Schwieterman: Weaker US dollar lifts live cattle higher

Corn                                                   Estimated Fund Position
Trends
Short Term:Down                           Net Long Futures and Options: 8578
Long Term: Down                           Change: +10000
Overnight Trade: N +1 3/4 Z +3 1/4 @7:15 AM
Opening Calls: 2-4 Higher

Corn condition ratings were better than expected and unchanged at 72% Good to Excellent. Forecasts still suggest that a decline in ratings is likely next week. Basis levels are firming again, which suggests we will see more bull spreading in the next several sessions. The big concern of the day will be the outside markets. Strength in the Dollar could weigh on the corn today, so look for two sided trade and yet another consolidation session. Key resistance in the December contract lies at the $5.28 - $5.32 area. A close above that this week would be very bullish.

Wheat                                               Estimated Fund Position
Trends
Short Term: Down                          Net Long Futures and Options: -42499
Long Term: Down                           Change: +3000
Overnight Trade: Chicago: N +3/4 KC: N -2 1/4 @7:15 AM
Opening Calls: Mixed

The July KW is trying to form a bottom. Step one was not making a new low yesterday and step two will be a close above $6.60 today, so the market still has some work to do. Yield reports are still disappointing in much of Kansas, which is supportive, and the lack of weakness in the corn takes away selling pressure from the wheat as well. The supply side of the equation is getting more bullish due to production problems, but we still need to see consistent, large export sales for this market to really get going.

Soybeans                                          Estimated Fund Position
Trends
Short Term: Down                           Net Long Futures and Options: 158432
Long Term: Down                            Change: -2000
Overnight Trade: N +11 1/4 X +6 1/2 @7:15 AM
Opening Calls: 7-10 Higher

The July soybeans made up for yesterday’s weakness in overnight trade. Crop condition ratings were not impressive at 65% Good to Excellent, so there isn’t a lot of confidence in a record yield right now. The bean market is still stuck in a downward channel and it would take a close above $13.80 in July today to get out of it so the technical don’t look as bullish as the fundamentals right now.

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

Live cattle futures closed moderately higher on Monday, as weaker US Dollar values combined with higher packer margins to provide support. Traders continued to buy in overnight trade, in spite of a firmer Dollar. June’s discount to cash trade should provide underlying support until basis levels narrow. Short and longer term moving averages have turned higher, initiating further technical support. Open interest was up on the Monday rally.

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

Feeder cattle futures closed sharply higher on Monday, posting triple digit gains in spite of the strong day in corn futures. Rains in the grass lands of Texas, Oklahoma and Kansas over the weekend added fundamental support to a technically stronger market. Overnight trade continued to firm, led by the active August contract gaining .50 as we write. Corn prices are firmer as well, with ag markets bucking the overnight Dollar strength.

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