Schwieterman: Feeder cattle futures extend recent gains

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Corn                                      Estimated Fund Position
Trends – March Contract
Short Term:Down                  Net Long Futures and Options: -178263
Long Term: Down                  Change: -4000
Overnight Trade: H Unch @7:30 AM


The corn market is trading at the bottom end of the trading range. Fresh news is hard to come by. Traders are still talking about the Chinese rejecting our corn, but that hasn’t happen for a while. The critical support on the charts is still at the December low and a close below that level would make the corn charts look like the wheat charts. The bulls really need a positive close today.

Wheat                                   Estimated Fund Position
Trends – March Contract
Short Term: Down                Net Long Futures and Options: -110496
Long Term: Down                 Change: -3000
Overnight Trade: Chicago: H Unch KC: H Unch @7:30 AM

The wheat market slipped to yet another new low for the move overnight. There doesn’t seem to be any love for the wheat right now despite the fact that our prices are very competitive on the world market. On the charts we still have to refer to the weekly and monthly continuations in order to find downside targets and for the moment the round numbers look most likely. $6.50 and $6.00 are strong possibilities for the March KW if we don’t see some good news soon.

Soybeans                             Estimated Fund Position
Trends – January Contract
Short Term: Up                    Net Long Futures and Options: 135672
Long Term:Up                      Change: +6000
Overnight Trade: F -4 @7:30 AM


The soybeans are still consolidating near the recent highs. The bears are waiting to see the Chinese cancel soybean purchases, but it isn’t happening, which has everyone on edge. Our export sales have to slow down to avoid shortages this summer and we can’t have any weather problems in S. America, so traders will be very sensitive to headlines about S. American dryness. Look for two sided trade today.

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


Live cattle futures recovered from early weakness to close moderately higher across the board on Monday. Futures are retesting the 50 day moving averages in the lead contracts, after finding support from commercial buying and a strong start to the week in cutout values. Wednesday’s FOMC meeting results are likely to be a key for financial markets into year end and are likely to spill over into the commodity markets. The safe bet is that they will make no changes but have some rhetoric that suggests tapering is coming.

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


Feeder cattle futures extended their recent gains on Monday, with January leading the assault, gaining 1.32 on the day. Cash index levels continue to establish new highs, with Mondays seven day average rising to 168.32. Overnight trade has been two sided, with a lower bias. Corn futures are up a penny as we write and feeders appear to be in light profit taking mode. Feeder cattle auctions generally slow for the next two weeks, as producers and feedlots go into their Holiday mode.



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