Schwieterman: Higher corn puts feeder futures under pressure

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Corn                                         Estimated Fund Position
Trends – December Contract
Short Term: Up                      Net Long Futures and Options: -127591
Long Term: Up                       Change: +30000
Overnight Trade: Z -2 @7:30 AM


So far the corn hasn’t seen any follow through buying after yesterday big move higher. The December corn closed above $5.00 and above the 50-day moving average, both of which are bullish from a technical standpoint. Crop condition ratings declined 2 points to 59% Good to Excellent, which wasn’t as bad as expected, but it is below the 5-year average. The forecasts are still warm, which is supportive and for the moment we have to look for a move up to the $5.25 area.

Wheat                                     Estimated Fund Position
Trends – December Contract
Short Term: Up                     Net Long Futures and Options: -69977
Long Term: Down                 Change: +7000
Overnight Trade: Chicago: Z Unch KC: Z +3 @7:30 AM


The December KW is trying to move through trend line resistance thanks to the strength in the corn. The market is far from overbought and thanks to the solid demand numbers we have seen the wheat has a chance to continue this rally. In the short run the $7.35 area is a good upside target.

Soybeans                               Estimated Fund Position
Trends – November Contract
Short Term: Up                     Net Long Futures and Options: 95529
Long Term:Up                       Change: +25000
Overnight Trade: X -4 @7:30 AM


The September and November soybeans touched limit higher yesterday, which gives us a very high statistical chance of seeing new highs in the soybeans this week. Crop condition ratings were down 4 points to 58% Good to Excellent, which is below the 5-year average and lower than 4 of the previous 5 years, which is hurting traders’ confidence in a big yield this year. Forecasts for dry weather through September would be very supportive.

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


Live Cattle futures closed moderately to sharply higher on Monday, with support stemming from Friday’s lower than expected placement number. Deferred contracts were the daily leaders, with April gaining 1.10 on the day. August was the weak month on Monday and again in overnight trade, with losses so far of .40, while deferred contracts are narrowly mixed. The packer is either struggling to move product or has very little inventory, as they slowed chain speeds to 115.000 on Monday. Open interest did climb 1,444 contracts on Monday’s rally.

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


Feeder cattle futures started their week under pressure from the sharply higher corn market on Monday. The Sept. thru March contracts all posted more than 200 point losses for the day, with October down the 300 point limit. Overnight corn activity has been modestly lower for the most part, allowing for a moderate rebound in the feeders. Cash index levels fell below all five days last week on Monday and should be monitored closely over the next few days for direction. With corn now above the 50 day moving averages we need to take a more protective approach in the feeders.



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