Corn                                                      Estimated Fund Position
Short Term:Down                              Net Long Futures and Options: 12851
Long Term: Down                              Change: +10000
Overnight Trade: H +1@7:30 AM

The bull spreading continues in the corn. The March contract finally broke out of the consolidation pattern and the December posted an outside day higher on the chart. The chart action suggests we will see further short covering and the basis levels suggest we will see further bull spreading. For the time being we will look for the March contract to bounce back to the $7.25 level and the December to $5.65.

Wheat                                                  Estimated Fund Position
Short Term: Down                             Net Long Futures and Options: -79947
Long Term: Down                              Change: +2000
Overnight Trade: Chicago: H +5 KC: H +5 @7:30 AM

The March KW managed a positive close yesterday and has seen follow though buying overnight. The bounce in the corn is probably the main reason for the bounce in the wheat. There is a lot of talk about the March corn and March Chicago wheat being equal and how that can’t last very long. Wheat is definitely part of the feed mix and it will take more than a one day bounce to change that.

Soybeans                                             Estimated Fund Position
Short Term: Down                             Net Long Futures and Options: 93248
Long Term:Up                                     Change: -4000
Overnight Trade: H +5 @7:30 AM

The March soybeans are still holding above the 40 and 50-day moving averages. The market is in good position to resume a move higher, but the market doesn’t seem to be in any hurry to do it. After two consecutive weeks of net cancellations, traders want to see a positive number in tomorrow’s export sales report. The Chinese have been active in the new crop market, but a fresh old crop sales would provide a big boost to the market. A close above $14.60 in the March contract should confirm a bottom.

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

Live cattle futures closed moderately higher on Tuesday after posting .50 losses in early action. We expect to see some follow through buying today, as open interest climbed on the reversal session. Cutouts were sharply higher on Tuesday and hide and offal have climbed to record high values over the past few weeks. Record high prices at that end are likely providing better margins for the packer than common rhetoric would indicate. No fresh deliveries were posted against the February contract, providing strength in overnight trade for that month. Cash trade could begin taking shape today, if bids rise closer to the $127 asking price.

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

Feeder cattle futures posted modest gains across the board on Tuesday, climbing nearly 2.00 off of session lows posted in early morning trade. The rally came in spite of solid gain in the corn futures on Tuesday. Overnight activity is narrowly mixed, with a slightly lower bias. Corn is mostly steady. Cash index levels continue to plummet, with Tuesday’s average dropping .83 to 138.31. This is the lowest posting since the middle of July. The future of the feeders is becoming more reliant on the fat market than any time in recent memory.