Schwieterman: Weak corn futures support higher feeders

Corn                                              Estimated Fund Position
Trends
Short Term: Down                     Net Long Futures and Options: 79406
Long Term: Down                      Change: -12000
Overnight Trade: N +1 1/2 Z Unch
Opening Calls: 1-2 Higher

Corn was choppy overnight with a little bit of bull spreading in the market. The 10 cent level is proving to be strong resistance for the May-July spread. Traders are waiting for confirmation of Chinese corn purchases, but we may not see the sales confirmed until the product is shipped, which could be months away. In the meantime traders will be looking for 35% or more of the corn crop to be planted, which will keep a cap on rallies in the new crop contracts.

Wheat                                               Estimated Fund Position
Trends
Short Term: Down                         Net Long Futures and Options: -96705
Long Term: Down                          Change: -2000
Overnight Trade: Chicago: N +1 KC: N +3
Opening Calls: 1-3 Higher

The July KW is hovering near the recent lows. The market is oversold, but with condition ratings expected to improve again and no significant strength in the corn, there is little reason for the wheat to rally. We may get a corrective bounce, but don’t be surprised if the market does little more than consolidate. Sell strength.

Soybeans                                          Estimated Fund Position
Trends
Short Term: Up                                 Net Long Futures and Options: 217097
Long Term: Up                                  Change: +10000
Overnight Trade: N -4 1/4 X -3 1/2
Opening Calls: 3-5 Lower

The July soybeans made a new high for the move Friday and started the overnight session higher, but finished lower. There is still concern that USDA is overestimating S. American production and underestimating US exports. The market is working to either attract acres from corn or to ration demand. Either way there will be excellent support under the market and one must buy breaks.

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

Live cattle futures closed weaker on Friday, in spite of the higher cash trade and rising cutouts. Futures continue to carry a sizable discount to the weekly cash trade. Cattle on feed numbers were fairly benign, with slightly higher than expected placement and marketing totals. Show lists are expected to be higher this week, with moderate carryover. Lists will be prices higher in the feedlots after trading better at midweek for two weeks in a row. The large discount of futures to cash in the April contract suggests some fireworks by weeks end.

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

Feeder cattle futures managed to close the active May contract .30 higher for the week, in spite of the struggling live futures. Weakness in corn futures for the week was supportive to the feeders. Placement numbers were lower in all states except for Nebraska, with all of their increase coming in over 800# category. Basis trade could turn in favor of the south by early to midsummer. Overnight corn values were modestly higher, with macro indicators pointing lower.

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