Schwieterman: Stronger dollar raises concerns over beef exports

Corn                                          Estimated Fund Position
Trends
Short Term: Up                       Net Long Futures and Options: 56879
Long Term: Down                   Change: +7000
Overnight Trade: N -3 1/2 Z -2 3/4
Opening Calls: 2-4 Lower

The July corn gave up most of yesterday’s gains by the close and saw some follow through selling overnight. Two sided trade is likely today as traders prepare for tomorrow’s supply and demand report. A move down to $6.15 in the July contract wouldn’t be a surprise, but neither would a retest of yesterday’s high. We are basically waiting to find out if USDA will tighten the old crop stocks and if the new crop numbers will be as bearish as expected. At this point it might be difficult to get a negative reaction out of the new crop contracts.

Wheat                                         Estimated Fund Position
Trends
Short Term: Down                    Net Long Futures and Options: -71379
Long Term: Down                     Change: +1500
Overnight Trade: Chicago: N -4 KC: N -4 1/4
Opening Calls: 3-5 Lower

The charts still suggest a rally in the wheat is possible, but it is hard to come up with a bullish fundamental scenario with harvest rapidly approaching. What the wheat needs more than anything tomorrow is to see tight old crop corn stocks, which would encourage more wheat feeding. Expect two sided trade with a weaker bias.

Soybeans                                      Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: 202822
Long Term: Up                             Change: -9000
Overnight Trade: N -14 3/4 X -12 1/2
Opening Calls: 10-15 Lower

There was more profit taking in the soybeans overnight. The 38% retracement of the entire move up from the December low on the July chart comes in at $13.65. A bearish report tomorrow would take the market to that level quickly. The news is still generally friendly due to the strong demand from China, but the funds seem to want out ahead of tomorrow’s report.

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

Live cattle futures closed moderately lower on Tuesday, with Monday’s lows holding and the market settling in the middle of the day’s trading range. Cutouts were sharply higher on Tuesday, which should reestablish packer margins from a week ago. Strength in the US Dollar over the past several days and again last night will prompt concerns over beef exports. Weak equities are also weighing on market strength.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 10-30 Lower

Feeder cattle futures closed moderately to sharply lower on Tuesday, with the lead May contract off 1.40 for the day. The large premium to cash in the May, along with the lackluster gains in the cash to start the week caught up with the market. The slight build in open interest in the feeders indicates new sellers willing to enter the market. Overnight trade is trending slightly higher, with weakness in the grains supporting.

1. Feeder cattle review: Feed report neutral to slightly bearish
2. Cattle Outlook: Retail choice beef up 9% over past 2 years
3. United States Cattle on Feed down 3 percent
4. Family contribution takes reward for cattle shooting over $16k
5. Nebraska Cattle on Feed down 3 percent
6. Oklahoma Cattle on Feed unchanged

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

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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