Schwieterman: Look for seasonal support moving into May

Corn                                           Estimated Fund Position
Trends
Short Term: Up                       Net Long Futures and Options: 64652
Long Term: Down                  Change: +21000
Overnight Trade: N +1 1/2 Z -1 1/4
Opening Calls: Mixed

The May-July corn spread traded to a record level Friday and basis levels were generally stronger as well, which tells us that end users are trying very hard to secure supplies of corn. It will be interesting to see if there are any forced deliveries. Look for the July contract to move to the upper end of the multi-month trading range, which is at the $6.60 area.

Wheat                                        Estimated Fund Position
Trends
Short Term: Up                        Net Long Futures and Options: -80066
Long Term: Down                   Change: +5000
Overnight Trade: Chicago: N -7 1/2 KC: N -7 3/4
Opening Calls: 6-10 Lower

May Kansas City wheat fell below May corn for the first time since 1977. In case you didn’t know it already, wheat is a feed grain. Don’t be surprised to see the same thing happen to the July KW – July corn and December KW – December corn spreads at some point. The wheat has a chance to move higher if the corn moves higher, but there is very little reason for any independent strength. Sell calls.

Soybeans                                  Estimated Fund Position
Trends
Short Term: Up                        Net Long Futures and Options: 231474
Long Term: Up                         Change: +7000
Overnight Trade: N -6 3/4 X -4 1/4
Opening Calls: 5-7 Lower

The July soybeans traded above, but did not close above $15.00. Demand is strong and S. American production estimates are shrinking. It is hard to get more bullish than that. Ideas are that old crop ending stocks are closer to 150 million than 250 million and prices will continue to rise until those ideas change. Buy breaks when we get them.

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

Live cattle futures closed higher across the board on Friday, correcting a minor percentage of the weekly losses. Overall June live gave up 2.60 for the week, with cash backing off a similar amount. Packers could rely heavily on May contracted cattle to fill the weeks’ kill needs, considering the low volume of cash traded last week and the increase in weekly kill. Outside market influences appear a little soft to start the week.

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

Feeder cattle futures firmed on Friday in spite of the sharply higher old crop corn prices. Even with those gains, May feeders were off nearly 3.00 for the week. Chart patterns are showing some divergence, which could allow for additional rebound in this market. Overnight corn prices are mixed, with old crop firmer and new crop softer. Look for seasonal support to enter into the market as we move into May.

1. U.S. May consumer sentiment highest in nearly 6 years
2. Cattle producers turn to MSU for reproduction class
3. NCBA Op-Ed: EPA’s data sharing incident a debacle
4. Cow-calf corner: Review calving season and make improvements
5. Feeder cattle review: Feed report neutral to slightly bearish
6. Cattle Outlook: Retail choice beef up 9% over past 2 years

1. New school lunch beef recipes win approval from kids, foodservice
2. Drier weather to give big boost to U.S. corn plantings
3. Prices for corn and soybeans, five years from now
4. Agriculture is expected to remain strong in the coming decade
5. What sick day? Farmers take just three a year
6. Senate Agriculture Committee completes Farm Bill markup

1. Insects. They’re what’s for dinner!
2. World food supply depends on character, virtuous leadership
3. Commentary: Slanting the statistics
4. Tyson selects panel to monitor animal welfare program
5. Cold spring stunts upper Midwest hay crop
6. Buffet concerned about soil and starvation