Schwieterman: Live cattle futures finished moderately to sharply

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Corn                            Estimated Fund Position

Trends – July Contract

Short Term:Down        Net Long Futures and Options: 179035

Long Term: Down       Change: -10000

Overnight Trade: N -1 @7:30 AM

The corn charts are looking bearish after yesterday’s sell off. The market is oversold, and there isn’t much fresh news, so there is a good chance for some consolidation trade today ahead of the weekend. However, as long as the weather is non-threatening, traders are going to be looking to sell rallies. The $4.76 area is a key support level for the December contract. A failure at that level will point to a move to $4.66 and then $4.35.

Wheat                          Estimated Fund Position

Trends – July Contract

Short Term: Down       Net Long Futures and Options: -18297

Long Term:Up              Change: -4000

Overnight Trade: Chicago: N +1 KC: N -3 @7:30 AM

Wheat was much weaker than expected yesterday. Traders were concerned about US wheat being priced out of the world market and the prospects for better planting weather in the spring wheat area. After giving up 62% of the last leg up, the July KW should be back in the game as far as the world market goes, so we shall see if attitudes change. The past two day’s lows in the July KW are at some important technical support levels, so if the market is going to hold, it better do so here.

Soybeans                     Estimated Fund Position

Trends – July Contract

Short Term: Down       Net Long Futures and Options: 93027

Long Term:Up              Change: -5000

Overnight Trade: N +1 @7:30 AM

The soybeans have had some very large daily swings, but it has amounted to 6 days of directionless trade. Basis levels have been climbing to compensate for the lack of strength in the futures, because the market must still do what it can to keep ahold of beans or encourage imports. The market is going to be very volatile until the old crop supply and demand situation is resolved.

Live Cattle

Trend

Short Term: Up

Long Term: Up

Opening Calls: Mixed

Live cattle futures finished moderately to sharply lower on Thursday, with the October contract falling 1.02 for the day. Cash trade became fairly active in the north, with prices off $2-$3 in the beef at $234-$235. Southern trade was more modest movement at $145 cash. Weights announced on Thursday for the week ending May 3rd were off significantly from the prior week but still slightly higher than a year ago. Overnight trade is currently trending slightly higher in the front four months. Open interest was up 1,968 contracts on Thursday’s sell off, suggesting new sellers entering the market in spite of the continued wide basis between cash and futures.

Feeder Cattle

Trends

Short Term: Up

Long Term: Up

Opening Call: 10-30 Higher

Feeder cattle futures closed mixed on Thursday, with the majority of the strength in the spot May contract. This afternoons’ on feed report is looking for a 3% drop in April placements from a year ago. Corn is off another 2-3 cents in overnight trade, with feeders once again the beneficiary. Many cattle being placed recently cannot be hedged in the fat market at a profit and will need to see a rally in the live pit. Until we see deferred live cattle move to new highs we may be limited in feeder strength.



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