Schwieterman: Feeder cattle higher amid limit higher corn

Corn                                              Estimated Fund Position
Trends
Short Term: Up                           Net Long Futures and Options: 167255
Long Term: Down                      Change: +35000
Overnight Trade: Z +9 1/2 N +7 3/4
Opening Calls: 3-5 Higher

The corn numbers were slightly negative this morning. Yield was left unchanged at 148.1 bu/ac, but harvested acreage was cut by 500,000, which was supportive. The negative part of the report was the 50 million bushel cut in new crop exports, which made ending stocks come in higher than expected at 866 million. This is not a catastrophically bearish report by any means and I think traders may quickly forget the ending stocks number and focus on a potential yield cut in the November report.

Wheat                                            Estimated Fund Position
Trends
Short Term: Up                            Net Long Futures and Options: -60009
Long Term: Down                       Change: +8000
Overnight Trade: Chicago: Z -1/2 KC: Z -2
Opening Calls: 3-5 Higher

The wheat numbers were bearish. Ending stocks were much higher than expected at 837 million. There were numerous cuts to the demand estimates in order to explain the higher than expected stocks level. 837 is still lower than the previous two years, but it confirms the idea, once again, that there will be no supply concerns with the wheat. Look for wheat to remain a follower of the corn.

Soybeans                                    Estimated Fund Position
Trends
Short Term: Up                          Net Long Futures and Options: 60449
Long Term: Down                     Change: +25000
Overnight Trade: X -2 1/4 N -2
Opening Calls: 5-10 Higher

The soybean report was friendly today. Yield was cut more than expected to 41.5 bu/ac and ending stocks were cut by 5 million to 160 million. Traders were looking for an increase in ending stocks, so this small cut is very supportive. Soybeans should be favored in the spread trade for a few days and I would look for the November contract to head to the $12.70 level.

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

Live cattle futures closed sharply higher on Tuesday, reversing much of Monday’s hard selloff. The selling on Monday was attributed to a large spec liquidating down ahead of first notice day. Outside market influences look supportive today, with the Dollar lower and equities firm. A test of overhead resistance could be seen today. The close on Tuesday in the April contract was its’ highest of the year.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 20-40 Higher

Feeder cattle futures defied any relationship with corn prices on Tuesday, posting moderate gains in the face of limit higher corn. Overnight is seeing more of the same, with futures gaining as much as .60‐.70 in spite of the 10 cent gains in the corn. Contract highs in the active November contract are now less than 2.50 above the market. This mornings’ grain report could be a controlling factor in today’s feeder trade.

1. A conversation with Dr. Jim Marsden about the safety of beef
2. Traders evening up positions ahead of the weekend Friday
3. Nearly 1,000 emaciated cattle found on N.M. ranch
4. Ag groups assisting cattle operations affected by tornado
5. NOAA: Get ready for a busy hurricane season
6. NCBA Op-Ed: ADUFA/AGDUFA reauthorization advances in the House

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

1. Commentary: In praise of animal foods
2. Seven jobs more dangerous than farming
3. What’s on America’s grill this weekend?
4. Meat industry associations quick to attack the new MCOOL rule
5. NASA backs 3D food printer to feed growing population
6. White House urges Senate to cut crop insurance in farm bill