Schwieterman: Feeders decline, corn futures weaker

Corn                                              Estimated Fund Position
Trends
Short Term: Up                           Net Long Futures and Options: 118343
Long Term: Up                            Change: -14000
Overnight Trade: N +2 1/4 Z +2
Opening Calls: 2-3 Higher

Corn made a small bounce overnight, but it wasn’t much of a recovery relative to the recent losses. Basis improved in a number of locations across the country and the May contract continues build a premium to the July contract, both of which are bullish. The July corn did complete a 62% retracement of the last move up, so the market is at a decent support area. Probably most important today is that fact that we aren’t seeing selling pressure in the stock market, that should give a number of markets some breathing room.

Wheat                                         Estimated Fund Position
Trends
Short Term: Up                          Net Long Futures and Options: -87986
Long Term: Down                     Change: -4000
Overnight Trade: Chicago: N +5 1/4 KC: N +5 1/4
Opening Calls: 3-5 Higher

The wheat market continues to be the worst of the bunch. Many support levels failed in the July KW yesterday and we must now look at the 2010 lows around $5.90 as the next downside objective. If the corn isn’t moving higher then there isn’t much reason for the wheat to move higher. Demand has to improve in order to see gains in the wheat, because without a freeze scare there won’t be any supply concerns.

Soybeans                                    Estimated Fund Position
Trends
Short Term: Up                           Net Long Futures and Options: 206437
Long Term: Up                            Change: -4000
Overnight Trade: N +1 X +3 1/4
Opening Calls: 1-3 Higher

Old crop soybeans did the best job of holding on yesterday and were higher overnight. USDA is probably still underestimating old crop exports and the projected tight supplies in the new crop will keep support under the market at least until the May supply and demand report. We are still looking for a move to $14.70 in the July contract.

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

Live cattle futures put in new lows for the move through the October contract on Tuesday. The sharply lower close produced some light cash sales in the north at 119.50 and 192.00. Prices are off $1-$2 from week ago levels. A major earthquake in Indonesia this morning is causing tsunami concerns and some choppy market activity. Overnight feeder prices are firming on the news, with prices as much as .50 higher in the active June contract.

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

Feeder cattle futures closed lower to sharply lower in the front four months, with October and November higher. Weakness in corn futures did little to create recovery in the feeders. Cash index levels continue to fall, but remain premium to front end feeder futures. Corn is firmer in overnight trade, with feeders slightly weaker across the board. Firmer trade in deferred live cattle would be well received by feeder operators.

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