Schwieterman: Higher beef prices, smaller show lists

Corn                                            Estimated Fund Position
Trends
Short Term: Down                   Net Long Futures and Options: 138085
Long Term: Up                          Change: +12000
Overnight Trade: H -3 3/4 Z -1/2
Opening Calls: 2-4 Lower

The corn was higher yesterday, but wasn’t able to match the strength in the soybeans. It was interesting that the corn didn’t manage to keep pace with the wheat either since it is our large supplies of wheat which is keeping the corn market subdued. There was some pressure overnight, but it still appears that the March corn is headed to a test of the upper end of the range at the $6.50 area. Plan on two sided trade today.

Wheat                                           Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: -81072
Long Term: Down                       Change: +3000
Overnight Trade: Chicago: H -4 3/4 KC: H -4 1/4
Opening Calls: 3-5 Lower

The wheat posted solid gains yesterday, but the gains were rather small in comparison to the losses late last week and it still looks like we have to test trend line support at the $6.63 area in the March KW. Today’s action will be key. If the support holds at yesterday and Friday’s lows then we will see a recovery get underway soon.

Soybeans                                       Estimated Fund Position
Trends
Short Term: Up                             Net Long Futures and Options: 45923
Long Term: Up                              Change: +6000
Overnight Trade: H +2 X -2 1/2
Opening Calls: 1-2 Higher

The soybeans are clearly the upside leader right now. The March contract left a gap higher yesterday, closed above $12.50 and had some follow through buying overnight. There is concern that USDA is underestimating our export potential and concern about new crop supplies if we have only 74 million acres of soybeans. The $12.90 area is the next upside objective for the March contract.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 10-30 Higher

Live cattle futures closed sharply higher on Monday, with the spot February contract leading the move. Higher beef prices, smaller show lists and a jump in open interest were key factors in the move. The market is back testing the upper end of the recent historic trading range. Overnight has traded both sides of unchanged, with current prices near the highs of the session. Snows in western Nebraska are slowing conversion in that region. Keep an eye on equity markets from these current lofty levels. Any significant break in stocks could negatively affect the cattle market.

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

Feeder cattle futures closed with triple digit gains on Monday, supported by live cattle strength and continued strong cash trade. Solid gains in corn futures remain a limiting factor. Overnight activity is narrowly mixed, with slightly lower corn prices supporting. Cash sales in Oklahoma City on Monday continued to display prices above current index levels.

1. Beef bull management refresher
2. Beef research and resources update
3. Workshop to discuss nutrient application, management, stewardship
4. Help for flood affected farmers
5. Representative Lucas discusses new Farm Bill
6. U.S. May consumer sentiment highest in nearly 6 years

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. The relationship between retail gasoline prices and futures prices
5. Agriculture is expected to remain strong in the coming decade
6. What sick day? Farmers take just three a year

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