Schwieterman: Feeder cattle futures led beef complex selloff Wed.

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Corn Estimated Fund Position

Trends – July Contract

Short Term:Down Net Long Futures and Options: 90166

Long Term: Down Change: -7000

Overnight Trade: N unch @7:30 AM

Corn export sales were down from last week, but still solid at 409,700 MT. Ethanol production hit another new high for the year, so old crop demand is still running at a stronger pace than what USDA has penciled in. Old crop basis levels were generally higher yesterday in response to yesterday’s market weakness and the bear spreading. Despite the strong demand, nobody is too worried about the old crop corn right now. The focus is on the new crop and the lack of threatening weather. The next stop for the December contract is $4.35 followed by $4.00.

Wheat Estimated Fund Position

Trends – July Contract

Short Term: Down Net Long Futures and Options: -46836

Long Term: Down Change: -5000

Overnight Trade: Chicago: N +1 KC: N +1 @7:30 AM

Wheat export sales exceeded most traders’ expectations again with net sales coming in at 494,400 MT for both crop years combined. Yesterday’s market break was attributed to USDA’s higher than expected ending stocks estimate, which was due in part to a lower export estimate, which is because we are supposedly uncompetitive in the world market. The recent sales numbers don’t necessarily support that, but the tone of the market is bearish none the less. The new low for the move makes $7.00 the next critical support, followed closely by $6.96 and then $6.60.

Soybeans Estimated Fund Position

Trends – July Contract

Short Term: Down Net Long Futures and Options: 57914

Long Term: Down Change: -4000

Overnight Trade: N +5 @7:30 AM

Soybean export sales were positive once again with the old crop coming in at 86,700 MT and the new crop at 403,000. The July beans made another new low for the move overnight before finishing the session firm. Bear spreading has supported the November contract, but the support probably won’t be able to last much longer since the sentiment towards the new crop is so negative. Look for a return to bull spreading and for a recovery in the old crop beans while the new crop struggles.

Live Cattle

Trend

Short Term: Up

Long Term: Up

Opening Calls: 20-30 Higher

Live cattle futures reversed early gains by as much as 2.00 on Wednesday, with the active August contract off 1.20 for the session. The selloff could be little more than some profit taking but reversals from these historic levels will garner a lot of attention from traders. Cash has yet to develop for the week, with bids and asking prices well apart at days end. There continue to be no deliveries against the June futures, as feedlots continue to expect a firming cash market. Overnight trade is trending higher, with the August leading the advance, gaining more than .50 for the day.

Feeder Cattle

Trends

Short Term: Up

Long Term: Up

Opening Call: 30-60 Higher

Feeder cattle futures led the selloff in the beef complexes on Wednesday, opening lower and closing near session lows. The decline came in spite of stronger cash and new lows for the move in the corn futures. Overnight trade is rebounding aggressively, with August up nearly 1.00 and leading the recovery. Single day averages of the cash feeders suggest that it may not take long for the seven day average to test the 200.00 level. Corn is flat to slightly higher in overnight action.



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