Schwieterman: Cash market, small show lists lift live cattle

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Corn                                         Estimated Fund Position
Trends
Short Term:Down                 Net Long Futures and Options: 32661
Long Term: Down                 Change: +5000
Overnight Trade: K +4 Z -1 @7:30 AM


Bull spreading is still active in the corn market. The old crop – new crop spreads are nowhere near the prestocks report levels, but it is interesting to note that the May - July spread is getting close to the pre-report level. That is a pretty good indication that old crop stocks are still quite tight. However, traders will not be aggressive with the bull spreads until after tomorrow’s report. There is still fear that we will see bearish numbers tomorrow. Plan on a little more short covering in the old crop contracts, but mostly it will be a waiting game.

Wheat                                       Estimated Fund Position
Trends
Short Term: Down                  Net Long Futures and Options: -38047
Long Term: Down                   Change: +3000
Overnight Trade: Chicago: K -4 KC: K -3 @7:30 AM


The wheat hasn’t been able to build on yesterday’s gains. Crop condition ratings improved, sort of, with the US condition rating up 2 points to 36% Good to Excellent, which is still the 3rd worst ever. The big problem is that the poor to very poor category increased in Kansas, Texas, Colorado, and Nebraska, so it’s not like the wheat is really getting much better. Plan on choppy, two sided, trade today.

Soybeans                                  Estimated Fund Position
Trends
Short Term: Down                  Net Long Futures and Options: 47287
Long Term: Down                   Change: +6000
Overnight Trade: K -2 X-1 @7:30 AM


The recent strength in the beans definitely improved the chart outlook, but we still have to get  through the report numbers for it to matter. Some traders are still worried about bird flu, and the stories haven’t gone away yet, so we have a bit of a black cloud over the market. Any kind of fresh demand news from China, however, will negate and bird flu news. As would a substantial cut in the ending stocks estimate tomorrow. Look for two side trade during today’s session.

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


Live cattle futures closed moderately higher on Monday, supported by last weeks’ cash and smaller show lists being distributed in most regions. Cutout values were modestly lower, with the return of cold weather this week potentially slowing demand for a few more days. Open interest was up nearly 3,000 contracts on the Monday rally. The big recovery into the close by equity markets is supporting overnight trade in the cattle pit. We are also seeing a more than 30 point drop in the Dollar this morning, which should lend support to the export market.

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


Feeder cattle futures were moderately higher on Monday and appear to be holding on to that trend in overnight trade. In spite strength developing in old crop corn, feeders look to be stabilizing after their recent downside correction. The cash index was actually down on Monday, for the first time in the last eight reports. Wednesday morning grain supply demand report will be monitored closely for further market direction.



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