Schwieterman: Record beef prices put a floor under cash prices

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Corn                                         Estimated Fund Position
Trends
Short Term:Down                Net Long Futures and Options: -23227
Long Term: Down                 Change: -5000
Overnight Trade: N -1 Z -1 @7:30 AM


We are working on another low volume session ahead of the supply and demand report. Export sales were not good with 115,800 MT of old crop and 169,900 MT of new crop sales. China was listed as a buyer of new crop corn, which is interesting, but not market moving information. The forecasts keep changing the size of the planting windows and the market seems to change with it. December corn made another new low for the move overnight, but by the end of the session, was back to unchanged. The charts still suggest lower prices, but the forecasts and tomorrow’s report will have the final say.

Wheat                                        Estimated Fund Position
Trends
Short Term: Down                   Net Long Futures and Options: -44393
Long Term:Up                           Change: -1000
Overnight Trade: Chicago: N -2 KC: N +1 @7:30 AM


The July KW held above $7.50 and managed to close above the 50-day moving average again yesterday, so it looks like the market has run out of downside momentum, unless we get some bearish information tomorrow. Export sales were poor at 239,200 MT of old crop and 226,300 MT of new crop sales, which won’t help matters, but the focus of the market is on the corn and tomorrow’s numbers not the mundane regular fundamental information like sales and crop conditions.

Soybeans                                   Estimated Fund Position
Trends
Short Term: Down                    Net Long Futures and Options: 45717
Long Term: Down                     Change: +5000
Overnight Trade: N +4 X -2 @7:30 AM


Old crop soybean sales were back to a positive number at 193,800 MT and new crop sales came in at 391,700 MT. Basis levels continue to rise, which means futures are still too low. If the May contract is too low to attract deliveries, then the July contract is way, way too low. Look for more bull spreading in the market with the July contract gaining on all the others.

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


Live cattle futures closed moderately to sharply lower on Wednesday, with October and December posting new contract lows and triple digit losses. Cash trade became more active, with moderate trade of $126 in the south and highs of $205 in the beef in Nebraska. Cutout values exploded higher in the choice cuts, with gains of 3.50 for the day. The all-time record high price for choice beef should help put a floor under cash prices. Open interest declined 2,430 contracts on the selloff. The fat market is finally becoming oversold enough to start looking for a bottom. We prefer to wait for a more positive technical indicator before lifting hedges.

Feeder Cattle
Trends
Short Term: Up
Long Term: Down
Opening Call: 10-30 Higher


Feeder cattle futures closed sharply lower on Wednesday, with triple digit losses in the front two trading months. May and September posted new contract lows, with other contracts nearly missing. The new lows come in the face of a .30 drop in old crop corn futures since Friday’s close. Overnight trade is trending a little higher, with corn prices modestly lower once again. Cash index levels and the May board are now neck and neck near 135.60.



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