Schwieterman: Feeder cattle limit higher with strong beef exports

Corn                                     Estimated Fund Position
Trends
Short Term: Up                 Net Long Futures and Options: 52652
Long Term: Down            Change: +4000
Overnight Trade: N +2 Z -2 3/4
Opening Calls: Mixed

The July corn closed positive yesterday and had some follow through buying overnight. The gains have not been impressive, but what has been impressive is the new record levels of the May – July corn spread and the surging basis levels across the country. We are being told on a daily basis by the cash market and the spread trade that July futures are too cheap, but for some reason we are still not seeing much buying enthusiasm in the futures market. I can’t be bearish old crop when the spreads and the basis is acting this way, but I am disappointed in the price action. Look for more bull spreading today.

Wheat                                      Estimated Fund Position
Trends
Short Term: Down                 Net Long Futures and Options: -84566
Long Term: Down                  Change: +1500
Overnight Trade: Chicago: N +5 1/4 KC: N +4 1/4
Opening Calls: 5-7 Higher

The wheat is seeing some short covering action. The charts actually show some divergence in the technical indicators that suggest the July KW could climb back to the $6.50 area. However the fundamentals still suggest that rallies are a selling opportunity. Much of the wheat in western Kansas is in severe need of more rain, but even without that production supplies will be plentiful and wheat will essentially be a feed grain.

Soybeans                                   Estimated Fund Position
Trends
Short Term: Up                        Net Long Futures and Options: 220474
Long Term: Up                         Change: -5000
Overnight Trade: N +6 1/4 X -1
Opening Calls: 5-7 Higher

Bull spreading was active in the soybeans overnight. The market still seems to be in a corrective mode, but the break should be short lived due to the strong demand for both old and new crop soybeans. The shrinking production estimates in S. America are also supportive since every bushel lost there will have to be made up for by the US. Buy breaks.

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

Live cattle futures closed sharply higher to limit up on Thursday, reversing all of the damage from the BSE case of two weeks ago. Cash bids and asking prices were on the rise as well, with feedlots requiring better money than a week ago to trade inventory. We saw some light trade in the north at the $195 level, which would be solidly ahead of week ago trade. Asking prices in the south are near $122, with $195+ asked up north. Overnight futures trade is mixed, with June modestly higher and deferred contracts off a little.

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

Feeder cattle futures closed mostly limit higher on Thursday, with the lead May contract up only 2.65. New buyers and short covering were seen, as traders showed their support for the weekly beef export number and news that the calf of the BSE cow tested negative. August was leader to the upside on Thursday and remains that in overnight trade, with gains of more than .50. Cash index levels have remained on the defensive, but should get a boost from the futures trade.

1. Ag commodities were mixed Friday morning
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3. Meat industry associations quick to attack the new MCOOL rule
4. Team up against bovine respiratory disease
5. Oil prices pare losses on U.S. equities turnaround
6. Future of food discussion with Agriculture Secretary

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. Seven jobs more dangerous than farming

1. Commentary: In praise of animal foods
2. Commentary: GMOs: How do I hate thee?
3. Seven jobs more dangerous than farming
4. What’s on America’s grill this weekend?
5. White House urges Senate to cut crop insurance in farm bill
6. NASA backs 3D food printer to feed growing population