Schwieterman: Weak dollar supports commodities this morning

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Corn                                                Estimated Fund Position
Trends
Short Term:Down                       Net Long Futures and Options: -18227
Long Term: Down                       Change: -4000
Overnight Trade: N -2 Z -4 @7:30 AM


The corn finished yesterday’s session well off the daily lows, but failed so see any follow though strength overnight. The bull spreads are still working and should continue to do so. With the supply and demand report coming out on Friday traders may be hesitant to chase the market in either direction, so we could be in for two session of consolidation trade. The forecasts will play a role in the market direction, especially after the report comes out, and for now the forecasts suggest planting will get back on track.

Wheat                                           Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: -43393
Long Term:Up                              Change: +2000
Overnight Trade: Chicago: N -1 KC: N -2 @7:30 AM


The July KW managed to stay above the 40 and 50-day moving averages, at least on a closing basis, which should give traders some hope of a turn around. The bears fear a low production number from Friday’s report, which would keep stocks levels from ballooning and take away some of the reason for the pressure in the wheat. $7.50 is now key support in the July KW. Failure there will have traders planning on a move to $7.00.

Soybeans                                      Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: 41717
Long Term: Down                       Change: +4000
Overnight Trade: N +5 X +1 @7:30 AM


The May – July soybean spread keeps setting records due to strong basis, lack of deliveries, and apparently, lack of availability. If basis levels were exceptionally weak instead of exceptionally strong there would be politicians up in arms about the lack of convergence between the cash and futures markets and excessive speculation. Nobody seems to care that we have the same problem now. The futures are being left in the dust by the cash market. Keep bull spreading the bean market. The tight old crop supplies aren’t going to change any time soon.

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


Live cattle futures closed moderately lower on Tuesday, triggering some early cash trade in the south a good $2-$3 below week ago levels. Cutouts bounced back from Monday’s decline to close higher on the day. Wide basis levels are likely to keep bids on the low side, with risk managers willing to accept the 5.00-6.00 basis and lift profitable hedges. The Dollar is weak this morning, which is providing some support for commodity prices. Next support for the June contract comes in near 120.40.

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

Feeder cattle futures posted sharply lower closes on Tuesday, with triple digit losses in several active contracts. The May contract posted new contract lows, with deferred contract holding  above major support levels. Cash index levels declined modestly and remain in a narrow 30 point range over the past 6 sessions. Pasture conditions remained surprisingly poor in Monday’s report in spite of recent moisture improvement in many areas.



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