Schwieterman: Feeder cattle futures close on triple digit losses

Corn                                                 Estimated Fund Position
Trends
Short Term: Down                        Net Long Futures and Options: 89457
Long Term: Down                         Change: -19000
Overnight Trade: N +12 1/4 Z +10 1/4
Opening Calls: 10-15 Higher

The corn jumped higher overnight due to more rumors of Chinese corn purchases. These rumors hadn’t helped the market much this week, but it looks like this round of rumors at least created a short covering bounce. The July corn did manage to take out yesterday’s high and the December contract looks pretty friendly right now. Just judging by the charts, the December contract looks like it could move back to $5.75 despite all the negativity in the market place. Export sales were poor at 300,400 MT of old crop sales, which could temper the overnight enthusiasm.

Wheat                                             Estimated Fund Position
Trends
Short Term: Down                        Net Long Futures and Options: -92985
Long Term: Down                         Change: -1000
Overnight Trade: Chicago: N +9 1/4 KC: N +10 1/2
Opening Calls: 10-12 Higher

Wheat export sales were adequate at 365,900 MT of old crop at 76,300 MT of new crop sales, but won’t provide any extra incentive to buy wheat. The strength in the corn supported with wheat overnight and the wheat will defer to the corn for price direction today. This market is overdue for a bounce, but any strength is a sales opportunity.

Soybeans                                          Estimated Fund Position
Trends
Short Term: Down                           Net Long Futures and Options: 199692
Long Term: Up                                  Change: -6000
Overnight Trade: N +15 1/2 X +13 1/4
Opening Calls: 10-15 Higher

Yesterday’s outside day down in the soybeans looks negative on the charts, so the bulls will need to see a strong move higher today in order to avoid a deeper correction. Export sales were very good with old crop beans at 374,300 MT, new crop at 845,000 MT, meal at 300,000 MT and bean oil at 22,900 MT. Strong demand and shrinking S. American production estimates are bullish. If corn can hold gains it should be a big day in the soybeans.

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

Live cattle traded sharply lower on Wednesday, with the June contract posting its’ second lowest close since early June of 2011. The selloff did serve short bought packers by shaking loose active cash trade in the south at steady money from a week ago. The $122 trade in Kansas and $123 in western Nebraska should be enough to get plants into the middle of next week. Eastern Nebraska is holding out for beef bids of $198 or better. Cutouts continue to scream higher, with weekly totals now over 8.00 higher on choice for the three days.

Feeder Cattle
Trends
Short Term: Up
Long Term: Down
Opening Call: 10-20 Higher

Feeder cattle futures closed with triple digit losses in active trade on Wednesday. The correction comes on the tail of nearly 7.00 rise futures price over the past ten days. Overnight activity is trending higher once again, as traders anticipate friendly numbers from Friday’s on feed report. Cash index levels remain on the rise, with several feedlots telling us than replacements are getting tougher to come by.

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