Schwieterman: Tight show lists create opportunities

Corn                                               Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: 116457
Long Term: Down                       Change: -10000
Overnight Trade: N +1/4 Z +1/2
Opening Calls: Mixed

It should come as no surprise that there are rumors that the Chinese are looking to buy more corn since that is what they do every time there is a break in the market. The corn market is becoming oversold, but we still have no indication of a bottom. A move down to $6.02 is still a possibility for the July corn. The December contract is testing the March low already, so the bulls need to see that support hold today. The planting progress numbers have been delayed until this afternoon. Traders are looking for about 20% of the corn to be planted.

Wheat                                               Estimated Fund Position
Trends
Short Term: Down                          Net Long Futures and Options: -90985
Long Term: Down                           Change: -2000
Overnight Trade: Chicago: N +2 3/4 KC: N +2 1/2
Opening Calls: 2-4 Higher

The May KW is closing in on the $6.26 weekly chart support, the market is oversold, and funds are very short in Chicago, which means they should be running out of room to sell. Other than that there still isn’t much to say about the wheat that is supportive. This afternoon’s crop progress report will show that the maturity of the HRW crop is ahead of normal, which would make the crop susceptible to freeze damage, but that would not be a very fun way to get a rally. Sell strength, particularly in the deferred contracts.

Soybeans                                         Estimated Fund Position
Trends
Short Term: Up                               Net Long Futures and Options: 201692
Long Term: Up                                Change: -5000
Overnight Trade: N +7 1/2 X +5 1/2
Opening Calls: 5-10 Higher

The soybeans posted a sizable rebound overnight. The charts suggest we have potential for further corrective weakness, but like the corn, all that lower prices will do is attract more demand, and at this point we probably can’t stand to see new crop stocks get any tighter. Buy breaks.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: 30-50 Higher

Live cattle futures closed narrowly mixed on Monday, with bull spreading the feature of the day. April led the way, with gains of .20 at the close, while some deferred contracts traded as much as .30 lower. Cutouts were sharply higher, with choice and select up 2.75 and 3.16 respectively. Show lists remain tight, with our list off 20% from a week ago and 30% from the same week last year. There appears to be a window for better cash trade ahead of May contracts becoming available.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: Sharply Higher

Feeder cattle futures finished Monday higher, with the exception of the lead April contract. Cash index levels are on the rise, as we projected, with cash trade in Oklahoma City called 3-5 higher on very light offerings. Continued weakness in corn futures has added to the resolve of feeder cattle producers. Overnight activity was modestly higher on feeders, with corn narrowly mixed.

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2. Ag markets posted a general advance mid-day Wednesday
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4. TSCRA works with sale barns to catch Houston cattle thief
5. Mexico says U.S. not respecting WTO ruling on meat labeling
6. Vance Publishing's 40 under 40

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2. Post-tornado composting a solution for disposal of dead livestock
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5. Drought losses in Oklahoma top $400 million for 2012
6. Survey reveals most Americans in favor of COOL

1. Meat and climate change: How significant is the impact?
2. Commentary: In praise of animal foods
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