Schwieterman: Cattle futures, cash trade bad and worse

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Corn                                        Estimated Fund Position
Trends
Short Term:Down                Net Long Futures and Options: -2713
Long Term: Up                      Change: +4000
Overnight Trade: N-2 Z -6 @7:30 AM

The bull spreaders were in control of the corn market overnight. The July corn didn’t build on Friday’s gains, but did hold together while the December contract gapped lower and appears to be headed to the $5.11 area. We have option expiration this week, which will cause some volatility, but overall the July contract should maintain an upward bias since the basis levels are not backing off and we are nearing the delivery period. Meanwhile, the forecasts for the Corn Belt are basically non-threatening, which will keep pressure on the new crop. This afternoon’s condition ratings will play a key role in Tuesday’s trade. Plan on some improvement in the crop ratings.

Wheat                                      Estimated Fund Position
Trends
Short Term: Down                 Net Long Futures and Options: -52031
Long Term: Down                  Change: -2000
Overnight Trade: Chicago: N -5 KC: N -1 @7:30 AM


The July KW made another new low for the move falling to $7.06. The $7.00 area is the next psychological support area and we will see a test of that level at some point this week. If the December corn keeps heading lower the wheat will go with it. Unless we see some very large export sales, we don’t have much to support the market at the moment.

Soybeans                                 Estimated Fund Position
Trends
Short Term: Down                  Net Long Futures and Options: 106571
Long Term:Up                          Change: +2000
Overnight Trade: N -14 X -15 @7:30 AM


The soybeans were active with a large trading range overnight. There was a little bit of bull spreading, which I think would be more active if it weren’t for the fact that the July chart looks rather toppy. If we see technical buy signals in the July contract the bull spreading will be very active. Soybean planting is close to over, which will pressure the market in general, but the tight supplies will be in the back of every traders mind.

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


Live cattle futures closed moderately to sharply lower on Friday, dropping the August contract to losses of 1.00 for the week. Cash trade ended up faring even worse, with southern trade finally taking shape at $120 late on Friday. That is the second straight 2.00 drop in weekly cash prices. We will be compiling show list numbers this morning, with carryover numbers expected to be rising. The approaching long 4th of July weekend should inspire good meat movement, with many folks looking at a 4-5 day getaway. A test of contract lows to start the week looks likely.

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


Feeder cattle futures posted triple digit losses across the board on Friday, with the lead August contract losing more than 2.00 for the day. For the week feeders were flat, with strength from lower corn offset by lower fat prices. Overnight corn values are continuing to trend lower, which could provide some needed support for the feeders. We expect struggles to continue until some turnaround can be established in the live cattle market. The cash index continues to edge higher but remains more than 750 point discount to the August futures.



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