Schwieterman: Corn prices on the defensive, feeder futures lower

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Corn                                                       Estimated Fund Position
Trends – December Contract
Short Term:Down                               Net Long Futures and Options: -151916
Long Term: Down                               Change: -5000
Overnight Trade: Z +1 @7:30 AM


The corn market is getting oversold and the downward pressure is slowing. However the basis collapse that we have seen in the soybeans is starting in the corn, which does not bode well for the September contract. It is still at a 17cent premium to the December and it may very well lose all of that at some point. There were areas of heavy rain across Iowa which will also weigh on the market today and the forecasts are still non-threatening. It is hard to make a case for a bounce, but if we get one it should be sold.

Wheat                                                    Estimated Fund Position
Trends – September Contract
Short Term: Down                               Net Long Futures and Options: -76402
Long Term: Down                                Change: -2000
Overnight Trade: Chicago: U +6 KC: U +5 @7:30 AM


There were also some good rains in Kansas overnight, which could begin to weigh on the July of 2014 contract. It is still very dry in many areas of the HRW Belt, but it seems that we are seeing improvement in many areas. In September contract the critical overhead resistance is now at the $7.01 - $7.02 area. A close above that will encourage short covering and maybe even some speculative buying. Solid export demand can keep this market from being a feed grain.

Soybeans                                                 Estimated Fund Position
Trends – August Contract
Short Term: Down                                 Net Long Futures and Options: 57190
Long Term: Down                                  Change: -10000
Overnight Trade: X +3 @7:30 AM


The soybeans made a nice rebound from the overnight lows. At this point it looks like nothing more than a short covering bounce and it is probably a selling opportunity in the November contract. The market is oversold and a correction is possible, but I don’t have much confidence in that market being able to climb over the $12.40 level at this time. Sell rallies.

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


Live cattle futures recovered from lower early trade to close narrowly mixed on Thursday. A rise in cutout values on moderate demand was enough to offset steady cash trade in the south. Northern trade remains relatively untested, with asking prices and bids still $3-$5 apart into weeks’ end. With just over a week before first notice day on the August contract, futures remain nearly a 3.00 premium to the recent cash trade. Overnight has been mostly firm, with a test of the 122.00 level in the August coming up just short.

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


Feeder cattle futures closed moderately lower on Thursday, with the large premium to cash being the main culprit. Corn prices were on the defensive once again and fats managed to work their way back to unchanged. Cash index levels were up modestly but the market is just carrying too much premium. Overnight corn values have posted modest gains, which may allow for additional pressure on the feeders.



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