Schwieterman: Cattle futures recover from early weakness

Corn                                    Estimated Fund Position
Trends
Short Term: Up                 Net Long Futures and Options: 46879
Long Term: Down            Change: -10000
Overnight Trade: N +3 Z - 3/4
Opening Calls: Steady to 15 Lower

USDA raised old crop ending stocks to 851 million by cutting feed usage again. Apparently there is no reason for the record basis or record inverse in the market. For the new crop USDA has started the season with 95.9 million acres and a record 166 bu/ac yield. They used the acreage figure from the Prospective Plantings report and the added to the already inflated trend line yield due to planting progress even though there is little correlation between planting progress and final yield. As usual we will get many revisions through the year.

Wheat                                  Estimated Fund Position
Trends
Short Term: Down            Net Long Futures and Options: -74379
Long Term: Down             Change: -3000
Overnight Trade: Chicago: N +3 KC: N +4 1/2
Opening Calls: 3-5 Higher

Wheat ending stocks figures were somewhat friendly at 768 million for the old crop and 735 million for the new crop. New crop wheat feeding is expected to be large, which is part of the explanation for the lower old crop corn feed usage. The price certainly justifies more wheat feeding, so that wouldn’t be a surprise. Rallies, however, are still a selling opportunity as we move into harvest.

Soybeans                              Estimated Fund Position
Trends
Short Term: Down              Net Long Futures and Options: 197822
Long Term: Up                     Change: -5000
Overnight Trade: N +18 X +15 1/4
Opening Calls: 20-40 Higher

The bullish figures of the report were found in the soybean tables. Old crop ending stocks were cut 40 million to 210 million due to higher crush and exports. New crop ending stocks are starting off at 145 million, which is very bullish, especially considering the record 43.9 bu/ac yield estimate. Any weather issues will result in record soybean prices this year. Look for big gains today.

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

Live cattle futures once again reversed early weakness to close higher on the day. Wednesday’s close was above last weeks’ highs in the June contract. The rally came in the face of mostly negative outside rhetoric. Overnight activity is narrowly mixed, with bull spreading a feature. Traders will be monitoring this mornings’ grain report for direction. Outside influences appear more positive this morning. Cash trade is not likely to occur unless packers find more money.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 20-30 Higher

Feeder cattle futures closed mixed on Wednesday, with good recovery in all but the lead May contract. Weakness in the corn market was supportive, along with another uptick in the cash index. Feedlots are reporting that replacement prices have jumped in the past few days. Monitor the grain report and weekly exports for early direction in the feeders.

1. Vilsack: Taking time to remember the fallen
2. Livestock Marketing: Beef prices remain strong, cattle pressured
3. Farm Bill progress
4. Feeder cattle review: Choice beef prices keep rolling higher
5. Ag markets diverge just before the long holiday weekend
6. Armyworms eat fescue pastures, hayfields

1. Commentary: New rules un-COOL
2. Former Eastern Livestock CEO, CFO sentenced for federal crimes
3. TSCRA works with sale barns to catch Houston cattle thief
4. NASA backs 3D food printer to feed growing population
5. More beef cows in worst drought regions than a year ago
6. Post-tornado composting a solution for disposal of dead livestock

1. Commentary: New rules un-COOL
2. Commentary: In praise of animal foods
3. What’s on America’s grill this weekend?
4. NASA backs 3D food printer to feed growing population
5. Meat industry associations quick to attack the new MCOOL rule
6. Commentary: Message to Occupy Monsanto: Occupy yourself