Schwieterman: Feeder cattle futures closed sharply higher on Wed

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Corn                                      Estimated Fund Position

Trends – July Contract

Short Term: Up                 Net Long Futures and Options: 181706

Long Term: Up                 Change: -9000

Overnight Trade: N -2 @7:30 AM

Export sales were great at 658,700 MT for the old crop and 58,000 MT for the new crop. Even after yesterday’s 125 million bushel increase in the export estimate to 1.750 billion, this current sales pace is still about 5 times what we need. In other words, unless we see sales slow significantly, USDA will have to increase the export estimate again next month. The charts, unfortunately, look poor after yesterday’s action. Look for follow through selling, especially in the new crop.

Wheat                                  Estimated Fund Position

Trends – July Contract

Short Term: Down           Net Long Futures and Options: -2526

Long Term:Up                   Change: -6000

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

Wheat export sales were poor at only 41,800 MT of old crop sales and 349,100 MT of new crop. The wheat posted an outside day down on the chart, but is still basically range bound. The export demand obviously isn’t helping the market, but the declining condition of the crop is. As usual we have good rain forecast about 10 days out, but we haven’t had much luck actually getting that rain to hit the ground. $7.28 ½ and $7.20 are the next support levels for the July KW.

Soybeans                            Estimated Fund Position

Trends – July Contract

Short Term: Up                 Net Long Futures and Options: 156669

Long Term:Up                   Change: +6000

Overnight Trade: N -2 @7:30 AM

The May soybeans cleared $15.00 for a little while yesterday and the July contract made it to $14.90. USDA increased the export estimate by 50 million in yesterday’s report, but that still isn’t enough to catch up with what we have already sold, and we had another positive sales figure this week. Old crop came in at 79,100 MT and new crop at 210,400 MT. Old crop meal came in at 179,600 MT, so we aren’t doing a great job of slowing demand at this point. Look for further gains in the old crop.

Live Cattle

Trend

Short Term: Down

Long Term: Up

Opening Calls: Mixed

Live cattle futures were mostly moderately higher on Wednesday, with the cash trade yet to surface and asking prices and bids well separated. We could easily see trade postponed until Friday if packers remain at their lower level bids. The huge reversal in the lean hogs on Wednesday should send up a warning signal to spec sellers in the meat markets. The weakness in boxed beef prices over the past couple weeks continues to be worrisome to producers. The huge discounts to cash in the deferred contracts don’t provide much of a hedging opportunity. The government raised their estimate for average fed cattle prices to $147 in their report on Wednesday.

Feeder Cattle

Trends

Short Term: Up

Long Term: Up

Opening Call: Mixed

Feeder cattle futures closed sharply higher on Wednesday, posting triple digit gains in most contract months. The higher live cattle, huge reversal in the hogs and lower corn settlement were all contributing factors. Cash index levels set a new all-time high of 178.74 on Wednesday. Dodge City and a couple other sales were trending a couple dollars lower than a week ago in their sales. The market needs to see appositive move in the feedlot sales near term in order to maintain their recent enthusiasm.



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