Schwieterman: Live cattle futures change direction, close lower

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Corn                                          Estimated Fund Position
Trends – July Contract
Short Term: Up                         Net Long Futures and Options: 77035
Long Term: Up                          Change: -4000
Overnight Trade: N +3 @7:30 AM


Corn export sales were huge at 1.52 MMT for the old crop at 164,500 MT for the new crop. I have doubted that USDA would increase the export estimate in the March supply and demand report, but sales numbers like this certainly justify it. Bull spreading is still active thanks to the strong up front demand and the threat of tighter ending stocks at some point in the future. The July contract is consolidating around the $4.90 resistance and it still looks like we are due for a correction, but with sales like this, dips are for buying in the old crop.

Wheat                                       Estimated Fund Position
Trends – July Contract
Short Term: Up                         Net Long Futures and Options: -39669
Long Term:Up                           Change: -2000
Overnight Trade: Chicago: N -2 KC: N -1 @7:30 AM


Wheat export sales were back on track and Brazil and China were listed as buyers, which is very important to note. The shipment pace is still too slow because we are running out of time to meet the USDA export estimate and that is probably one of the reasons traders are looking for a negative supply and demand report. The technical setup of the market still suggests we will see a correction, but right now the market seems to be correcting by going sideways.

Soybeans                                  Estimated Fund Position
Trends – July Contract
Short Term: Up                         Net Long Futures and Options: 187619
Long Term:Up                           Change: -3000
Overnight Trade: N +10 @7:30 AM


Despite cancellations by the Chinese, we still had a big export sales number of 772,700 MT of old crop and 256,000 MT of new crop beans. Meal sales were great and oil sales were solid, so the overall demand picture is much more bullish than we can handle. It will be interesting to see how USDA handles this demand. I am planning on seeing negative residual usage at some point. On the charts, the July contract made a new high for the week overnight, but has not taken out last week’s high, so we are still set up for a correction. However, with export sales like this, weakness is a buying opportunity for the old crop.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 10-30 Lower


Live cattle futures reversed from contract highs to trade sharply lower on Wednesday. The April contract touched limit down at 142.62, before recovering 1.00 of those losses. We would not be surprised to at least have a retest of Wednesday’s low before any extended rally effort resumes. We saw a few thousand head of Kansas show lists moved at $148 on Wednesday, with some light northern movement at $240 in the beef. Beef exports for the week were listed at 11,100 mt. Higher equities and a weaker Dollar this morning should be commodity supportive.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 10-30 Lower


Feeder cattle futures closed moderately lower on Wednesday, getting mixed signals from lower live cattle and lower corn. Corn is mixed in early morning trade, with feeders dipping lower along with the fats. The cash index put in a new all-time record high on Wednesday, of 172.21. Sales in the southern areas this week have been limited in numbers due to poor weather conditions in the region. We expect the feeders to remain fairly stable in both the cash and futures trade.



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