Schwieterman: Cattle futures post solid gains, corn market strong

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Corn                                       Estimated Fund Position
Trends
Short Term: Up                   Net Long Futures and Options: -16169
Long Term: Down               Change: +10000
Overnight Trade: N +1 Z -1 @7:30 AM


Corn was mixed overnight in low volume. Traders have one eye on the forecasts and one on the basis levels. Bull spreaders have been active and if the mid-day forecasts show opportunities for planting the new crop contracts will come under pressure adding to the bull spreading. For the July contract the bulls have to see a move to $6.70 today to keep the bullish momentum alive.

Wheat                                   Estimated Fund Position
Trends
Short Term: Up                   Net Long Futures and Options: -40058
Long Term:Up                     Change: +2000
Overnight Trade: Chicago: N +3 KC: N -1 @7:30 AM


It was cold again across much of the HRW Belt, but any damage will be difficult to assess and, as usual it seems, the lack of moisture is probably more of a concern. Crop production potential is declining on a daily basis due to a number of issues, but what this market really needs are solid export sales like we have had 2 of the past 3 weeks. On the chart the July KW has closed above the pre-stocks report high 2 of the past 3 sessions, but upward momentum is slowing and the market needs a new high for the move soon. $8.00 is critical resistance.

Soybeans                              Estimated Fund Position
Trends
Short Term: Up                    Net Long Futures and Options: 43963
Long Term: Down               Change: +2000
Overnight Trade: N +1 X +4 @7:30 AM

Soybeans are in consolidation mode. Like the corn we have some traders looking at basis and demand and some at the shifting acreage ideas. In the long run the bull spreaders should win out, since it is likely that we see soybean acreage increase and we still don’t have the tight old crop situation resolved. Basis levels are still exceptionally strong and even though we have had two weeks of cancellations of old crop soybean export sales we are still selling soybean meal. Buy old crop and sell new crop.

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


Live cattle finished moderately to sharply higher on Thursday, as higher cash and cutouts supported on the close. For the first time since 2004 choice cuts were above the 200.00 level. Cash trade in the north reached $208 in the beef and cash in Colorado saw a high of $131. This mornings’ monthly employment numbers were bullish to the equity markets, which should spill over into meat demand. Dollar strength coming out of the report could be an offsetting factor. Reports of several strains of bacteria in ground turkey around the country could boost beef demand.

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


Feeder cattle futures posted solid gains on Thursday in spite of strength in the corn market. Buying has continued in overnight feeder trade, with the lead May contract back testing the highs for the week. Corn is trading narrowly mixed, which may reduce the upside resistance in the feeders. We remain cautious about buying the existing premium in the board until longer term resistance levels are broken or pullbacks to support occur.



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