Schwieterman: Outside market influences limit cattle market

Corn                                            Estimated Fund Position
Trends
Short Term: Up                         Net Long Futures and Options: 52879
Long Term: Down                    Change: +4000
Overnight Trade: N -2 Z -4 3/4
Opening Calls: 3-5 Lower

Corn traded lower overnight due mostly to the weakness in the stock futures and strength in the Dollar Index. Basis continues to improve around the country and the bull spreads are still active, both of wheat tell us that the July futures are too low. What seems to be keeping the corn market in check is the threat of a big crop this year and the fear of a bearish supply and demand report this week. Look for two sided trade today and look for the July contract to head to $6.50 this week.

Wheat                                          Estimated Fund Position
Trends
Short Term: Down                     Net Long Futures and Options: -74379
Long Term: Down                      Change: -2000
Overnight Trade: Chicago: N -3/4 KC: Unch
Opening Calls: Mixed

The July KW was only about 7 cents over the July corn Friday, but it won’t be surprising to see that spread at zero or less very soon. There just isn’t much to support the wheat as we are heading into harvest. Some technical indicators suggest we are due for a bounce, but if we get one it is a selling opportunity.

Soybeans                                     Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: 215822
Long Term: Up                             Change: +4000
Overnight Trade: N -7 X -11 1/4
Opening Calls: 7-10 Lower

The soybeans saw moderate selling pressure overnight. Some traders are concerned that last week’s reversal lower marked a long term top in the market, which makes Friday’s low of $14.58 critical support. However, the fundamental outlook for both the old and new crops is still bullish and there probably won’t be many willing sellers ahead of Thursday’s report. Plan on consolidation trade today.

Live Cattle
Trend
Short Term: Up
Long Term: Down
Opening Calls: Mixed

Live cattle futures reversed higher for the week, with June gaining 2.80 from the previous Friday. Cash trade saw another successful week, with steady to $2 higher cash paid Friday afternoon. This week’s asking prices will be $122-$123 in the south and $197+ in the north. The ability of the feedlots to see improved cash in the face of May contract availability is a great sign for the market. Outside market influences could limit upside potential to start the day. Equities are weaker and the Dollar is stronger.

Feeder Cattle
Trends
Short Term: Up
Long Term: Down
Opening Call: Mixed

Feeder cattle futures firmed near session highs on Friday’s close, with the May contract gaining an impressive 3.75 for the week. We need to see some improvement in the cash trade to sustain this strength in the futures. Technical indicators suggest good buyers on any weakness in this market. Softer overnight corn values could add support to the feeders.

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