Schwieterman: Cash improvement gives live cattle futures leverage

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Corn                                                Estimated Fund Position
Trends – December Contract
Short Term:Down                        Net Long Futures and Options: -171247
Long Term: Down                        Change: -5000
Overnight Trade: Z -1 @7:30 AM

There wasn’t a great deal of movement in the corn overnight, but the December contract did make a new low for the move. The forecasts look cool and wet for the bulk of the Corn Belt, which will keep a lid on the market. The expectations for the crop condition ratings this afternoon range from 1 lower to 2 higher in the Good to Excellent. The state of Iowa may act as a drag on the eastern Corn Belt again since conditions are still less than ideal in many areas of Iowa. The $4.70 area will act as short run support, but unless the weather changes we  will eventually see $4.50 and probably $4.00.

Wheat                                              Estimated Fund Position
Trends – September Contract
Short Term: Down                        Net Long Futures and Options: -85655
Long Term: Down                         Change: -1000
Overnight Trade: Chicago: U -1 KC: U -1 @7:30 AM

The drought isn’t over in all of the HRW Belt, but at least there are a lot of areas seeing rain. Some areas of Kansas are nearing record rainfall for the month of July. Moisture like that will keep the pressure on the July 14 KW. For the September contract we keep following the trend line resistance lower. One can’t get excited about being bullish wheat until we move through that resistance.

Soybeans                                      Estimated Fund Position
Trends – November Contract
Short Term: Down                      Net Long Futures and Options: 52914
Long Term: Down                       Change: +3000
Overnight Trade: X -14 @7:30 AM

The soybeans were under pressure overnight, but the November contract hasn’t taken out last week’s low, yet. The next downside target should be the $11.80 area and the current forecasts should be able to get the market there. The crop condition ratings this afternoon will play a role in that of course and steady to higher ratings will add pressure to the market.

Live Cattle
Short Term: Up
Long Term: Up
Opening Calls: Mixed

Live cattle futures finished modestly higher on Friday and could see follow through buying to start the week, after seeing cash improvement in Nebraska. For the week, August live fell 17 cents. Deliveries for the August contract begin after the close next Monday. We look for asking prices to be at least a Dollar higher than they were a week ago. The first half of the week cutout values will be closely monitored by traders for near term direction.

Feeder Cattle
Short Term: Up
Long Term: Up
Opening Call: 10-30 Higher

Feeder cattle futures closed moderately higher on Friday, supported by cash improvement in the northern fats and continued prospects for lower corn values. Cash feeder index levels dropped for the third time in the past four days. Overnight corn values are narrowly mixed, with a lower bias in the new crop. We expect the futures to struggle until the cash market shows improvement. There is just too much premium in the late summer and fall contracts.

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