Schwieterman: Cattle futures higher, dryness moves corn up

Corn                                                Estimated Fund Position
Trends
Short Term: Up                             Net Long Futures and Options: 10024
Long Term: Down                        Change: +20000
Overnight Trade: N +11 Z +13 @7:15 AM
Opening Calls: 10-15 Higher

Crop condition ratings declined to 63% Good to Excellent, which is now well below average and makes the current yield estimate of 166 look way too high. Bear spreading has been active due to the buying interest in the new crop. The December contract is back above the 50-day moving average and is headed for a test of the $5.50 resistance. A close above $5.50 will have traders looking for a move up to $6.00. Buy breaks as long as the forecasts are hot and dry.

Wheat                                           Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: -54602
Long Term: Down                       Change: +4000
Overnight Trade: Chicago: N +13 KC: N +11 @7:15 AM
Opening Calls: 10-15 Higher

The technical outlook of the July KW is vastly improved after yesterday’s action. The market is now trading above the 50-day moving average and trend line resistance. The next major  resistance lies at the $6.70 level. Strength in the corn is definitely helping the wheat market move higher. All this market needs is a better export demand in order to start a bull market.

Soybeans                                         Estimated Fund Position
Trends
Short Term: Down                         Net Long Futures and Options: 167059
Long Term: Down                          Change: +6000
Overnight Trade: N +27 X +28 @7:15 AM
Opening Calls: 20-30 Higher

Soybean conditions declined to 56% Good to Excellent. The weather will have to improve very soon in order to reach USDA’s record high yield estimate. There is a great deal of concern regarding new crop production potential and extremely tight supplies next summer. The job of the market is to slow demand until crop conditions stabilize. November beans are headed for a test of $14.00.

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

Live cattle futures finished higher to sharply higher on Monday, with June and August posting triple digit gains. The rally came in spite of a higher Dollar and lower equities. Overnight, the outside markets look more supportive, with the Dollar weaker and equities firming. Fats are trading mostly firm, with the exception being the June. Strength in corn futures could prompt new buying into the deferred live cattle. Watch technical indicators closely for turn signals.

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

Feeder cattle futures closed moderately higher on Monday, anchored somewhat by the strength in corn futures. Overnight corn prices are up another 12-14 cents, pressuring feeders to as much as .65 lower. The weather market is negative to feeders in two respects. Dryness is forcing corn higher and calves into feedlots earlier than desired. Key support for the August contract is at 154.65.

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