Schwieterman: Cash index levels on the rise, feeder cattle lower

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Corn                                             Estimated Fund Position
Trends
Short Term:Down                     Net Long Futures and Options: 27661
Long Term: Down                     Change: -3000
Overnight Trade: K +4 Z -1 @7:30 AM


The corn was firmer overnight, but not strong enough to verify a turnaround in the market. The market is being bull spread, which should at least be encouraging to the bulls. Getting past the supply and demand report on Wednesday will probably help the market more than anything. The average trade guess calls for a nearly 200 million bushel increase in old crop ending stocks, but there is a good chance that the larger than expected stocks estimate is not reflected in the supply and demand tables.

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


Talk of China buying US wheat is keeping support under the market. Export demand is exactly what this market needs, but we have been talking about improved exports since last fall. Perhaps the high domestic prices in China are finally going to impact our markets. Indicators are still oversold despite the recent strength and there is still plenty of short covering potential in this market as long as the supply and demand numbers for the corn aren’t too bearish. Look for the May KW to approach $7.50 soon.

Soybeans                                     Estimated Fund Position
Trends
Short Term: Down                     Net Long Futures and Options: 41287
Long Term: Down                      Change: -5000
Overnight Trade: K +11 X+4 @7:30 AM


May soybeans are working on a turn around. Bird flu in China is a concern that we will have to monitor, but traders with fresh short positions will likely want out ahead of the report, just in case USDA throws out a bullish surprise. On the chart, a close today above $13.84 in the May contract would be friendly.

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


Live cattle futures closed moderately to sharply lower on Friday. For the week June live cattle gave up 2.80, in spite of seeing steady to higher cash trade in all sectors. Outside markets look mostly supportive to start the week, with April starting out at least 2.00 below last weeks’ cash trade. First notice day for deliveries against the April contract take place after the close today. Deliveries are not expected to be a factor, unless a rally effort occurs or the cash market backs up.

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


Feeder cattle futures posted triple digit losses across the board on Friday, with weakness in the deferred live cattle weighing on the market. Cash index levels are on the rise, reaching 140.27 on Friday afternoon. The April board remains a 2.25 premium to the index. Overnight corn prices are firmer, which may limit any early week rally effort in the feeders. The market still appears to have a lot of work to do to regain sustainable upside momentum.



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