Schwieterman: Cattle futures lower Friday, Cash strength grows

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Corn                                            Estimated Fund Position
Trends – December Contract
Short Term:Down                    Net Long Futures and Options: -196805
Long Term: Down                    Change: -6000
Overnight Trade: Z -5 @7:30 AM

The corn market made new lows for the move overnight and the December contract appears to be headed to the $4.50 area. The forecasts look mostly favorable, but there areas in Iowa in particular that have been short on rain. However, the cool temperatures will limit yield losses, so traders don’t seem to be overly concerned about Iowa. Crop condition ratings are expected to be steady to slightly higher. Keep in mind that ratings usually decline at this time of year, so an improvement is definitely bearish.

Wheat                                       Estimated Fund Position
Trends – September Contract
Short Term: Down                  Net Long Futures and Options: -71002
Long Term: Down                   Change: +1500
Overnight Trade: Chicago: U -3 KC: U -3 @7:30 AM


It feels like the wheat market wants to separate from the corn and beans, but the other markets are acting like an anchor. The good export sales we are seeing are very supportive to the market, so the wheat should be able to at least remain separated from the corn and there shouldn’t be much fear of a spread collapse. Meanwhile the rains in the HRW Belt will keep the pressure on the July 14 contract because planting conditions are improving daily. The $6.95 - $7.00 area will be good support for the September KW today.

Soybeans                                 Estimated Fund Position
Trends – November Contract
Short Term: Down                 Net Long Futures and Options: 22164
Long Term: Down                  Change: -6000
Overnight Trade: X -8 @7:30 AM


The $11.80 support has failed in the November soybeans. The market is oversold and due for a bounce, but it is now time to think about this market falling to $11.40. Production prospects are improving and we will have to see an acreage cut in the August supply and demand report to avoid very bearish numbers. Sell rallies if we get them.
Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: Mixed


Live cattle futures closed modestly lower on Friday, with some higher cash trade noted but an August premium still in place ahead of the delivery period. Today will be spent trying to determine show list size, weekend clearance and cutout strength or weakness. The August contract will begin its’ delivery period after the close of business today. For the week the October contract was off 1.20 and settled below key technical support levels.

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


Feeder cattle futures were modestly lower on Friday but closed the active October contract 1.05 higher for the week. Weakness in overnight corn values along with continuing moisture in the plains grazing regions should support the complex. Cash index levels rose another .48 on Friday and closed with 4.50 of the lead August futures contract. All indicators have the cash strength continuing to grow in this market.



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