Wednesday, June 20, 2007
888-452-8751
Fundamentals:
Corn futures dropped 7-9 cents. CZ opened lower after trading most of the overnight electronic session higher. Last night's short range weather maps reduced some of the rains forecasted for the east US Midwest. AM maps not only added rains back but added another rain event for the east Midwest later next week. Maps also hint of above normal temps early next week and the first week in July. This suggests these rains are needed to offset the above normal temps. Noon maps moved the bulk of the rains into east IA, west IL and MO and reduced rains for IN and OH. Weekly US corn export sales rose 33 mil bu. Total commit is near 2016 mil bu vs 1971 LAST YEAR. Japan and Taiwan were main buyers. Tech speaking the corn chart has retraced the entire move up after the US June supply and demand report. Despite a steep drop in US corn ratings, forecast of rains in the east and fact crop is still rated above average triggered some long liquidation back to key support. Trade feels USDA will est US 2007 corn acres near USDA est of 90.5 mil on their June 29 est. June 1 US corn stocks is est near 3490 mil bu vs 4362 LAST YEAR.
Technicals:
July Corn finished down 1 3/4 at 394 1/4, 6 1/2 off the high and 4 1/4 up from the low. Declining momentum studies in the neutral zone will tend to reinforce lower price action for July Corn. The close below the 9-day moving average is a negative short-term indicator for trend.
Recommendations:
Speculative:
6-21-07: Buy 1 Dec Corn @ $4.14 Stop Close Only
Hedge Positions:
3-9-07: Bought December $4.00 Puts / Sold December $5.60 Calls @ ~$.25
Soybeans:
Fundamental:
Soybean futures dropped 23 cents. SX dropped to 851.75. Sell stops were hit below 861. SX settled near 20 day moving average level of support. Soybeans had become overbought. A rally in May had started near 750 SX and tested 893 on concern of lower US 2007 planted acres and a drop in US 2007/08 carryout. Demand picture was mixed. Weaker demand for soymeal in China reduced soybean demand there. Still talk of higher world vigil demand for fuel had helped rally soy oil and world pal moil prices. Today, talk of better chances of rain in the US east Midwest and south over the next 10 days triggered long liquidation. These rains appear to offset forecast of above normal temps early next week and the first week in July. Weekly US soybean export sales rose 13 mil bu. Total commit is near 1087 mil bu vs 889 LAST YEAR. Mexico, Japan and China were main buyers. Next key USDA report is USDA June 29 acreage and stocks report. Some est June 1 US soybean stocks near 1100 mil bu vs 991 LAST YEAR. Acreage est are from 68.0-68.8 mil acres vs USDA March est of 67.1.
Technicals:
July Soybeans finished up 10 at 839, 13 off the high and 10 1/2 up from the low. November Soybeans closed up 10 1/2 at 874 1/2. This was 11 1/2 up from the low and 11 3/4 off the high. Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out for July Soybeans. The close above the 9-day moving average is a positive short-term indicator for trend. It is a mildly bullish indicator that the market closed over the pivot swing number.
Recommendations:
Speculative:
6-21-07: Did not trade position due to volatility.
Hedge Positions:
3-9-07: Bought November Soybean $7.80 Put / Sold November $10.40 Call @ ~$.35
Wheat:
Fundamental:
Wheat futures closed mixed. Spread trading helped MLS gain. Large corn and soybean futures weighed on Chicago and KC wheat. Trade continues volatile near 600. Recent rains have slowed US 2007 HRW harvest and reduced quality of the crop. Weekly US wheat export sales rose 20 mil bu. Total commit is near 194 mil bu vs 164 LAST YEAR. Italy, Chile, Nigeria, Yeman and Japan were all small buyers. Continued to be some concern that drop in 2007 Ukraine export supplies could shift some demand to other exporters esp US. There remains debate on final size of US winter wheat crop. Last USDA est was 1610 mil bu vs their May est vs 1616 and 1298 LAST YEAR. Forecast is for drier US south plains weather. This should help advance harvest. Low test weight continues to be a concern. On June 29, USDA will est US wheat acres and June 1 stocks. All wheat acres are est near 60.3 mil or unchanged from current USDA est. June 1 US all wheat stocks are est near 417 mil bu vs 571 LAST YEAR. Low world/US stocks to use ratio offers support to futures.
Technicals:
July Wheat finished up 24 at 605, 6 off the high and 18 1/2 up from the low. December Wheat closed up 22 at 623 1/2. This was 17 1/2 up from the low and 8 off the high. Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action for July Wheat. The market's short-term trend is positive on the close above the 9-day moving average. A positive setup occurred with the close over the 1st swing resistance.
Recommendations:
NONE
Speculative:
NONE
Beef:
BEEF...The Wednesday cash trade at 4.00 lower in the north continued to weigh on live cattle futures today. We have no cash trade out of the south today. The wholesale beef came in sharply lower this afternoon (down 2.22) which should make it difficult for southern feedlots to get steady money. The cattle on feed report may usher in some short covering ahead of Friday's close. Today's kill was reported at 125,000 compared to last year's 125,000.
PORK...The continued large hog slaughter is weighing on hog futures. The trade is expecting the cash and pork cutout to top out soon, perhaps next week. Futures turned higher on short coving at mid session, only to drift lower into the close. Technically the market appears to be breaking down. We're also nearing the end of the bullish seasonal window. The cash market was steady to higher but called mixed for Friday. Today's hog slaughter was pegged at 386,000 - well above the year ago actual kill of 377,000. The weekly kill is running 74,000 ahead of last year. The noon pork was very lightly tested with hams down one at 65 cents. The pork cutout is approaching 12 month highs. Yesterday's cutout at 78.89 was the highest since June 28, 2006.
Positions:
6-21-07: Sold 1 August Live Cattle @ 89.92 - risk a close above 90.60
6-21-07: Sell 1 August Dairy @ 20.50 - risk a close above 20.66.
New Recommendations:
6-22-07: Sell 1 August Lean Hog @ 75.00 - risk a close above your entry price.
