Schwieterman: New buyers give live cattle futures a boost

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Corn                                                   Estimated Fund Position
Trends
Short Term: Up                                Net Long Futures and Options: 63299
Long Term: Up                                 Change: +6000
Overnight Trade: K -4 @7:30 AM


The May corn has traded against trend line resistance the past two sessions, but so far has not been able to push through. A close above the $7.34 area is now needed to keep the upward momentum of the market going. Export sales were poor at only 92,200 MT of old crop and 183,300 MT of new crop sales, which won’t help the market move higher. Sales at this level leave the potential for further cuts in the export estimate. A setback for a day or two is looking more and more likely.

Wheat                                               Estimated Fund Position
Trends
Short Term: Up                               Net Long Futures and Options: -57816
Long Term: Down                           Change: +4000
Overnight Trade: Chicago: K -7 KC: K -3 @7:30 AM


Wheat export sales were good at 484,500 MT of old crop and 88,800 MT of new crop sales. The momentum of the market has begun to turn higher and the trading funds still have a very large net short position, so there is potential for more short covering. In the short run the May KW should be able to reach $7.74 and possibly $7.90, but it will take more good demand news and some help from the corn to go any further than that.

Soybeans                                          Estimated Fund Position
Trends
Short Term: Down                           Net Long Futures and Options: 94210
Long Term: Down                            Change: +6000
Overnight Trade: K +7 @7:30 AM


Soybean export sales came in at 107,800 MT for the old crop and 234,000 MT for the new crop. The old crop number may seem low, but it is still double what we need each week. We probably can’t maintain that pace for the rest of the crop year without shortages somewhere or significant imports into the east coast. May beans are headed to $14.90.

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


Live cattle futures closed moderately to sharply higher on Wednesday, reversing early weakness and holding key support on the weekly continuation chart. Short covering ahead of Friday’s on feed report, as well as new buyers in deferred contracts supported the rally. Average estimates heading into the report suggest on feed of 93.5%, placements of 91% and marketed at 92.7%. The numbers look supportive for the August timeframe. Overnight trade is mostly firmer, with April leading the recovery.

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


Feeder cattle futures closed moderately lower on Wednesday, with weak cash trade and higher corn values overshadowing the recovery effort in the fat market. Corn is softer overnight, providing some relief for the deferred feeders, while the March struggles due to current cash issues. The placement number expected on Friday should provide some short covering on the deferred. We see a near term bottom trying to form in the futures, with cash market needing to be monitored closely for a change in country attitude.



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