Schwieterman: Cattle futures post gains, Corn in a downtrend

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Corn                                          Estimated Fund Position
Short Term:Down                  Net Long Futures and Options: -149
Long Term: Down                  Change: -3000
Overnight Trade: H -2 @7:30 AM

The March corn is testing the low from two weeks ago and the December contract made a new low for the move. There isn’t much to say that is positive about the corn right now. We have had one week in a row of decent export sales and basis is still strong, but traders are convinced that supplies will be replenished this year and all will be well. As long as attitudes are like that, plan on pressure in the new crop.

Wheat                                        Estimated Fund Position
Short Term: Down                  Net Long Futures and Options: -78947
Long Term: Down                   Change: -2000
Overnight Trade: Chicago: H -6 KC: H -4 @7:30 AM

More moisture in the HRW Belt is putting more pressure on the wheat. Garden City had no snow overnight, but one doesn’t have to travel very far east to find it. For the central part of the state, the Drought Monitor will look much better and give the bears the idea that the drought is broken and we will have a big crop this year. Unfortunately we don’t have the demand to support a big crop and that will make it very hard for the wheat to rally.

Soybeans                              Estimated Fund Position
Short Term: Up                    Net Long Futures and Options: 101248
Long Term:Up                      Change: -8000
Overnight Trade: H -2 @7:30 AM

Friday was very disappointing. What started as a breakout above $15.00 in the March contract turned into a reversal lower. The market has traded both sides of unchanged overnight in a wide trading range. The $14.50 area should be good support, so the market may be ready for a turnaround now. A positive close today would put the market back on track for another move above $15.00.

Live Cattle
Short Term: Down
Long Term: Down
Opening Calls: 20-40 Higher

Live cattle futures closed higher across the board on Friday, with triple digit gains in the expiring February contract. Additional snow is slated for Kansas today, which should continue to stress cattle into slower conversion rates. Friday’s on feed report held very little in the surprise category, with placements up 2% and marketing’s rising 6% from year ago levels. Cash trade improved in Kansas and Nebraska after the report, with moderate $125 trade reported. In spite of increasing production by 7% over January 2012, cold storage was down 1%, suggesting improved demand.

Feeder Cattle
Short Term: Down
Long Term: Down
Opening Call: 20-40 Higher

Feeder cattle futures posted moderate gains on Friday, ahead of the monthly on feed report. For the week, April feeders were down 2.85 but remain 3.30 premium to the current cash index. Corn futures remained in their downtrend in overnight trade, with current prices off another 2 cents. The grain weakness could provide some much needed support for the feeders. Look for choppy trade to continue, as this market works to carve out a bottom.

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