Schwieterman: Cattle futures solid, cash and corn improve

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Corn                                               Estimated Fund Position
Trends
Short Term: Up                            Net Long Futures and Options: 7287
Long Term: Up                             Change: +10000
Overnight Trade: N +1 Z -1 @7:30 AM


Yesterday the July corn closed at the highest level since the day of the March stocks report and the December contract posted a reversal higher after making a new low for the move. There was no follow through strength in the corn overnight, but yesterday’s action would suggest we have the potential for further gains. Plus the crop condition ratings were not impressive coming in only one point higher at 64% Good to Excellent. Ratings will need to improve to keep the bears from getting nervous.

Wheat                                           Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: -51031
Long Term: Down                       Change: +1000
Overnight Trade: Chicago: N +7 KC: N +6 @7:30 AM


The July KW posted a reversal higher as well, probably thanks to the strength in the corn. The wheat, however, did see some follow through strength overnight though the market is still well short of yesterday’s high. A little bit more recovery action wouldn’t be surprising, but it will take some large gains in the corn or large export sales to really convince traders they should be buyers of this market.

Soybeans                                      Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: 101571
Long Term:Up                              Change: -6000
Overnight Trade: N +6 X +3 @7:30 AM


The soybean market looks set for more bull spreading. The July contract is ready to another run at the highs thanks to the cash market and the November contract is ready to make a new low for the move thanks to fears of a large crop. One has to expect volatility in the spreads, but the trend of the market should favor the bull spreaders.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: 20-40 Lower


Live cattle futures started the week on a positive note, with moderate to strong gains across the board. Choice cuts jumped 1.66 for the day, with modest gains in the select. Overnight trade is trending lower, due to larger show lists and a lower trending cash market. Outside influences seem slightly positive, with the Dollar flat and equities higher. Improving pasture conditions could keep placements on hold as we head into early summer.

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


Feeder cattle futures closed moderately to sharply higher on Monday, in the face of solid gains in the corn market. We continue to believe that any extended rallies in the feeders will need support from the deferred fat cattle market to have any legs under it. Cash index levels continue to creep higher, reaching their highest level since the 16th of April. The technical pattern in the August feeders is coiling for a breakout move in one direction or the other. Ranges are becoming smaller and smaller.



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