Schwieterman: Reactions to WASDE could move cattle market

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

Corn ending stocks were left unchanged at 801 million. This is exactly what happened last year. Lower than expected stocks followed by no changes in the April supply and demand report. Many traders will be disappointed by this since expectations were for an estimate closer to 700 million than 800. An initial break to the downside should be expected, then traders should go back to trading the fundamentals that matter, which is strong basis and strong demand.

Wheat                                        Estimated Fund Position
Trends
Short Term: Up                         Net Long Futures and Options: -81603
Long Term: Down                    Change: -2000
Overnight Trade: Chicago: N +4 1/2 KC: N +3 1/4
Opening Calls: 3-5 Higher

Wheat ending stocks were cut to 793 million due to an increase in feed usage. We still have plenty of wheat on hand, but it is nice that USDA finally recognized the increase in wheat feeding. With stocks still near 800 million there isn’t a lot of reason to see the wheat move higher, but perhaps this report will slow the descent.

Soybeans                                     Estimated Fund Position
Trends
Short Term: Up                           Net Long Futures and Options: 202708
Long Term: Up                            Change: +5000
Overnight Trade: N +10 X +10 1/2
Opening Calls: 10-15 Higher

US soybean ending stocks were cut to 250 million bushels due to increases in both crush and exports. USDA is probably still under estimating exports, but this is typical of USDA and how they make slow incremental changes. 250 million bushels is still a lot of old crop soybeans, but the fear is that the old crop estimate will continue to shrink and the new crop will be extremely tight. Buy breaks and keep looking for the July contract to reach $14.70.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: 10-30 Higher

Live cattle futures got the week off to a more positive start, with the lead April contract posting triple digit gains, while June and August settled modestly lower. The bull spreading in the market could be a positive sign for a sagging cash market. Asking prices are $124+ in the south and $195+ in the north as the week begins. Overnight trade remains positive, with the front four months trading .15-.30 higher. Reactions from this morning monthly grain supply/demand report could move the market.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: 20-40 Higher

Feeder cattle closed very mixed on Monday, with April off .57 into the close and the next two months slightly higher. Sharp losses in old crop corn heading into the grain report this morning supported deferred feeders. Technical indicators remain oversold, while we are seeing some positive divergences in the stochastics. The grain report is likely the key to today’s trading in the feeders.

1. UK beef study: Birth/weaning weight
2. Early preparation key to a good calving season
3. Oil gains moderately, trading sluggish ahead of Fed
4. House cafeterias to discontinue "Meatless Mondays"
5. Crude oil expected to peak and cost of electricity to go down
6. Ag markets mixed again Tuesday

1. 3,000 pounds of copper wire stolen from Oklahoma ranch
2. Will Smith dethroned in latest Peterson Farm Bros. parody
3. Changes in U.S.-Mexican cattle and beef trade
4. Experts weigh in on lowest beef supply in 60 years
5. Peterson Brothers: What summer vacation?
6. Pasture and range conditions improve

1. COOL isn’t working
2. NIAA releases white paper on FMD preparedness
3. Feedyard margins a train wreck, packers cozy
4. Finding the comedy in ag-gag
5. Vilsack: A bill to grow local, regional markets
6. Expert offers tips to reduce hay-drying time