Schwieterman: Live cattle futures closed mixed on Thursday

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Corn                            Estimated Fund Position

Trends – July Contract

Short Term: Up           Net Long Futures and Options: 179706

Long Term: Up           Change: -2000

Overnight Trade: N -1 @7:30 AM

Corn was a little weaker overnight, but there isn’t much direction to the market. Wednesday’s failure resulted is some follow through selling yesterday, but most of the losses we recovered by the close. The charts still suggest the July corn can move down to the $4.90 level, but the forecasts for the Corn Belt look a little wetter, so that will support the market today. Sunday’s nights forecast will be important and open weather will be negative to the market.

Wheat                          Estimated Fund Position

Trends – July Contract

Short Term: Down       Net Long Futures and Options: -6526

Long Term:Up                        Change: -4000

Overnight Trade: Chicago: N -5 KC: N -5 @7:30 AM

The Drought Monitor looks worse for parts of Texas and Oklahoma, but some areas of the HRW Belt will see rain over the weekend, thus the new low for the move in the July KW. $7.20 is still the next downside target and we haven’t quite reached that level yet. Expect to see lower crop condition ratings on Monday with the numbers potentially falling to 1996 levels.

Soybeans                     Estimated Fund Position

Trends – July Contract

Short Term: Up           Net Long Futures and Options: 151669

Long Term:Up                        Change: -5000

Overnight Trade: N -8 @7:30 AM

After briefly trading over $15.00 in the May contract this week, traders are now, once again, concerned about the Chinese. There is talk of defaults on cargoes of beans, but they are mostly from Brazil, so it still doesn’t fix our tight old crop balance sheet. The market has had a good run and a correction back to $14.30 in the July contract would be reasonable at this time.

 Live Cattle

Trend

Short Term: Down

Long Term: Up

Opening Calls: 10-30 Higher

Live cattle futures closed mixed on Thursday, with April higher and the rest of the complex softer. Cash trade remains a mystery this week, with bids slowly moving toward week ago cash. Feedlots remain firm in their higher asking prices, while the April contract is just inching higher. Overnight futures prices are modestly higher, with bull spreading a continued feature from Thurs ay. Sharply lower equity markets could limit upside potential in the meat markets. Open interest in the April contract of more than 23,000 will likely require some volatility for liquidation to take place.

Feeder Cattle

Trends

Short Term: Up

Long Term: Up

Opening Call: 10-30 Lower

Feeder cattle futures closed moderately lower in the front two months, with deferred contracts narrowly mixed. Corn prices were modestly lower on Thursday and are trading near unchanged in overnight trade. Overnight feeder trade has been two sided, with little lower bias as we write. The cash index dropped .43 on Thursday but remains .22 higher for the week. As we have stated recently, additional strength in the feeders will become more reliant on strength in the fats, with no big corn breaks in sight.



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