Schwieterman: Feeder cattle futures close sharply higher

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Corn                                        Estimated Fund Position

Trends – July Contract

Short Term: Up                       Net Long Futures and Options: 190728

Long Term: Up                       Change: +6000

Overnight Trade: N -3 @7:30 AM

The corn market is consolidating above the top of the old trading range. Yesterday’s big export sales number was enough to help the market close positive, but not enough to take out Wednesday’s high. The extended forecasts for the Corn Belt look warmer and drier than this week’s weather, which will aid in planting if the forecasts verify. Traders will be back to watching the Sunday night forecasts very closely for hints of planting delays. Look for two sided trade as we close out the week.

Wheat                                      Estimated Fund Position

Trends – July Contract

Short Term: Down                   Net Long Futures and Options: -18709

Long Term:Up                                    Change: +2500

Overnight Trade: Chicago: N -10 KC: N -11 @7:30 AM

The July KW made a new low for the move overnight, but the July Chicago wheat did not. The markets are becoming oversold and due for a corrective pause or bounce. Rainfall accumulation in the HRW Belt was minimal yesterday and it doesn’t look like the weekend will be much better. Plan on lower crop condition ratings again on Monday, and if the current forecasts are accurate, the Monday after that as well. There appears to be good moisture in the 8-14 day time period, but that is too far away to have much confidence in. $7.20 still looks like a possible downside target for the July KW, but the falling Dollar and strength in the outside markets may help the wheat come off the overnight lows during the day session.

Soybeans                                 Estimated Fund Position

Trends – July Contract

Short Term: Up                       Net Long Futures and Options: 163356

Long Term:Up                                    Change: +4000

Overnight Trade: N +3 @7:30 AM

The soybeans were strong yesterday and again overnight, but still haven’t made a new high for the move. Indicators are overbought, but it won’t be a surprise to see a new high either today or early next week. We still haven’t got the old crop balance sheet figured out and next week’s supply and demand report should be friendly. Plan on more bull spreading and $15.00 is still a viable upside target for the July contract.

Live Cattle

Trend

Short Term: Up

Long Term: Up

Opening Calls: Mixed

Live cattle futures closed moderately higher on Thursday, with little sign of cash trade being established. Cutouts were lower, as were the carcass weights. Buyers are expected to start bids near $148 in the south, with asking prices of $153. Overnight trade has been two sided, with some light bull spreading as a feature. Open interest was up nearly 4,000 contracts on Thursdays’ rally. The Dollar is making new highs for the move, which may start to limit export sales in some regions. Last weeks’ sales remained solid at 13,800 mt.

Feeder Cattle

Trends

Short Term: Up

Long Term: Up

Opening Call: 10-30 Lower

Feeder cattle futures closed sharply higher on Thursday, with all but the lead April contract posting new contract highs. The rally came in the face of solid gains in the corn market and on the back of some surprisingly strong cash sales. Overnight feeders are trending a little lower, even though the corn market has backed off 2-3 cents. We expect to see some choppy trade heading into the weekend, with front months gaining on the deferred.


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