Schwieterman: Crop condition lower than expected, yields falling

Corn                                          Estimated Fund Position
Trends
Short Term: Up                      Net Long Futures and Options: 156026
Long Term: Up                       Change: +25000
Overnight Trade: Z +3 @7:15 AM
Opening Calls: Steady to 10 Higher

Crop condition ratings declined more than expected to 31% Good to Excellent. Many analysts are talking about yields in the 130 – 135 area and some are lower than that. At the moment there is no salvation in the forecasts, so another decline should be expected next week and possibly the following week as well. The December corn closed above $7.50 yesterday and the next objective is $8.00.

Wheat                                       Estimated Fund Position
Trends
Short Term: Up                       Net Long Futures and Options: 10172
Long Term: Up                        Change: +6000
Overnight Trade: Chicago: Z-1 KC: Z -1 @7:15 AM
Opening Calls: Mixed

The wheat keeps following the corn higher as it should. Crop losses in the corn are becoming large enough that USDA is underestimating wheat feed usage by a great deal. Stocks could end up being much tighter than what USDA indicates and we are going to be in need of a good crop next year. At some point we may see new crop futures trying to attract acres.

Soybeans                                   Estimated Fund Position
Trends
Short Term: Up                         Net Long Futures and Options: 223676
Long Term:Up                           Change: +9000
Overnight Trade: X -5 @7:15 AM
Opening Calls: Mixed

The soybean ratings fell 6 points to 34% Good to Excellent. At this point we can probably forget a yield in the 40’s. The market is going to be very sensitive to any fresh demand because we really can’t handle it. Buy breaks if we get them and July 13 beans look cheap at this level.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: 50-70 Lower

Live cattle futures started the week softer, with near triple digit losses posted in the front months. Weakness in feeders, along with technical selling weighed on the fats. Cattlemen are fighting negative closeouts along with heat and dust in many yards. We appear to be a week or two away from much of a turn around. We do expect exports and lighter closeout weights to support the market over the coming months. Overnight trade is .60-.90 lower. Our show list is up 9%, with carryover only 11%.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: 200-300 Lower

Feeder cattle futures continued their plummet on Monday, posting limit losses across the board. Strength in corn continues to be the driving factor, along with feedlot losses reaching painful levels. Corn prices are modestly higher this morning, with feeders off of their limit losses of last evening. Corn conditions released on Monday did little to offer support for the feeders, with good to excellent ratings dropping another 9% nationally.

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