Schwieterman: Weak live cattle pulls feeders lower

Corn                                                 Estimated Fund Position
Trends
Short Term: Down                        Net Long Futures and Options:
Long Term: Down                         Change:
Overnight Trade: N +1 3/4 Z -1 1/4
Opening Calls: Mixed

Trading volume was very high overnight following Friday’s limit higher move in the front months of the corn. Bull spreading was active again, as it should be with tight old crop stocks and large new crop acreage. The gains were particularly impressive overnight, but eventually we should see the July corn work up to the $6.75 area. The December will struggle with overhead resistance at the $5.50 level.

Wheat                                                Estimated Fund Position
Trends
Short Term: Down                           Net Long Futures and Options:
Long Term: Down                             Change:
Overnight Trade: Chicago: N -7 1/2 KC: N -5 1/2
Opening Calls: 5-7 Lower

Wheat futures in Kansas City and Chicago traded both sides of unchanged overnight and finished the session lower. The lack of follow through strength isn’t surprising since the main supporting factor in the wheat is the strength in the old crop corn, which wasn’t impressive either. Minneapolis wheat did stay positive through the session thanks to the lower than expected acreage estimate and the need for that market to buy back acres.

Soybeans                                             Estimated Fund Position
Trends
Short Term: Up                                    Net Long Futures and Options:
Long Term: Up                                     Change:
Overnight Trade: N +8 1/4 X +12
Opening Calls: 10-15 Higher

Strength in the soybeans, and bear spreading, is what we saw overnight and exactly what one would expect following Friday’s reports. The soybean market needs to shift acres away from the corn and that is what the market is trying to do. Look for the July contract to make a run for the September high at $14.71.

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

Live cattle futures closed the week with the April contract off 4.20 for the five day period. Cash was off a couple dollars in most regions. The sharply lower close on Friday was done on new money entering the short side of the market. The sharp rise in open interest is worrisome to a market that is going into a seasonal time frame that is normally a little soft. Outside market influences appear narrowly mixed in overnight trade. A first of the month, first of the quarter bounce is certainly a decent possibility.

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

Feeder cattle saw overall losses of 3.70 in the lead April contract for the week. Friday's decline came at the hands of a weak live cattle contract along with limit move higher in the old crop corn. Overnight corn prices were just mixed, with old crop modestly higher and new modestly lower. Cash index levels are well above the current futures price, with April discounted by more 5.00 at week’s end.

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