Schwieterman: Feeder cattle futures end loss streak with gains

Corn                                          Estimated Fund Position
Trends
Short Term: Up                      Net Long Futures and Options: 67299
Long Term: Up                       Change: +4000
Overnight Trade: K -4 @7:30 AM

Late strength yesterday pushed the May corn through trend line resistance, but there was no follow through buying overnight. So far the market is stuck between the trend line and the 200-day moving average. We have seen some basis levels decline, which takes the luster off the front months of the market, and the market is definitely due for some corrective activity, but consistent losses are not likely until after we get the stocks and acreage report out of the way next week. If we do get a correction $7.15 - $7.25 will be good support in the May contract.

Wheat                                      Estimated Fund Position
Trends
Short Term: Up                       Net Long Futures and Options: -59816
Long Term: Down                  Change: -2000
Overnight Trade: Chicago: K -3 KC: K -2 @7:30 AM

I am still looking for the May KW to reach the $7.74 area, but the market seems to have run out of upward momentum this week. Chances for rain in the HRW Belt are weighing on the market, especially since the corn isn’t moving higher. There is a good chance that we see the May KW move back to $7.50 today.

Soybeans                                   Estimated Fund Position
Trends
Short Term: Down                   Net Long Futures and Options: 111210
Long Term:Up                           Change: +7000
Overnight Trade: K -6 @7:30 AM

The May soybeans made it back above the 50-day moving average yesterday, which is encouraging, at it is very likely that we see the market move up towards $14.90. The market will be very sensitive to export sales news since we are so close to reaching the current estimate and still have more than 5 months left in the crop year. Buy breaks.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: 20-30 Lower

Live cattle futures closed modestly higher on Thursday but some .60 off of the daily highs. Today is cattle on feed report day, which could allow for some additional short covering as the day goes on. Equity markets are higher and the Dollar is lower. The surprises in this report could come with placements and or marketing coming in higher than expected. The market still doesn’t feel like the bears are ready to relinquish control of price direction. Weather remains a negative factor, with the start of grilling season on hold for a majority of the country.

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

Feeder cattle futures posted gains for the first time in 6 days on Thursday. We had thought short covering ahead of the on feed report made sense but open interest was up 143 contracts for the day. Overnight activity has returned to the sell side, even though the corn futures are backing off 3-4 cents. Another solid day higher on good volume is needed for us to get excited about a sustained recovery effort. The report should be supportive.

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