Schwieterman: Cattle futures lose ground, Cash trade disappoints

Corn                                             Estimated Fund Position
Trends
Short Term: Up                          Net Long Futures and Options: 175167
Long Term: Up                           Change: -2000
Overnight Trade: N -1/2 Z -2 1/2
Opening Calls: Mixed

Export sales were good with 937,600 MT of old crop and 185,100 MT of new crop sales. China was the biggest buyer, which is supportive. Bull spreaders were active again in the overnight trade, which is encouraging. We have seen a couple of days of consolidation and a loss of upward momentum, so the bulls need to see some strength today. We will eventually see a test of the $6.75 level in the May and July contracts, but it is beginning to look like that won’t happen until after next week’s supply and demand report.

Wheat                                            Estimated Fund Position
Trends
Short Term: Up                             Net Long Futures and Options: -79603
Long Term: Down                        Change: -4000
Overnight Trade: Chicago: N +1/2 KC: N +1 1/2
Opening Calls: 1-2 Higher

Wheat is still the weak link. Export sales were good at 408,300 MT of old crop sales and 103,400 MT of new crop, but this is not enough to get anyone excited. The wheat market needs something besides the corn market keeping wheat a feed grain in order to produce consistent gains. Plan on a retest of the lows.

Soybeans                                       Estimated Fund Position
Trends
Short Term: Up                             Net Long Futures and Options: 197708
Long Term: Up                              Change: +3000
Overnight Trade: N +3 1/2 X -3/4
Opening Calls: 1-3 Higher

Export sales were good at 406,900 MT of old crop and 706,000 MT of new crop sales. Importers are obviously concerned about tight new crop supplies. On the charts, the July contract looks like it is set up for day number four of consolidation. This looks like a pause before another move higher. Plan on a move to $14.70 in the July contract.

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

Live cattle futures continued their weeklong selloff on Wednesday, with triple digit or near triple digit losses posted in most months. The new lows for the move have technical indicators deep in oversold territory and showing some divergences for the first time in a while. Cash trade in the north was very disappointing, with most sales in the beef quoted at $194. The cash trade, though disappointing, remains well above the settlement on the lead April contract. First notice day for deliveries on the April contract is after the close on Monday. At current levels no deliveries are expected.

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

Feeder cattle futures lost ground again on Wednesday, with deferred contract posting triple digit losses. The active May contract finished just .02 lower for the day, which was 1.75 off of session lows. The rebound in the front months came as corn futures backed away from their early morning gains. The combination of softening corn and oversold feeders gave way to the recovery. Overnight activity is similar, with the front two months firmer and deferred contracts weaker.

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