Schwieterman: Feeder Cattle Feed Off Of Sold Cash & Lower Corn
Corn
Trends
Short Term: Down
Long Term: Down
Overnight Trade: N Unch Z –1/4
Opening Calls: Steady
LDP for FI County KS: Corn -9 Milo 12
Support failed in the corn once again yesterday. For the December contract the next major support lies at the $2.49 level. The market is oversold and due for a correction, but so far there is little indication that the market is going to turn higher. The US corn crop is rated at 68% good to excellent, which is the same as last year and the 5 - year average. Weather forecasts are mostly favorable and if there is no weather threat the corn will continue to trend lower.
Wheat
Trends
Short Term: Down
Long Term: Down
Overnight Trade: Chicago: N +3 3/4 KC: N +3 1/2
Opening Calls: 2-3 Higher
LDP for FI County KS: -153
Wheat futures got a bounce overnight. The wheat is due for a bounce and during yesterday’s session it was apparent that the wheat was try to separate itself from the other markets. Crop conditions were unchanged in the winter wheat, but the spring wheat fell to 60% good to excellent from 67% last week. The Kansas wheat crop is 53% complete compared with 15% on average. The harvest progress indicates that the wheat is due for some seasonal strength that we usually see when harvest starts winding down.
Soybeans
Trends
Short Term: Down
Long Term: Down
Overnight Trade: N +1 1/2
Opening Calls: 1-2 Higher
LDP for FI County KS: -33
Soybeans were under heavy selling pressure yesterday, but had no follow through overnight. Even if there is more selling today, it is unlikely that the soybeans will lose much more than 10 cents. There is no indication that the soybeans are going to break out of the range bound trade that we have seen for months. Soybean condition was reported at 67% good to excellent, which was unchanged from a week ago.
LIVE CATTLE
Trend
Short Term: Up
Long Term: Up
Seasonal: Down
Opening Calls: 10-20 Higher
Live cattle futures picked up where they left off last week, scoring new highs for the move in nearly every contract. Boxed beef prices rose moderately on the day and movement for a Monday was very good. It is assumed that at least two of the major packers are short bought coming in to this week. If that is the case we could see some cash development earlier in the week than normal. Slaughter started the week ahead of last weeks pace and should continue as long as packer margins remain deep in the black. If you have June/August spreads on, we would look to begin liquidating on any move toward the 3.50 area in the next few days.
FEEDER CATTLE
Trends
Short Term: Up
Long Term: Up
Seasonal: Up
Opening Calls: Steady/Higher
Feeder cattle continued to feed off of solid cash trade and lower corn prices, closing at the highest levels since the first of the year. Rains in some key grass areas over the weekend should help support the market by pulling immediate numbers out of the sale barns. We remain active in buying put options on a scale up basis to protect late Summer and Fall inventories.
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