Schwieterman: Rising corn values to keep a lid on feeder futures

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Corn                                              Estimated Fund Position
Trends
Short Term: Up                           Net Long Futures and Options: 42417
Long Term: Up                            Change: +8000
Overnight Trade: N +6 Z +5 @7:30 AM


The corn posted solid gains overnight and the July corn is back to testing the critical resistance at the $6.69 area. Meanwhile the December contract is testing the March high of $5.73 ¾. The bull spreaders still haven’t been able to completely reassert themselves due to concerns about planting delays and acreage loss, but in the meantime basis levels are still very strong, which should prevent much further bear spreading. A close over $6.70 in the July contract should allow the market to move to $7.00.

Wheat                                          Estimated Fund Position
Trends
Short Term: Up                          Net Long Futures and Options: -57889
Long Term: Down                     Change: +3000
Overnight Trade: Chicago: N +6 KC: N +3 @7:30 AM


The July KW traded sideways through trend line resistance Friday and above the 50-day moving average overnight. The charts still don’t look terribly bullish, but if the corn can move higher it will drag the wheat with it to an extent. Harvest is upon us and for the most part it won’t be good, but it still seems like we deal with a certain amount of “harvest pressure” even in short crop years. The July KW has a reasonable shot at a run to $7.75, but right now I’m not looking for more than that.

Soybeans                                    Estimated Fund Position
Trends
Short Term: Up                          Net Long Futures and Options: 82531
Long Term:Up                            Change: +5000
Overnight Trade: N +24 X +22 @7:30 AM


July soybeans are making a run for the recent highs and the November beans made another new high for the move overnight even though we have a great deal of talk about expanding soybean acreage. I would look for the bull spreading to come back to the market. I am very suspicious of the November contract falling apart in the near future. At some point we will be talking about rain makes grain again and the market will be back at $12.00.

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


Live cattle futures closed sharply higher on Friday, solidifying very strong basis levels after seeing cash trade steady for the week in most regions. For the week June live cattle gained .65, which closed the gap on cash by a like amount. Open interest climbed slightly on the rally, suggesting new buyers joining the fray, while hedgers liquidate their short positions following cash sales. The continued strength of the new crop corn market should underpin deferred live cattle contracts. Show lists could be larger, based on limited packer volume on Friday.

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


Feeder cattle futures posted modest spill over gains on Friday, but were unable to post weekly gains in the August contract. Overnight corn values are on the rise, which could keep a lid on feeder futures on todays’ open. Outside market influences appear more supportive to start the week, which may allow for feeders to work into the higher end of their recent narrow range. Pasture conditions could show some modest improvement in this afternoon’s report.



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