Schwieterman: Feeder cattle market weakens, corn trades lower

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Corn                                                     Estimated Fund Position
Trends
Short Term:Down                             Net Long Futures and Options: 62047
Long Term: Down                             Change: -6000
Overnight Trade: K +1 Z +1 @7:30 AM


The corn market is consolidating near the recent lows waiting for fresh information. There is much debate as to whether or not we will see any changes in the supply and demand report based on the higher than expected stocks number. Many think we will see a large cut in the feed usage estimate, but history suggests we won’t see changes. The big news of the day will be the ethanol production figure, although next week’s number will more accurately reflect the recent change in the price of corn. If the market can’t make a new low today or tomorrow look for the May contract to head back to the open chart gap that runs from $6.79 to $6.95.

Wheat                                                   Estimated Fund Position
Trends
Short Term: Down                              Net Long Futures and Options: -63380
Long Term: Down                               Change: +3000
Overnight Trade: Chicago: K +8 KC: K +4 @7:30 AM


The wheat closed positive yesterday and has seen some follow through buying overnight, but right now it looks like the beginning of a bear flag on the chart. The May KW will need to get above $7.30 to change my opinion on that. Hopefully we see a solid export sales report tomorrow and we see solid gains as we head into the supply and demand report. In the meantime, however, prepare for new lows.

Soybeans                                                Estimated Fund Position
Trends
Short Term: Down                                 Net Long Futures and Options: 68993
Long Term: Down                                   Change: -1000
Overnight Trade: K -8 X-10 @7:30 AM


Bird flu in China is the major headline of the day, which is causing fears of lower soybean meal demand. The May beans did make a new low for the move overnight, so the downward momentum has not come to an end for the soybeans yet. Tomorrow’s export sales report will likely determine whether or not we continue lower.

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


Live cattle futures closed sharply lower on Tuesday, with April rejecting early highs above 129.00 and closing 1.60 below the session highs. Triple digit losses were posted across the board, in spite of solid gains in the beef and moderate demand. Cash strength will be hard to sustain, with futures now under last weeks’ cash trade. Overnight prices are mixed, with modest gains in the front two months and similar weakness in deferred. Open interest was up 930 contracts on the break, suggesting new selling at the higher levels. A weaker Dollar and flat equities add minor support this morning.

Feeder Cattle
Trends
Short Term: Up
Long Term: Down
Opening Call: 10-30 Lower


Feeder cattle futures closed moderately lower in spite of lower corn trade on Tuesday. Weakness in the fat market along with overbought conditions and a large premium to cash weighed on the feeders. Overnight saw continued weakness in the feeders, with August taking the biggest hit so far this morning. Feeders large premium to cash and the inability of the deferred live cattle to move to higher levels should keep selling interest in the feeders attractive. Corn is trading modestly higher in electronic trade.



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