a pretty good discount to current cash cattle quotes.
CRUDE OIL
June crude oil traded fractionally higher during the early morning hours, helped by an improvement in risk-taking sentiment and first-quarter German GDP data that came better than expected. Some traders were hopeful that growth in Germany might help the Euro area avoid a deep recession. European and US equity markets were higher, commodities were mixed and the US dollar was fractionally lower, which also reflected an improvement in risk-taking sentiment. The crude oil market could see headlines later in the session from meetings between Iran and the IAEA, and a read on how willing Iran is on curtailing their nuclear program. Meanwhile, some traders suggested that the supply situation in the crude oil market was ample, with active Saudi Arabian production and expectations for US crude inventories to show their eighth consecutive weekly build 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.
