Schwieterman: Drought takes cows, bulls to market prematurely

Corn                                        Estimated Fund Position
Trends
Short Term: Up                     Net Long Futures and Options: 131026
Long Term: Up                      Change: +10000
Overnight Trade: Z +30 @7:15 AM
Opening Calls: 25-35 Higher

Wednesday’s reversal lower is history since the market has now blown through those highs. The weather is still threatening and the crop is still shrinking, which will keep support under the market. A close above $7.50 today will make $8.00, $8.50, and $8.62 the next upside objectives. There is enough crop damage that some people are now talking about $10.00 or higher.

Wheat                                     Estimated Fund Position
Trends
Short Term: Up                      Net Long Futures and Options: 4172
Long Term:Up                        Change: +1000
Overnight Trade: Chicago: Z+28 KC: Z +26 @7:15 AM
Opening Calls: 25-35 Higher

The wheat continues to move higher with the corn. As the corn crop shrinks there will be more wheat fed, which will draw down stocks. We are getting to the point that we will see to see a decent crop next year to keep supplies of wheat from getting tight. The next major hurdle the market has is $9.00 and we are testing that today. A close over $9.00 will make $9.93 the next objective.

Soybeans                               Estimated Fund Position
Trends
Short Term: Up                     Net Long Futures and Options: 214676
Long Term:Up                       Change: +5000
Overnight Trade: X +40 @7:15 AM
Opening Calls: 35-45 Higher

November soybeans are now testing $16.00. The story is exactly the same as in the corn market. Forecasts are threatening and the crop is shrinking. Traders are very concerned about a sub 40 yield and demand rationing. Unless the S. American crop next year is huge, July soybeans at $14.70 are a bargin.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: 20-40 Lower

Live cattle futures gave up 2.00 for the week in the August contract. Weaker cutouts and cash trade continue to plague the market. The heat and drought are not only bringing feeders off grass prematurely, it is bringing cows and bulls to market as well. Oppressive heat also limits the demand for cookout meats in an ever expanding area. We have continued a strong export pace for beef and pork, with the likelihood of stronger sales ahead, as foreign countries opt for importing the finished product rather than the grain.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: Lower

August feeder cattle futures finished 7.40 lower for the week and are expected to get off to a weak start this morning. With corn gaining another .30 in morning trade, feeders are likely to continue their recent nose dive. Drought is pushing cattle prematurely into the feedlots, which is putting additional pressure on front wend prices. There is still no end in sight to the dry Midwest conditions.

1. Workshop to discuss nutrient application, management, stewardship
2. Help for flood affected farmers
3. Representative Lucas discusses new Farm Bill
4. U.S. May consumer sentiment highest in nearly 6 years
5. Cattle producers turn to MSU for reproduction class
6. NCBA Op-Ed: EPA’s data sharing incident a debacle

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. Agriculture is expected to remain strong in the coming decade
5. What sick day? Farmers take just three a year
6. Insects. They’re what’s for dinner!

1. Insects. They’re what’s for dinner!
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