Schwieterman: Dryness to move cattle into feedlots early

Corn                                      Estimated Fund Position
Trends
Short Term: Up                   Net Long Futures and Options: 51130
Long Term: Down              Change: -20000
Overnight Trade: N +3 1/2 Z +1/2 @7:15 AM
Opening Calls: 1-3 Higher

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                                    Estimated Fund Position
Trends
Short Term: Up                    Net Long Futures and Options: -61203
Long Term:Up                      Change: -8000
Overnight Trade: Chicago: N -12 3/4 KC: N -8 1/2 @7:15 AM
Opening Calls: 10-15 Lower

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. I am still looking for the July KW to move to the $6.70 level.

Soybeans                                Estimated Fund Position
Trends
Short Term: Down                Net Long Futures and Options: 183671
Long Term: Down                 Change: -10000
Overnight Trade: N -12 1/4 X -14 1/2 @7:15 AM
Opening Calls: 10-15 Lower

There were also rumors of soybean sales cancellations, which is putting pressure on the soybeans. Oldcrop 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 traders 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
Trend
Short Term: Up
Long Term: Up
Opening Calls: 20-40 Lower

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 prices 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. We could see strong outside market influences for at least a couple more days.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: Mixed

Feeder cattle futures closed sharply higher on Tuesday, supported by higher live futures and the sharp selloff in corn. The active August contract closed back above the 160.00 level and should get additional support from the struggling corn. Dryness in some of the heavy grazing areas could bring cattle into the feedlots earlier than expected, if weather patterns do not change.

1. Feeder cattle review: Choice beef prices keep rolling higher
2. Ag markets diverge just before the long holiday weekend
3. Armyworms eat fescue pastures, hayfields
4. Commentary: New rules un-COOL
5. Oil edges up on book squaring, but posts big weekly drop
6. Cattle theft and brands

1. Commentary: New rules un-COOL
2. Former Eastern Livestock CEO, CFO sentenced for federal crimes
3. TSCRA works with sale barns to catch Houston cattle thief
4. More beef cows in worst drought regions than a year ago
5. Post-tornado composting a solution for disposal of dead livestock
6. Michigan hay buyers should plan purchases early

1. Commentary: In praise of animal foods
2. What’s on America’s grill this weekend?
3. Meat industry associations quick to attack the new MCOOL rule
4. Seven jobs more dangerous than farming
5. NASA backs 3D food printer to feed growing population
6. Commentary: New rules un-COOL