Schwieterman: Lower corn pushes feeder cattle futures higher

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Corn                                                Estimated Fund Position
Trends
Short Term:Down                        Net Long Futures and Options: 68047
Long Term: Down                        Change: -35000
Overnight Trade: K +6 Z +3 @7:30 AM


The corn made a slight bounce at the close yesterday and saw some follow through buying overnight, but not enough to even dent the recent losses. Basis levels were mixed around the country, which doesn’t give a clear picture of what is going on in the cash market, so look at the spread trade to determine if this market is ready to bottom or not. One would suspect we will at least see a retest of yesterday’s low at some point this week. Next on the agenda will be to decide whether or not USDA will make any adjustments to the supply and demand tables  that come out next Wednesday based on the stocks report. Last year they didn’t and if that is the case again, that would provide the catalyst the market needs to move back towards $7.00 and fill the open chart gap.

Wheat                                             Estimated Fund Position
Trends
Short Term: Down                        Net Long Futures and Options: -66380
Long Term: Down                         Change: -9000
Overnight Trade: Chicago: K +9 KC: K +7 @7:30 AM


As expected, crop condition ratings are still terrible with KS at 31% Good to Excellent and the US as a whole at 34% Good to Excellent. Expectations are that condition ratings will improve next Monday and if they do the pressure will stay on the wheat unless something miraculous happens in the corn market. At the moment we have to consider the possibility of the July KW moving down to $7.00.

Soybeans                                        Estimated Fund Position
Trends
Short Term: Down                         Net Long Futures and Options: 69993
Long Term: Down                          Change: -6000
Overnight Trade: K +11 X+6 @7:30 AM


The beans were firm overnight and the November contract has taken out yesterday’s high. There is a very good chance that we see some fresh demand out of China this week that will serve to send the old crop beans back to the top of the range. Regardless of the stocks report numbers USDA will have to increase the export estimate in next week’s report and the lower than expected acreage estimate will keep the new crop supported.

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


Live cattle futures closed moderately lower in the front five contract months on Monday. Open interest declined by 914 contracts, suggesting profit taking after last weeks’ windfall gains. Overnight activity is firming, with .20-.25 gains in the lead months. Texas show lists were larger, with Nebraska smaller and our list in western Kansas near steady with a week ago. Asking prices in the south appear firmly set, at $130+, while northern cattle are priced near $206 in the beef. Outside markets are supportive, with higher equities and a flat Dollar.

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


Feeder cattle futures posted sharply higher closes again on Monday, with most active contracts more than 200 points higher. Another 50 cent drop in corn values remained the catalyst for the feeder rally. In two days we’ve seen more than 90 cent drop in old crop corn price, which has equated to more than 5.00 gains in feeder futures. The cash index has gained 4.60 since its lows posted less than a week ago. Overnight corn values have rebounded 6-7 cents, which has traders taking some limited coverage in the feeders. Futures remain a full 6-7 dollars per hundred weight above the recent cash index.



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