Schwieterman: Weak corn keeps floor under feeder cattle

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Corn                                                  Estimated Fund Position
Trends
Short Term: Down                         Net Long Futures and Options: 57242
Long Term: Down                          Change: -10000
Overnight Trade: H -4 @7:30 AM


The corn gapped higher yesterday, but those first ticks of the day ended up being the high of the day. The March corn posted an outside day down on the chart and has seen follow through selling today. The next support is the bottom of the open chart gap at $6.83 ½ followed by $6.78. The momentum of the market is clearly to the downside and it will take a surprisingly large export sales report tomorrow or something from next week’s supply and demand report to change the trend.

Wheat                                              Estimated Fund Position
Trends
Short Term: Down                         Net Long Futures and Options: -72017
Long Term: Down                          Change: -5000
Overnight Trade: Chicago: H -1 KC: H +1 @7:30 AM


The wheat posted a horrible performance yesterday. The outside day down and new low for the move make the $7.90 level the next downside objective for the March KW. Meanwhile, crop condition ratings are getting worse and exports are improving, so the news isn’t all bearish by any means. The market is oversold and due for a bounce, but trying to pick a bottom is futile.

Soybeans                                        Estimated Fund Position
Trends
Short Term: Down                        Net Long Futures and Options: 59076
Long Term: Down                         Change: -7000
Overnight Trade: H -12 @7:30 AM


The March soybeans stalled out at the 40-day moving average right at the open yesterday and spent the rest of the session working lower. Like the other markets the beans posted an outside day down on the chart and have seen follow through selling overnight. At this point we have to plan on a test of the November low of $13.56 in the March contract.

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

Live cattle futures closed mixed on Wednesday, but did see a new injection of business, with open interest rising more than 6,000 contracts. Cash trade should start taking shape today, with asking prices of $129-$130 and bids of near $125. The large premium of the board to last weeks’ cash is expected to keep asking prices firm. Overnight trade is slightly firmer. Look for overall bias to remain higher in the complex, with good support on any decent pullbacks.

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

Feeder cattle futures closed modestly lower in the front three months on Wednesday, with deferred contracts settling modestly higher. Continued weakness in the corn market is expected to keep floor under the feeders, even though they remain a solid premium to cash. Corn is off another 4-5 cents in electronic trade, while feeders are trading steady to slightly weaker. Feeders look like a buy on any 1.50-2.00 retracement.



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