Schwieterman: Feeder cattle market waits for direction from corn

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Corn                                 Estimated Fund Position
Trends – December Contract
Short Term:Down            Net Long Futures and Options: -140420
Long Term: Down            Change: +6000
Overnight Trade: Z -2 @7:30 AM


The corn was weaker overnight despite the expectations for another decline in crop condition ratings. Early yield reports are good, so for the moment at least, that is enough to offset concerns about possibly poor yields in places like Iowa and a cut in the acreage estimate at some point in the future. We do have the September supply and demand report this week which will answer some of our questions about production, but the September report will mostly serve as a teaser for what we will get in the October report. Plan on the December corn staying between $4.50 and $5.00 until the report and then we will see what the numbers say.

Wheat                              Estimated Fund Position
Trends – December Contract
Short Term: Down           Net Long Futures and Options: -76491
Long Term: Down            Change: +2500
Overnight Trade: Chicago: Z -4 KC: Z -3 @7:30 AM


The December KW has been trading sideways/lower for months and there doesn’t seem to be any indication of that changing. There is some rain in the forecast for the HRW Belt this week, which could weigh on the July 14 contract, but the rain hasn’t hit the ground yet. Old crop export sales remain strong, but it seems that traders would like the corn market to move consistently in one direction or  the other before they try to make a push in the wheat. Plan on more of the status quo in the wheat market.

Soybeans                         Estimated Fund Position
Trends – November Contract
Short Term: Up                Net Long Futures and Options: 121340
Long Term:Up                  Change: +3500
Overnight Trade: X +4 @7:30 AM


Soybeans were firmer overnight, but the market did give up most of the gains by the time the session ended. Weather is still a concern for the soybeans and one must plan on a great deal of volatility over the next couple of weeks and direction will depend on the weather and the yield estimates from USDA. Crop condition ratings are going to decline again today and if the ratings are any indication of final yield then we should probably plan on higher soybean prices in the future.

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


Live cattle futures closed mixed on Friday, with October recovering .45, while deferred contracts were steady to .10 lower. Cash trade in the south held steady for the week, while northern trade was mostly $2.00 lower in the beef. We expect numbers to remain adequate but not burdensome over the next few weeks. Export demand has picked up over the past few weeks, which should offset some of the limited domestic business. Today will be spent collecting show list data and seeing how the beef market starts the week.

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


Feeder cattle futures closed week on a negative note, with moderate to sharp losses on Friday. For the week the October futures were off right at 1.00. We expect the market to remain fairly stagnant over the next few weeks, unless we see a major move in the corn market. Corn is trading a couple cents lower in overnight trade, with volume of trade light so far. Our short term indicators have just turned lower in the front month feeders.



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