Schwieterman: Weakness in corn futures support feeders

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Corn                                                          Estimated Fund Position
Trends
Short Term:Down                                  Net Long Futures and Options: -30669
Long Term: Down                                  Change: -7000
Overnight Trade: K -3 Z -6 @7:30 AM


May corn is drifting sideways and the December contract is testing the lows. The bull spreaders are going to be in charge of the market if it looks like the corn crop will be planted on time. New lows in the December contract will look bearish and make $5.12 the next downside objective. The markets is not oversold and selling pressure could certainly accelerate if we start to see sell stops hit or hedge pressure.

Wheat                                                      Estimated Fund Position
Trends
Short Term: Down                                 Net Long Futures and Options:
Long Term: Down                                  Change:
Overnight Trade: Chicago: K -7 KC: K -4 @7:30 AM


Crop condition ratings didn’t change very much. Nationwide winter wheat came in at 35% good to excellent, which is down 1 point from last week. The poor to very poor increased by 2 points to 33% thanks to places like Colorado and Kansas. We have cold temperatures in the HRW again, but it doesn’t seem to concerning to the marketplace. The size of the corn crop will probably have as big of an impact on wheat price and the size of the wheat crop. We have a long string of lower highs that will have to be broken very soon to avoid a retest of the lows.

Soybeans                                                 Estimated Fund Position
Trends
Short Term: Up                                       Net Long Futures and Options: 40225
Long Term: Down                                   Change: -7000
Overnight Trade: K +2 X-4 @7:30 AM


There is more bull spreading in the soybeans thanks to very strong basis levels and prospects of a large new crop. It appears that the USDA is overstating current supplies, otherwise basis shouldn’t have to be so strong. The threat of delivery should be zero since the cash market is so much stronger than the futures. The May – July spread should continue to set records.

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


Live cattle futures closed moderately lower on Monday, with pressure stemming from the bearishly construed on feed report from Friday. The fats did manage to close well off of their daily lows and maintain contact with support areas of 126.00 in the April and 121.00 in the June. Overnight business has been two sided, with a slightly friendly bias as we write. Cold storage numbers were record large for the time frame, while forward sales are picking up as weather gets ready to turn more seasonal. Our show list was up 4% from a week ago and 16% above the same week last year.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: 50-100 Higher


Feeder cattle futures closed moderately lower in the front two months, with deferred contracts settling mixed. Feeders managed a solid recovery after triple digit losses on the opening. Weakness in corn futures is adding support, along with ideas that better grass conditions should create competition with the feedlots for tight supplies into late spring. Corn is weaker again in overnight trade, with new crop leading the way lower.



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