Schwieterman: Live cattle stronger, feeders close Friday lower

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Corn                                         Estimated Fund Position
Short Term: Up                     Net Long Futures and Options:
Long Term: Down                Change:
Overnight Trade: K -9 Z -11 @7:30 AM

Blame some of the pressure in the corn on the gold market and some on the extended forecast that would allow for better planting in the Corn Belt. The market is still being bull spread, which is encouraging to the bulls, but we have an outside day down in the May contract as well as the December. The old crop corn will have a chance at strength later in the week, but the outside markets will have to calm down first. Planting is expected to be 3-4% complete. More than 5% would probably add to the pressure in the December contract.

Wheat                                     Estimated Fund Position
Short Term: Up                     Net Long Futures and Options:
Long Term: Down                 Change:
Overnight Trade: Chicago: K -15 KC: K -13 @7:30 AM

The Kansas City wheat traded at the upper end of the trading channel Friday and the lower end overnight. The market may have a chance for strength tomorrow if the crop condition ratings drop significantly. There is still a big part of the HRW Belt that is suffering from drought and freeze stress and it is still possible that we end up having the worst rated wheat crop ever at some point in the crop year. If the overnight lows for the first couple of hours of the day session, there is a good chance that the wheat trades back to the upper end of the channel  later this week.

Soybeans                                 Estimated Fund Position
Short Term: Up                       Net Long Futures and Options:
Long Term: Down                  Change:
Overnight Trade: K -6 X-12 @7:30 AM

The soybeans are under pressure like the other markets, but the bull spreaders are still active. There is obviously a huge disparity in the fundamental outlooks of the old and new crops. May soybeans will like move up towards $14.30 this week, but November chart looks bearish and may be headed below the $12.00 level. It will probably take a summer weather scare to see any consistent gains in the November contract.

Live Cattle
Short Term: Down
Long Term: Down
Opening Calls: 20-50 Lower

Live cattle futures closed stronger in the front three months on Friday, with deferred contracts modestly lower. Look for the start of the week to be defensive, based on the outside market trade seen overnight. Metal and energy markets have led the implosion in overnight trade. Packers appear geared to speed up the kills this week if they can secure cattle. We should see interest develop by midweek again, if basis levels support lower cash trade.

Feeder Cattle
Short Term: Down
Long Term: Down
Opening Call: 30-50 Lower

Feeder cattle futures closed lower on Friday and finished 3.20 lower for the week in the May contract. Overnight weakness in the corn futures could give feeders hope of a rebound. The severe weakness in outside market trade overnight will weigh on any rally effort. Controlling the feeders in the face of the washout in metals and other markets may be a tough task. The trend is down. Remain defensive.

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