Schwieterman: New crop contracts determined by weather, planting

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Corn                                                  Estimated Fund Position
Trends
Short Term:Down                          Net Long Futures and Options: -13227
Long Term: Down                          Change: +10000
Overnight Trade: N -3 Z -5 @7:30 AM


Yesterday the corn climbed back to test the bottom of the chart gap left Monday, but saw no follow through buying overnight. Traders are waiting for this morning’s report numbers, which definitely have the potential to move the market in either direction. The lack of deliveries and strong basis suggest that the July contract can keep moving higher and the direction of the new crop contracts will be determined by the weather and the planting progress. Bull spreading still looks like a viable way to trade this market.

Wheat                                                 Estimated Fund Position
Trends
Short Term: Down                            Net Long Futures and Options: -40393
Long Term:Up                                    Change: +4000
Overnight Trade: Chicago: N -7 KC: N -5 @7:30 AM


The July KW reached the 62% retracement of the last move down yesterday, but like the corn there was no follow through buying overnight. After holding at $7.50 and moving higher, the chart suggests that the market is ready to move up to the $8.00 - $8.25 area, but it will be the report numbers that determine whether or not that happens. HRW production is expected to be well below last year and just how far below will determine the direction of the market and the amount of spread trade between the various wheat contracts. Something below 750 million would be considered very bullish.

Soybeans                                          Estimated Fund Position
Trends
Short Term: Down                           Net Long Futures and Options: 61717
Long Term: Down                            Change: +6000
Overnight Trade: N +1 X -2 @7:30 AM


Bull spreading continues in the soybean market. The futures are well below the cash market, which leaves little fundamental reason to sell old crop futures. In the meantime new crop production is a great unknown, but traders fear the downside potential of the market if there is an acreage shift and good summer weather. The report will determine the direction of the market today, but in the long run the bull spreads will likely work due to the underlying fundamentals of the cash market.



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