Schwieterman: Feeder cattle futures closed sharply higher

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Corn                                      Estimated Fund Position

Trends – July Contract

Short Term: Up                 Net Long Futures and Options: 182027

Long Term: Up                  Change: -3000

Overnight Trade: N +4 @7:30 AM

Corn was higher overnight thanks to a wet forecast for the Corn Belt and strength in the wheat. The July contract has struggled to move through the $5.12 - $5.13 area during most of April and the market will likely struggle with that area again today. Some analysts believe that Monday’s planting progress number will be equal to the average and therefore there shouldn’t be any concerns about planting delays. Last week’s report was well below expectations, so we will see how close the guesses are this time. An average planting pace would certainly make it difficult to justify the current price level in the December contract.

Wheat                                  Estimated Fund Position

Trends – July Contract

Short Term: Up                 Net Long Futures and Options: -3291

Long Term:Up                   Change: +5000

Overnight Trade: Chicago: N +7 KC: N +7 @7:30 AM

Wheat was higher again overnight due to the continuing problems in Ukraine and the continuing lack of rain in the HRW Belt. Those that got rain this week will see their crops hang on a bit longer, but those that didn’t will get to deal with some very warm temperatures and no moisture this weekend. Plan on lower crop condition ratings Monday, and stay tuned for results from next week’s Wheat Quality Council crop tour. The charts are looking friendly again and we have the potential for a retest of the March highs.

Soybeans                            Estimated Fund Position

Trends – July Contract

Short Term: Down           Net Long Futures and Options: 136012

Long Term:Up                   Change: +3000

Overnight Trade: N +12 @7:30 AM

Support held in the soybeans yesterday and traders have shifted back to bull spreading and worrying about old crop supplies. There has been concern about the lack of bull spreading between the May and July contracts and how that is an indication of adequate supplies. That may be the case, and bear spreading after option expiration would be a concern to the bull camp. However, at the moment, the charts suggest we will at least see a retest of the contract highs soon.

Live Cattle

Trend

Short Term: Up

Long Term: Up

Opening Calls: 10-30 Lower

Live cattle futures posted moderate gains on Thursday, with cash trade and the monthly on feed report all happening today. Overnight trade in the cattle has been wild, with the June contract rallying .80 in early trade and trading as much as .87 lower after 3:30 this morning. The market has recovered about .60 from session lows but remains on the defensive. Bids and asking prices are separated by at least $4.00 this morning. Open interest was up again on Thursdays’ rally, suggesting new longs entering the market.

Feeder Cattle

Trends

Short Term: Up

Long Term: Up

Opening Call: Mixed

Feeder cattle futures closed sharply higher on Thursday, getting a boost from lower corn and big gains in the cash index. The index climbed 1.63 for the day and the August futures jumped 1.60 to settle above 184.00. The placement number is expected to be slightly higher than a year ago in this afternoons’ report. Overnight trade has been erratic, with a 1.15 trading range. Corn prices have rebounded 3-4 cents, as traders monitor the Russian and Ukraine situation. Heavy Midwest rain forecasts are delaying planting in some areas.



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