Schwieterman: Ongoing strength in cash market lifts feeder cattle

Corn                                              Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: 97739
Long Term: Down                       Change: -22000
Overnight Trade: Z +1/2 N +1/2
Opening Calls: Steady to 1 Higher

The critical $6.30 support failed in the December corn yesterday, which suggests that the market may be headed to the October low near $5.72. At the very least we will probably see the market drift down to the $6.00 area in time for next Friday’s option expiration. The past two weeks of poor export sales numbers suggest this market is overpriced and it will take improved demand numbers to change trader’s minds.

Wheat                                             Estimated Fund Position
Trends
Short Term: Down                       Net Long Futures and Options: -79895
Long Term: Down                        Change: -4000
Overnight Trade: Chicago: Z +4 1/2 KC: Z +2 3/4
Opening Calls: 3-5 Higher

The support at the October low failed in both Kansas City and Chicago. The charts look very bearish and with no strength in the corn, there is little reason to expect strength in the wheat. The drought monitor still looks horrible for much of the HRW belt, but traders are more concerned with the lack of demand.

Soybeans                                       Estimated Fund Position
Trends
Short Term: Down                        Net Long Futures and Options: 7622
Long Term: Down                        Change: -6000
Overnight Trade: F +5 3/4 N +6 1/2
Opening Calls: 5-7 Higher

The January soybeans are still holding near the October low. Demand numbers have certainly improved, which give the beans the best shot at a bounce in the short run. We still need to see consistently large sales numbers to China, but at least the past two week’s are a solid start. Look for short covering as we head into the weekend.

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

Live cattle futures closed sharply lower on Thursday, triggering some moderate cash trade in the south $2‐$3 lower than a week ago. Northern trade appears to be holding asking prices of at least steady money. Weakness in corn values of nearly 30 cents on Thursday, allowed for deferred live to fall off as well. This afternoon’s report should be supportive and weight breakdowns for last week were below year ago levels.

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

Feeder cattle futures managed to blow off weaker live trade to close moderately higher on Thursday. Sharp losses in corn futures provided support, along with ongoing strength in the cash feeder market. This afternoon’s report is expected to show more light weight placements, further limiting the yearlings available down the road.

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