Schwieterman: Crop conditions expected to decline

Corn                                               Estimated Fund Position
Trends
Short Term:Down                       Net Long Futures and Options: -1422
Long Term: Down                       Change: -8000
Overnight Trade: N +13 1/4 Z +11 @7:15 AM
Opening Calls: 10-15 Higher

Crop condition ratings are expected to decline in this afternoon’s report and forecasts for the week are not favorable, which means we should expect lower ratings next week as well. Friday’s wild action will make traders nervous about chasing rallies, but it will be reasonable to expect a strong close today unless the forecast makes a major change at mid-day or the Euro falls apart. Plan on another day of sideways trade.

Wheat                                             Estimated Fund Position
Trends
Short Term: Down                        Net Long Futures and Options: -45499
Long Term: Down                         Change: -8000
Overnight Trade: Chicago: N +11 KC: N +12 1/4 @7:15 AM
Opening Calls: 10-15 Higher

Wheat futures are making a strong rebound, but haven’t given an indication of a bottom. Indicators are oversold and yield reports aren’t bearish, but we will have to see some stability in the financial markets in order to hold gains. Friday’s low of $6.37 ¾ is critical support today. That is right between the 75 and 78% retracements and failure there will point to a move down to $6.09.

Soybeans                                        Estimated Fund Position
Trends
Short Term: Down                         Net Long Futures and Options: 160432
Long Term: Down                          Change: +4000
Overnight Trade: N +7 1/4 X +12 @7:15 AM
Opening Calls: 10-15 Higher

The July soybeans bounced off the 50% retracement of the entire move up Friday and are seeing follow through buying this morning. The market still hasn’t done anything to break out of the downward trading channel or confirm a bottom. The bulls will need to see a close above $13.80 this week in the July contract to get that done.

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

Live cattle futures closed moderately lower on Friday and narrowly mixed for the week. Cash trade should support the June into the delivery period, with the lead contract $4-$5 discount to week ago cash. Outside market look mildly supportive to start the day. We expect to see June gain on deferred contracts over the near term. Weather appears to be good for grilling over a majority of the country.

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

Feeder cattle futures closed the week with losses of 1.20 in the lead August contract. Those losses, with corn off .24 during the same period, look a little shaky. We should see support starting to take hold as the futures and cash market have come much closer together. Overnight corn prices are posting double digit gains, behind rumors of continued Chinese demand. Export demand continues to be a friend in the beef market as well.

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