Schwieterman: Feeder, live cattle futures end week modestly lower

Corn                                             Estimated Fund Position
Trends
Short Term: Up                          Net Long Futures and Options: 178167
Long Term: Up                           Change: +3000
Overnight Trade: N -1/4 Z +3/4
Opening Calls: Mixed

Tomorrow is the April supply and demand report. Expectations are for a cut in the ending stocks estimate due to the lower than expected quarterly stocks. It is logical to expect that, but don’t plan on it. Last year under similar circumstances ending stocks were left unchanged in the April supply and demand report. It looks like we will have one more day of consolidation and then traders will react to whatever the report says. Plan on choppy trade today.

Wheat                                             Estimated Fund Position
Trends
Short Term: Up                              Net Long Futures and Options: -81603
Long Term: Down                         Change: -2000
Overnight Trade: Chicago: N +1 1/2 KC: N +3/4
Opening Calls: 1-2 Higher

The wheat has clearly been the weak link. Today may provide some relief from the selling pressure as traders take profits ahead of tomorrow’s report. However, it will take friendly corn and soybean numbers tomorrow to avoid a move down to the March low. Look for an improvement in the crop condition ratings this afternoon.

Soybeans                                             Estimated Fund Position
Trends
Short Term: Up                                   Net Long Futures and Options: 202708
Long Term: Up                                    Change: +5000
Overnight Trade: N +1/4 X +2 1/2
Opening Calls: 1-3 Higher

The soybeans made a new high for the move briefly overnight. The market failed to hold gains, but it won’t be surprising to see the market move back to the highs during the day session. Traders expect to see cuts in S. American production and in US ending stocks. One should still expect to see the July contract eventually reach $14.70.

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

Live cattle futures finished the week with modest losses of .50 in the active June contract. By contrast, cash trade was markedly lower for the week. The board remains a solid discount to cash heading into the delivery process this evening. Deliveries are not to be expected with the large discount, which may provide support for the lead April contract. Outside influences are mixed this morning, with some pressure possible from a disappointing jobs payroll number released on Friday.

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

Feeder cattle futures posted only modest losses for the week, with the May contract off .65 for the four days. Technical indicators are extremely oversold, which could give way to a decent recovery in the first half of the week. Strength in the deferred fat market or weakness in the corn market seems important for any significant rally effort in feeders. Open interest has been rising on the weaker trade, showing heavy hedges in the market.

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