Schwieterman: Feeder cattle futures lower with heavy selling

Corn                                             Estimated Fund Position
Trends
Short Term: Down                    Net Long Futures and Options: 59869
Long Term: Down                     Change: +5000
Overnight Trade: H -1/4 Z -2 1/2
Opening Calls: 1-2 Lower

Yesterday’s recovery should encourage the bulls, and breaking the string of lower highs and lower lows in the overnight trade is helpful as well. Now all we need to see is a big export sales number and traders will begin to think we have marked a low. In other words we aren’t out of the woods yet. The technicals suggest we could see a recovery, but we are still lacking a fundamental spark that will get the buying started. A slip back below $5.88 today would be a good reason to sell again.

Wheat                                          Estimated Fund Position
Trends
Short Term: Up                          Net Long Futures and Options: -82385
Long Term: Down                     Change: +1000
Overnight Trade: Chicago: H -4 KC: H -4
Opening Calls: 3-5 Lower

The wheat made a solid recovery yesterday as well, but had no follow through strength overnight. I see no reason to get very excited about the wheat until we take out Monday’s high of $6.89 in the March KW. No fresh fundamental news, a flat corn market and flat outside markets suggest choppy, two sided trade for the wheat today.

Soybeans                                   Estimated Fund Position
Trends
Short Term: Up                          Net Long Futures and Options: -18421
Long Term: Down                     Change: +3000
Overnight Trade: H + 3 3/4 X +4 1/2
Opening Calls: 3-5 Higher

The March beans held at the $11.29 support yesterday and made a solid recovery. There was even some buying overnight, but the move was not big enough to scare shorts into covering their positions. Like everything else this market needs to see consistently large demand numbers in order to produce consistent gains in the market. A technical recovery may be at hand, but we need more fundamental information for a change in trend.

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

Live cattle futures rejected an early recovery effort on Tuesday, closing moderately lower in all but the December contract. The bull spreading and continued aggressive kill rate, were the only real positives. Cutouts remain under assault, and momentum continues to favor the bears. Overnight action traded both sides of unchanged, with outside influences leaning to the sell side. We should continue to see December gain on deferred contracts.

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

Feeder cattle futures continued to see heavy selling on Tuesday, with the lead contract down more than 2.00 for the day. The rebound in corn values didn’t help, but technical selling led by long liquidation is a bigger factor. Overnight saw continued weakness, with deferred contracts as much as .50‐.60 lower. The last remaining chart gap in the January contract comes in at 139.50, which also happens to be a 62% retracement of the move from the August low to the November high.

1. U.S. electricity prices grows 1.1% in 2013
2. Consider oats as a double crop after wheat
3. Jolley: What is to become of beef?
4. Ag markets moved generally higher Wednesday
5. U.S. coal prices steadily increase value
6. Angus breeders honored by the Beef Improvement Federation

1. Will Smith dethroned in latest Peterson Farm Bros. parody
2. 3,000 pounds of copper wire stolen from Oklahoma ranch
3. Crude oil expected to peak and cost of electricity to go down
4. Changes in U.S.-Mexican cattle and beef trade
5. Peterson Brothers: What summer vacation?
6. 2100: 11 billion mouths to feed

1. COOL isn’t working
2. Feedyard margins a train wreck, packers cozy
3. Canadian CJD cases are “classical" form
4. Jolley: What is to become of beef?
5. Will Smith dethroned in latest Peterson Farm Bros. parody
6. New ads emphasize agriculture’s role in economic recovery