Schwieterman: Old and new corn crop futures make new highs

Corn                                          Estimated Fund Position
Trends
Short Term: Up                      Net Long Futures and Options: 65130
Long Term: Up                       Change: +13000
Overnight Trade: N +2 3/4 Z +5 ½ @7:15 AM
Opening Calls: 2-4 Higher

Both old crop and new crop futures made new highs for the move overnight, but have given up most of the gains. The news hasn’t changed much and there are still concerns about old crop tightness and basis levels, while new crop traders are looking at less than ideal forecasts. The indicators are overbought and it is bothersome that the December contract stalled out at the $5.50 area, which in the past acted as strong support. A set back may occur at any time, but one should take a “buy the breaks” stance at this time.

Wheat                                       Estimated Fund Position
Trends
Short Term: Up                       Net Long Futures and Options: -65130
Long Term:Up                         Change: -2000
Overnight Trade: Chicago: N -1 1/2 KC: N +3 ¼ @7:15 AM
Opening Calls: Mixed

Wheat was extremely volatile overnight. The big move higher, followed by a collapse looks very negative, but there is still a lot of trading to be done today. Forecasts for extremely high temperatures in parts of the HRW Belts and declining crop condition ratings are still supportive to the market, but harvest is upon us, which will temper enthusiasm for buying. $6.70 would be a good place to buy the July KW until more is known about the crop size.

Soybeans                                  Estimated Fund Position
Trends
Short Term: Down                   Net Long Futures and Options: 188671
Long Term: Down                    Change: -8000
Overnight Trade: N +9 1/2 X +14 @7:15 AM
Opening Calls: 10-15 Higher

The soybeans were firm overnight, but like the other markets, the beans have given up most of the gains. The July contract is struggling with the 40 and 50-day moving average resistance and there is concern that if the Chinese do not step up their old crop buying, the old crop futures will be subject to selling pressure. Bear spreading was active overnight and will probably remain so during the week.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: Higher

Live cattle futures had a strong week, closing up more than 4.00 in the lead June contract. Cash trade was up $3.00 in most cases and the monthly on feed report was supportive enough to boost calls significantly higher this morning. Placements of 85% and on feed numbers below a year ago for the first time in well over a year is lending the support for the strong opening. Asking prices are expected to rise to $126 in the south and $198+ in the north. Packers will be buying for a shortened kill, with next Monday the Memorial Day holiday.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 40-80 Higher

Feeder cattle futures posted solid gains for the week, gaining 3.20 in the August contract in spite of .54 gains in the corn futures. Lower than expected placements, along with expanding open pen space should produce demand in the country sales. Strength in deferred live cattle will be a key factor in continued strength with the feeders. Cash is going to be a huge discount to futures when May goes off the board next week.

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