Schwieterman: Feeder cattle struggles continue

Corn                                                 Estimated Fund Position
Trends
Short Term: Up                              Net Long Futures and Options: 218846
Long Term: Up                               Change: +12000
Overnight Trade: Z -7 @7:30 AM

The corn has started the week under pressure due to better than expected rainfall in some locations and a cooler forecast. Crop condition ratings are still likely to decline in this afternoon’s report and although the forecast is cooler it also looks devoid of moisture for the week. Friday is the supply and demand report and I am looking for directionless trade going into that report. Look for two sided trading today.

Wheat                                              Estimated Fund Position
Trends
Short Term: Up                               Net Long Futures and Options: 13569
Long Term:Up                                 Change: +4000
Overnight Trade: Chicago: Z-4 KC: Z -5 @7:30 AM

The wheat held on pretty well overnight. I still don’t think the wheat will do anything but trade sideways until Friday’s report, but I think that Friday’s supply and demand numbers may serve as a wakeup call to complacent end users. I don’t think we can cut another 2 billion bushels off of corn production without drawing wheat ending stocks down to 400 million bushels or less. I’m looking for bullish numbers and a bullish reaction on Friday.

Soybeans                                        Estimated Fund Position
Trends
Short Term: Up                              Net Long Futures and Options: 199709
Long Term:Up                                Change: +5000
Overnight Trade: X -33 @7:30 AM

The recent rain and the cooler forecast are being viewed as helpful for soybean production, which made the bean market the downside leader overnight. There was a trend line support failure that doesn’t look good on the charts and the fact that there was never any attempt at follow through buying last week is bothersome. Traders are obviously waiting for more information on crop size before placing any more bullish bets. The overnight low should provide good support and dips still look like a buying opportunity.

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

Live cattle futures closed moderately lower on Friday, with the active October contract backing off nearly a Dollar for the week. The lower board activity came in the face of sharply higher cash. Basis levels are now more reasonable, with first notice for delivery on the August contract after today’s close. Asking prices in the cash market this week should rest around $120-$121 in the south and $190+ up north. August contracts are available, but might not be pulled as long as the basis remains weak.

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

Feeder cattle futures continued to struggle, losing 1.30 in the October contract for the week. December corn gained .14 for the week and should remain well supported into Friday’s supply/demand report. Overnight corn values are lower, on improved weather and spill over from the bean pit. We should see continued choppy trade in the feeders, as this market continues to carve out their seasonal bottom.

1. Corn market reacted poorly to the Crop Progress data
2. Packer margins jump higher, feeding margins bleak
3. New animal identification rules aid disease traceability
4. Oklahoma producers have access to new OQBN tool
5. Survey reveals most Americans in favor of COOL
6. Oil ends higher on weaker dollar, supplies weigh

1. Michigan hay buyers should plan purchases early
2. U.S. cattle placements rise in April as feed costs subside
3. Ag markets were mixed to start the new week
4. Corn planting pace turns from record slow to record fast
5. New animal identification rules aid disease traceability
6. Corn and soybean prices continue to retrace 2012 drought rally

1. Tyson selects panel to monitor animal welfare program
2. BeefTalk: How do we get the next generation to raise beef?
3. 2014 Farm Bill: Are we near an agreement?
4. Farm bill and immigration reform action needed
5. Boxed beef hits record highs, cattle weak to lower