Schwieterman: Dry weather in S. America supports corn market

Corn                                   Estimated Fund Position
Trends
Short Term: Up               Net Long Futures and Options: 93997
Long Term: Up                Change: +1000
Overnight Trade: H +8 1/2 Z +7 1/4
Opening Calls: 7-10 Higher

Dry weather in S. America supported the corn market overnight. Crop losses and potential for a bullish report from USDA on Thursday are very supportive to the corn market. We still have the potential to see a record, or near record stocks to use ratio for US corn. The resistance to watch now is last week’s high of $6.64 ¼ in the March contract.

Wheat                              Estimated Fund Position
Trends
Short Term: Down         Net Long Futures and Options: -75705
Long Term: Down          Change: -1500
Overnight Trade: Chicago: H +11 KC: H +8 1/4
Opening Calls: 7-10 Higher

Wheat followed the corn higher overnight. Friday, the March KW fell to the support zone between the 50 and 62% retracements of the last move up and held, so from a technical perspective, the wheat could be ready for a second leg higher. There still isn’t much wheat specific, bullish, fundamental news, but if the corn moves higher, so will the wheat.

Soybeans                        Estimated Fund Position
Trends
Short Term: Down        Net Long Futures and Options: 6419
Long Term: Up              Change: -5000
Overnight Trade: H +10 1/4 X +9
Opening Calls: 7-10 Higher

The $11.92 support in the March contract has been tested and has held, so if the forecasts stay threatening, the soybeans should resume their trend higher. Both technicals are fundamentals seem to suggest we are ready for more gains in the soybean market. Barring a bearish surprise from USDA this week, we should see solid gains.

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

Live cattle futures closed moderately lower on Friday and for the week. Cash trade was steady to $1.00 lower in most cases, with clearance continuing to be less than impressive. Weather remains open in the extended forecast, with temps dropping to below normal in some regions. The dry winter has allowed for good conversion rates. With that, weights remain below year ago levels, which could continue due to the lighter placement weights starting in the early part of summer. February continues to look like a value compared to deferred contracts.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: Mixed

Feeder cattle futures posted moderate to heavy losses on Friday, but remained a good dollar stronger for the week. Continued dryness in South America had corn up 8 cents in overnight trade. Open interest continued to climb in the feeders on Friday. Cash levels remain extremely strong, which should keep a floor under the futures. Look for two sided trade, with a continued higher bias.

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