Schwieterman: Cattle futures move higher, Corn stronger overnight

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Corn                                           Estimated Fund Position
Trends
Short Term:Down                   Net Long Futures and Options: -33669
Long Term: Down                   Change: +5000
Overnight Trade: K +4 Z +1 @7:30 AM


Export sales were ok at 314,700 MT of old crop and 21,200 MT of new crop. Traders were back to bull spreading overnight, which is supportive to the market as a whole. The action in the December contract, however, will likely be determined by the interpretation of the extended forecasts for the Corn Belt. If traders feel the corn will be planted in a timely manner, it will be difficult to hold above $5.25. For the May contract it will probably be all about option expiration the next two session with the market hovering around the $6.50 area.

Wheat                                        Estimated Fund Position
Trends
Short Term: Down                  Net Long Futures and Options: -59602
Long Term: Down                   Change: -2000
Overnight Trade: Chicago: K +2 KC: K +5 @7:30 AM


Export sales were well below last week’s big numbers with old crop coming in at only 71,700 MT and new crop at 234,700 MT. The overnight high in the July KW was at the 40-day moving average, so the bulls have a very well defined hurdle to clear today. The chart is set up for a move back to $7.60 in the July KW, so hopefully we see some buying enthusiasm today.

Soybeans                                   Estimated Fund Position
Trends
Short Term: Down                   Net Long Futures and Options: 31225
Long Term: Down                    Change: -5000
Overnight Trade: K +10 X +6 @7:30 AM


The Chinese cancelled some soybeans so old crop sales came is as a net cancellation of 206,300 MT and new crop sales were at 628,000 MT. Next week’s new crop numbers will be big as well. The old crop soybeans suffered a sizeable setback yesterday and are trying to get that back today, but the cancellations probably won’t help. The basis levels will be the key to the market the next few days. If the interior basis levels don’t drop off then there is no reason for the bear spreading, because deliveries are highly unlikely with the current market setup.

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


Live cattle futures closed moderately to sharply higher on Wednesday, with the June and deferred contracts turning up on short term trends. The rally in futures prices should enable feedlots to hold to higher asking prices heading into the last two days of the week. Some talk of short bought packers began stirring on Wednesday, with other signs of increased kill plans helping to fuel the stronger futures prices. Overnight weakness in the Dollar has metals and energies charging higher, which should support commodities in general.

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

Feeder cattle futures scored triple digit gains once again on Wednesday, with the August contract now 4.65 above last Friday’s settlement. Strength in overnight corn values could slow down the upward surge in feeder prices. The premium built back into the May contract and beyond is becoming significant. Hedgers may want to establish put option strategies near current levels until more is known about corn planting progress.



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