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May 23 Market Talk
Posted: 05.23.2012 at 9:04 AM
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CORN
The corn came under heavy selling pressure yesterday due to rumors of cancellations of old crop purchases by the Chinese and less threatening weather forecasts for the Corn Belt. Basis levels were sharply lower in many locations, which gives credence to the cancellation rumors, but there has been no confirmation. There was little follow through selling pressure overnight, so it looks like we will start the day in consolidation mode.
WHEAT
Weather problems in the US and Europe kept the wheat from being was weak as the corn yesterday, but traders made up for that overnight. Better moisture prospects for Russia and bearish looking charts are giving traders plenty of reason to sell. Analysts are still looking for the July KW to move to the $6.70 level.
SOYBEANS
There were also rumors of soybean sales cancellations, which is putting pressure on the soybeans. Old crop supplies are more than adequate if the Chinese are done buying. The new low for the move in the July contract looks very bearish and technical trders will start thinking about a move down to $12.72. The bulls need a turn around right now to avoid further long liquidation by the funds.
LIVE CATTLE
Live Cattle futures posted moderate gains on Tuesday, as cash bids surfaced just under a week ago highs in the south. With a few $122 bids sprinkled around, cattlemen continue to feel comfortable with their asking price near $125. Overnight weakness in equities and strength in the Dollar are weighing on live futures. Cutouts were mixed on Tuesday but remain within striking distance of all time highs. Analysts say we could see strong outside market influences over the next couple of days.
FEEDER CATTLE
Feeder Cattle futures closed sharply higher on Tuesday, supported byhigher live futures and the sharp selloff in corn. The active August contract closed back above the 160.00 level and should get additinal support from the struggling corn. Analysts anticipate that dryness in some of the heavy grazing areas could bring cattle into the feedlots earlier than expected, if weather patterns do not change.
CRUDE OIL
July crude oil prices trended lower throughout the overnight and early morning trading hours, falling to their lowest level since November 1st. Some traders indicated that weakness in the market came from mounting fears regarding the European debt situation and economic growth concerns. Outside markets were under pressure from a risk-averse tone, with global equity markets lower and the Euro currency at a new 21-month low against the US dollar. Further weakness in the crude oil market might have come from headlines suggesting that the IAEA was close to a deal between Iran and Western nations to investigate Iran's nuclear program. This comes as world leaders meet in Baghdad today to discuss recent sanctions against Iran. The progress is seen as a positive in resolving conflict and reduces the threat of supply disruptions in the oil market. Expectations for this morning's EIA inventory report are for crude stocks to show their ninth consecutive build, this time in the range of 1.5 million barrels. This compares to the five year average draw for this week of the year of 900,000 barrels.
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.
