Schwieterman: Cattle futures finish higher Friday

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Corn                                     Estimated Fund Position
Trends – March Contract
Short Term: Up                    Net Long Futures and Options:
Long Term: Up                     Change:
Overnight Trade: H -2 @7:30 AM


The March corn made its best close since mid-November Friday, but didn’t see any follow through buying overnight. Today is the February supply and demand report and expectations are for friendly numbers, but it may take a bullish surprise in order for the market to work through the $4.50 resistance. Bearish traders are hoping that the focus of the market returns to the new crop and the expected rise in ending stocks once the report is out of the way. Indicators are overbought, so if there is any disappointment from the report, it will be a quick move down.

Wheat                                   Estimated Fund Position
Trends – March Contract
Short Term: Up                     Net Long Futures and Options:
Long Term: Down                 Change:
Overnight Trade: Chicago: H -3 KC: H -4 @7:30 AM


Friday’s sharp break in the wheat has made a lot of traders nervous. The March KW did close positive, but that didn’t do much to ease fears. Today’s supply and demand numbers probably won’t do much to help either the bulls or the bears, so the market will likely take its directional cues from the corn and soybeans. The chart still leaves us potential for a move up to $6.74, but it will probably take something friendly from USDA to make that happen.

Soybeans                               Estimated Fund Position
Trends – March Contract
Short Term: Up                      Net Long Futures and Options:
Long Term:Up                        Change:
Overnight Trade: H +2 @7:30 AM


Now that the beans are back to the top of the trading range it seems that all the talk has shifted back to fears of cancellations by the Chinese, but that didn’t keep the March beans from making a new high for the move overnight. USDA has the potential to release a very bullish report today and that has traders a little nervous. I expect to see something supportive, but very conservative from USDA today. There will be a small increase in exports and a small cut in ending stocks and they will keep their fingers crossed for cancellations.

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


Live cattle futures exploded higher on Friday, in spite of the sharply lower cash trade. The best we have heard in the south was $141, with limited clearance bring reported by early evening. A recall of a large amount of boxed beef being reported over the weekend is the story heading into the opening of markets at 9:05 this morning. The recall appears to be mostly head, cheeks, tongue, livers along with veal bones and trimmings, all from a California plant. The other big news today will be the USDA supply/demand report to be released at 11:00 am. First notice for delivery of the February contract is after the close today.

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


Feeder cattle futures closed moderately higher on Friday, gaining support from the sharp rise in live cattle futures. For the week, March feeders were down 1.63 and remain nearly 1.80 lower than the current cash index. The index was lower for the 7th session in a row and lost 1.49 for the week. This mornings’ grain report is expected to be the main influence on feeders today, with corn prices already thirty some cents above their contract lows posted just a month ago.



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