Schwieterman: Live cattle futures closed with strong gains Friday

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Corn                            Estimated Fund Position

Trends – July Contract

Short Term: Up           Net Long Futures and Options: 181591

Long Term: Up           Change: +5000

Overnight Trade: N +4 @7:30 AM

Corn was higher overnight and the July contract reached the highest level since the 9th of April. Planting delays and the strength in the wheat are two of the main supporting factors. This afternoon’s planting progress figure will be very important since some traders aren’t looking for much progress and some are looking for a number near average. Somebody is going to be disappointed. The corn market has run out of steam at these levels before, but a positive close in the July contract, would make it the best close since September, so the charts look pretty bullish right now.

Wheat                          Estimated Fund Position

Trends – July Contract

Short Term: Up           Net Long Futures and Options: -628

Long Term:Up                        Change: +4000

Overnight Trade: Chicago: N +4 KC: N +7 @7:30 AM

Wheat was higher overnight thanks to the lack of rain in most of the HRW Belt. When the crop tour gets started tomorrow, they will probably see some mud near Manhattan, but as one would expect, it will get much drier as they head west. The July KW has taken out the $7.80 resistance making the $7.95 level the next upside target. The charts suggest we should start thinking about a move to $8.66. The fact that there is very little rain in the forecast suggests we will see lower crop condition ratings, at least for the HRW, for at least two more weeks, which will keep the market supported.

Soybeans                     Estimated Fund Position

Trends – July Contract

Short Term: Up           Net Long Futures and Options: 125694

Long Term:Up                        Change: +9000

Overnight Trade: N +16 @7:30 AM

Soybeans were very strong overnight because we still don’t have the old crop supply and demand situation figured out. There has been talk about more imports from Brazil, but we have to have more to make the numbers work out. The bears suggest that USDA has underestimated production and use the basis levels in the Corn Belt as evidence, but they seem to have forgotten that the cash market often doesn’t lead the market. I don’t think that the soybeans would be over $15.00 if they were easy to find.

Live Cattle

Trend

Short Term: Up

Long Term: Up

Opening Calls: 20-50 Higher

Live cattle futures closed with strong gains on Friday, ahead of the on feed report and significant cash trade. Cash trade came in steady to a Dollar lower, while a lower than expected placement figure should support the early third quarter time frame. Cutouts declined a bit on Friday and will be monitored close as we get under way this week. Outside market influences look supportive, with the Dollar lower and equities firmer. The expiring

April contract continues to carry more than 5,000 contracts into the last three trading days. Some volatility is likely.

Feeder Cattle

Trends

Short Term: Up

Long Term: Up

Opening Call: 20-50 Higher

Feeder cattle futures settled higher on Friday, with 3rd and 4th quarter contracts sharply higher. The 95 percent placement number should continue to support an already firm cash market. The cash index was up .12 on Friday and is within 1.30 of all-time highs after the recent decline. For the week May feeders were up 1.80 and are expected to open firmer this morning. Export demand for beef could be supported in the US if any countries back away from Brazil due to recent BSE issues.



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