Schwieterman: Corn moves higher with threatening forecast

Corn                                          Estimated Fund Position
Trends
Short Term: Up                       Net Long Futures and Options: 71887
Long Term: Up                        Change: +30000
Overnight Trade: N +16 Z +19 @7:30 AM
Opening Calls: 10-20 Higher

Corn continues to move higher due to the threatening forecast. Many analysts have their new crop ending stocks estimates below 1 billion now, which keeps the stocks to use ratio extremely tight. We have quickly gone from expectations of a large surplus to needing to keep fresh demand in check. Chinese corn production will play a critical role in new crop prices. With the $6.20 resistance behind us, the next objective for the December contract is $6.70.

Wheat                                         Estimated Fund Position
Trends
Short Term: Up                          Net Long Futures and Options: -37713
Long Term:Up                            Change: +3000
Overnight Trade: Chicago: N Unch KC: N Unch @7:30 AM
Opening Calls: Mixed

Wheat is, and should remain, the short leg of spreads. There still isn’t much reason for independent strength in the wheat unless we see several more export sales reports like last weeks. The $7.45 - $7.50 level is acting as strong resistance in the July KW. A close above $7.50 would suggest a move into the $8.00 area and that could happen if the corn keeps moving up.

Soybeans                                    Estimated Fund Position
Trends
Short Term: Up                          Net Long Futures and Options: 186294
Long Term:Up                            Change: -7000
Overnight Trade: N +17 X +15 @7:30 AM
Opening Calls: 10-15 Higher

Soybeans are making up for yesterday’s losses. Forecasts are still threatening and while June weather isn’t as critical to the soybeans as it is the corn, the beans have to have some rain to promote good plant growth and health. November soybeans will be at $15.00 soon.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: Mixed

Live cattle futures closed moderately lower on Tuesday, even though choice beef prices are nearing their all-time record highs. Struggling world economic news continues to weigh on the market, along with the raging heat across the midsession of the country. The oppressive heat could begin showing up in cattle weights, but with humidity levels low the damage may be less severe. This morning’s markets are narrowly mixed. We expect cash to trade steady to a buck lower in spite of the excellent packer margins.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: 40-60 Lower

Feeder cattle futures continue to come under severe pressure, due to the ever strengthening corn values. December corn is now up .90 for the week, with August feeders off over 6.50. We are now trading below the lows since last October. Cash feeders are dropping as well, with replacements still not penciling in profits with the higher grain and no gains in deferred live cattle.

1. Beef bull management refresher
2. Beef research and resources update
3. Workshop to discuss nutrient application, management, stewardship
4. Help for flood affected farmers
5. Representative Lucas discusses new Farm Bill
6. U.S. May consumer sentiment highest in nearly 6 years

1. New school lunch beef recipes win approval from kids, foodservice
2. Prices for corn and soybeans, five years from now
3. Drier weather to give big boost to U.S. corn plantings
4. The relationship between retail gasoline prices and futures prices
5. Agriculture is expected to remain strong in the coming decade
6. Domestic ethanol production starts to grow again

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2. Tyson selects panel to monitor animal welfare program
3. World food supply depends on character, virtuous leadership
4. Commentary: Slanting the statistics
5. Buffet concerned about soil and starvation
6. Cold spring stunts upper Midwest hay crop