Schwieterman: Crop condition report pushes corn trading lower

Corn                                         Estimated Fund Position
Trends
Short Term: Up                     Net Long Futures and Options: 71130
Long Term: Up                      Change: +6000
Overnight Trade: N -5 1/2 Z -5 3/4 @7:15 AM
Opening Calls: 3-5 Lower

Corn is trading lower largely in response to the higher than expected 77% Good – Excellent crop condition rating. However, soil moisture profiles are dry in many areas and the forecasts  aren’t favorable for many areas, and what we really need is perfect conditions to hit USDA’s 166 bu/ac yield estimate. This is going to keep good support under the corn market until we see widespread rainfall in the Corn Belt. Buy breaks.

Wheat                                    Estimated Fund Position
Trends
Short Term: Up                     Net Long Futures and Options: -53203
Long Term:Up                       Change: +12000
Overnight Trade: Chicago: N -15 1/4 KC: N -11 1/2 @7:15 AM
Opening Calls: 10-15 Lower

The declining crop condition ratings didn’t help the wheat overnight. US wheat dropped to 58% Good to Excellent and Kansas wheat dropped to 43% Good to Excellent. Harvest is upon us and their will we good yields in many areas, but there are also going to be some big disappointments and large insurance checks. Plan on a lower production estimate in the June or July supply and demand report. Look for a break to $6.70 in the July KW.

Soybeans                                   Estimated Fund Position
Trends
Short Term: Down                    Net Long Futures and Options: 193671
Long Term: Down                     Change: +5000
Overnight Trade: N -1 X -5 1/4 @7:15 AM
Opening Calls: 3-5 Lower

The soybeans are consolidating. If we don’t see new lows in the soybeans soon the buyers will return. The weather concerns in Corn Belt are very supportive to the new crop soybeans. If there is any threat to production the soybeans will have to add a great deal of weather premium. $12.75 is the critical support in the November contract.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 20-40 Higher

Live cattle futures closed moderately to sharply lower on Monday, reversing early morning strength after Friday’s bullishly construed on feed report. Choice cutouts were more than 2.00 higher for the day on decent movement. Domestic demand appears to be hitting a better stride. Weather appears good across most of the country for the coming three day weekend. Overnight trade is running higher across the board. The short kill week coming up, followed by the availability of June contracts could weigh on packer demand for cash cattle.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 10-30 Higher

Feeder cattle futures led the reversal lower in the meat complex on Monday, posting triple digit declines in all but the May contract. Cash index levels rose 3.00 on the day, closing the gap between cash and futures significantly. Overnight trade is steady to .30 higher, with support from higher live and lower corn values. Feeders would like to rally, if they could find support from the deferred live market.

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