Schwieterman: Late rally takes cattle futures higher

Corn                                              Estimated Fund Position
Trends
Short Term: Up                           Net Long Futures and Options: 72652
Long Term: Down                      Change: +8000
Overnight Trade: N -5 Z -5
Opening Calls: 3-5 Lower

Planting progress was well above expectations at 53%, which is probably the reason for the pressure, especially in the September contract, in overnight trade. Keep in mind that the only time planting pace was faster than this was 2010 and we ended up with a sub-trend line yield, so the crop isn’t in the bin yet. Meanwhile, the July contract reached the 62% retracement of the last move down yesterday, so the market has reached a good spot to pause and consolidate, and it looks like that is what it is doing.

Wheat                                              Estimated Fund Position
Trends
Short Term: Up                               Net Long Futures and Options: -78066
Long Term: Down                           Change: +2000
Overnight Trade: Chicago: N -8 1/4 KC: N -8 1/2
Opening Calls: 6-10 Lower

Wheat made a good rebound yesterday, but had no follow through buying overnight, mostly because the corn was lower. Winter wheat was rated at 64% good to Excellent, which was expected. The Wheat Quality Council tour of Kansas begins today and they will likely find good wheat that is in a very advanced state of maturity. It will be interesting to see what they say about that. If the corn turns back up the wheat should follow, otherwise there is nothing bullish about the wheat.

Soybeans                                           Estimated Fund Position
Trends
Short Term: Up                                 Net Long Futures and Options: 236474
Long Term: Up                                  Change: +5000
Overnight Trade: N -10 1/4 X -3
Opening Calls: 5-10 Lower

July soybeans made a new high for the move yesterday, but showed no strength overnight.  12% of the crop is planted, which is ahead of average. We continue to see sales reported to China, many of which have been new crop, which may be why we are seeing profit taking in the bull spreads. There is still little reason to suggest that the trend in the soybean market is changing, so we are still looking at breaks as a buying opportunity.

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

Live cattle futures rallied late in the session to close higher on the day and initiate some buy signals on shorter term indicators. Overnight activity has been mixed, with the market trading in a narrow .50 trading range. With Friday’s late day cash trade of $120 in the south, June is a healthy 6.00 discount to the cash. Boxed beef traded narrowly mixed on Monday, after rallying to comfortable margins last week. Show lists, with the exception of Nebraska were reported generally smaller.

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

Feeder cattle posted strong triple digit gains on Monday, taking out the previous three day’s highs and testing trend line resistance. Strong corn prices on Friday and Monday have done little to detour the feeder recovery. Overnight corn prices retreated 5-6 cents, which should support the feeders. Watch the trend line from the March 2nd high to determine follow through buying in this market.

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