Corn
Corn futures are called slightly higher on old crop and slightly lower on new crop this morning. Preliminary open interest dropped 12,939 contracts yesterday. It was a get me out before the report day. There have been 6 limit up or limit down moves out of the last seven quarterly stocks report days. Last year was the only limit move for corn in a March report in the past 10 years, however. There was some unwinding of soy/corn spreads, and also trade selling of May futures ahead of the index fund roll period. One FCM (broker) bought 1000 September 580 straddles, a bet prices will be anywhere but here after the report. The July/Mar inverse has collapsed, suggesting the market is well supplied for the moment with cash grain. U.S. planting intentions will be reported by USDA on Friday morning, along with Grain Stocks. The average trade estimate for planting intentions appears to be around 94.7 million acres, with March 1 stocks around 6.2 billion bushels. Corn was up 4 cents at t he Dalian exchange and up 2 cents on Globex.
Soybeans
Soybean futures are expected to start the day 4 to 6 cents higher. China bought 120,000 MT of soybeans for 2012/13 delivery reported by private exporters to USDA yesterday. Turnaround Tuesday profit taking took all three legs of the complex lower yesterday after a big up Monday, abetted by lower heating oil/diesel prices. The U.S. soy/corn ratio is still in favor of soybeans as the market makes an effort to encourage producers to allocate more of the acres to soybeans versus corn. The trade average guess for 2012 Planting Intentions is 75.3 million acres. The average stocks number per Reuters is 1.387 billion bushels. Brazilian basis firmed on Tuesday, suggesting new export business was done on the price dip. Soybeans on the Dalian were down 5 cents and Globex was up 6 cents.
Wheat
Wheat futures are called 2 to 4 cents higher this morning. Futures were double digits lower at all three exchanges. Never ones to waste an opportunity, Egypt tendered for wheat imports overnight to take advantage of the lower price structure. China will offer 380,000 MT of wheat from their reserve. Position squaring ahead of the report becomes the focus for today. Chicago open interest changed little on the Tuesday break, increasing only 320 contracts in the preliminary report. Crop condition ratings on Monday evening were stellar for OK, KS and NE. The average trade estimate for All Wheat planted acres in 2012 is 57.4 million bushels. Ending stocks projections for March 1 are centered around 1.22 billion bushels, which would be a three year low for a March report. SRW wheat was up 4 1/2 cents, HRW wheat was up 3 1/2 cents and HRS was up 2 1/2 cents on Globex.
Cattle
Live Cattle are expected to open steady to mixed. Most of the contracts were up $1 or more as shorts took profits ahead of month end and were concerned that a bump up in wholesale prices might be warning of another big export sale. Futures bounced off long term trend line support last Friday with technical indicators positive. The gain in Choice beef on Tuesday morning didn't hold, with the afternoon report $1.31 lower and Select losing more ground to end the day $1.18 lower. Slaughter week to date is even with last week. Cattle crush spreads rallied further with the drop off in corn, but are not yet into breakeven territory.
Hogs
Lean Hog futures are called slightly lower this morning. The summer contracts showed the largest gains. The rally was short covering, with preliminary open interest dropping 3,765 contracts during the up day. Prices at the retail level are very competitive with other meats. The IA/MN cash hog quote was down an average 56 cents. WCB hogs were 73 cents lower and the ECB was down 34 cents. Wholesale prices were higher again on Tuesday, up 58 cents. Estimated daily hog slaughter this week totals 822,000 head so far, about 7,000 behind last week and year ago.
Cotton
Cotton futures are trading up 8 on the spot month and down 9 on the July this morning. May futures hit the highest price since March 6. Trading volume picked up sharply due to positioning ahead of the USDA report and the monthly index fund roll period. Spec money has been coming into cotton as we approach the end of the calendar quarter. The limitations India is placing on exports continue to be supportive to growths from other origins. USDA will issue a Planting Intentions report on Friday morning. Trade estimates are clustered in the 13.0-13.6 million acre range. Chinese cotton producers are looking for other crops to grow, with one estimate on CNCotton projecting a 9.1% drop. Another, from CCA shows a more severe drop. The Cotlook A Index rose to 100.30.
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.
