Schwieterman: Cattle futures higher, cash trade to develop

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Corn                                              Estimated Fund Position
Trends
Short Term: Up                           Net Long Futures and Options: -11763
Long Term: Up                            Change: +3000
Overnight Trade: N +1 Z -2 @7:30 AM


We are seeing more bull spreading in the corn. The July contract acts as if it is going to make a run at the highs, while the December contract made a new low for the move overnight. Basis levels are still very strong and the threat of delivery is low. First notice day is tomorrow, so the delivery period is upon us. Also tomorrow are the Quarterly Stocks report and the Planted Acreage reports. Plan on plenty of volatility tomorrow. Export sales were good with 336,700 MT of old crop and 153,600 MT of new crop sales.

Wheat                                          Estimated Fund Position
Trends
Short Term: Down                     Net Long Futures and Options: -65594
Long Term: Down                      Change: -2500
Overnight Trade: Chicago: N +4 KC: N +4 @7:30 AM


Wheat charts look bearish, but we could see some short covering ahead of the reports. Export sales were good at 731,800 MT. What this market needs more than anything are strong exports. Yesterday’s new low for the move suggests we are probably headed below $7.00 in the September contract, but we have to get the reports out of the way before that will happen. Harvest reports seem to be very poor, but that doesn’t matter much. Supplies will never be greater than they are now.

Soybeans                                      Estimated Fund Position
Trends
Short Term: Down                       Net Long Futures and Options: 96192
Long Term:Up                               Change: -2000
Overnight Trade: N +8 X +3 @7:30 AM


Bull spread are working in the soybeans. We have the same concerns about the soybeans as the corn. Not enough old crop supply and potential for a big new crop. Export sales were good with 14,500 MT of old crop and 451,100 MT of new crop sales. Anything in the old crop is too much and bullish. On the charts it looks like we should plan on new highs in the July contract, but the November looks like it is just hanging on and waiting for the report. If the acreage numbers are bearish the November beans will get ugly.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 20-40 Higher


Live cattle futures closed moderately to sharply higher on Wednesday, providing feedlots with their best ammunition for higher cash in several weeks. There finally seems to be a carrot dangling in front of cattle feeders, firming their resolve for better cash trade this week. For the first time in a couple of months we have the chance of seeing some Thursday cash trade, rather than eleventh hour trade on Friday afternoon. On the flip side, choice cutouts continue to slide, which could limit packer enthusiasm.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 30-50 Higher


Feeder cattle futures closed sharply higher on Wednesday, taking their lead from the fats on a day when corn was fairly indifferent. Overnight has seen follow through buying in the complex, with August probing above the 100 day moving average for the first time since early February. Technical indicators look good but the market needs to see improved cash trade out of the feedlots to gain any real momentum.



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