Schwieterman: Feeder cattle futures close low

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 Corn                                      Estimated Fund Position

Trends – July Contract

Short Term: Up                 Net Long Futures and Options: 93568

Long Term: Up Change: +7000

Overnight Trade: N -5 @7:30 AM

The corn was weaker overnight, but is still holding above yesterday’s lows. Strength in the wheat seemed to be yesterday’s most supportive feature in the marketplace, otherwise fresh news was sparse. There is still some concern about Ukraine, but for the most part grain trade is proceeding as usual. Today’s ethanol production figure and the export sales number tomorrow will be very important for the spread trade in the corn the rest of the week. The charts still suggest we are in for a deeper correction with the July contract headed back to the $4.70 area.

Wheat                                  Estimated Fund Position

Trends – July Contract

Short Term: Up                 Net Long Futures and Options: -34106

Long Term:Up                   Change: +6000

Overnight Trade: Chicago: N -1 KC: N -1 @7:30 AM

The wheat market seems unstoppable. There is some concern about the weather in the HRW Belt and concern about Ukraine, but for the most part the strength stems from money flow. Fund buying/short covering is still very active and supporting the wheat market. The close above $7.18 in the July KW now suggests that a move to $7.50 is possible.

Soybeans                            Estimated Fund Position

Trends – July Contract

Short Term: Up                 Net Long Futures and Options: 172502

Long Term:Up                   Change: -3000

Overnight Trade: N -35 @7:30 AM

Soybeans were under heavy selling pressure overnight on concerns about Chinese crush margins and the possibility of US imports of Brazilian soybeans. The July contract has already fallen below the 38% retracement at $13.54, which makes the $13.08 level a viable downside target. The market has been due for a correction and we are finally seeing it. Be prepared for volatility because another good export sales report on Thursday could easily erase these losses.

Live Cattle

Trend

Short Term: Up

Long Term: Up

Opening Calls: Mixed

Live cattle futures closed mixed on Tuesday, with April modestly higher and deferred contracts moderately lower. The reversal from early morning strength was disappointing after seeing another strong day of cutout values. Packer margins are improving by the day but the futures and cash trade seem to be on pause. Consecutive days of weakness in the equity markets could be putting a bit of an anchor on fat cattle prices. Overnight weakness in the hog market could limit the buying in cattle as well.

Feeder Cattle

Trends

Short Term: Up

Long Term: Up

Opening Call: Mixed

Feeder cattle futures closed lower on Tuesday, with weakness in deferred live cattle and stronger corn futures offsetting the record highs in the cash index. Overnight corn prices have softened 4-5 cents, lending modest support to the feeders. We look for choppy feeder trade until the fats can establish a trend other than sideways. Commodity prices in general look a little soft this morning.


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