Schwieterman: Fast planting pace, forecasted rain limits crops

Corn                                              Estimated Fund Position
Trends
Short Term: Down                     Net Long Futures and Options: 127343
Long Term: Down                      Change: +6000
Overnight Trade: N +1/2 Z -3/4
Opening Calls: Mixed

The July corn is still holding above the 62% retracement of the last move up and looks set for another day of consolidation trade. There is more talk of Chinese corn purchases and the basis at the Gulf continues to improve, which should keep the old crop corn supported. A fast planting pace and expected rain is keeping the new crop from moving higher. Plan on two sided trade and bull spreading today.

Wheat                                            Estimated Fund Position
Trends
Short Term: Down                       Net Long Futures and Options: -83986
Long Term: Down                        Change: +3000
Overnight Trade: Chicago: N +1/4 KC: N -1 1/2
Opening Calls: Mixed

The wheat showed some signs of life yesterday, but don’t plan on it lasting long. The market is oversold and due for a bounce, but otherwise this market is faced with good production potential and demand that won’t be good enough to keep stocks from building. The wheat has to see strength in the corn to keep wheat in the feed mix and to keep the market supported.

Soybeans                                       Estimated Fund Position
Trends
Short Term: Up                              Net Long Futures and Options: 208437
Long Term: Up                               Change: +6000
Overnight Trade: N +1 1/2 X -3/4
Opening Calls: Mixed

The July soybeans have gone a couple of days without making a new high for the move, so the market is probably due to make one today. Chinese demand is strong and we still have concern about new crop stocks. It will be hard to hold this market back when USDA is probably overstating old crop stocks and new crop will end up at pipeline levels. Buy breaks when we get them.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: 20-40 Lower

Live cattle futures closed sharply higher on Thursday, with April posting near limit gains. Cash traded as high as $124 in the north, with many cattle scheduled for immediate pickup. Packers appear to be short bought, with fewer captive supplies available for the next two weeks. Overnight trade is trending lower, with equities lower and the Dollar stronger. We look for pullbacks to be well supported, with weights falling rapidly and show lists remaining historically tight.

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

Feeder cattle futures were led higher on Thursday by the limit move in August futures. Cash index levels actually dropped on the day, but should trend higher in coming days. Expectations of a very low placement number for March in next weeks’ report, along with concerns that yearlings will remain tight over the next several months are fueling the fresh short covering and new long speculation. Overnight trade is narrowly mixed, with corn slightly higher in old crop contracts.

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