Schwieterman: Live cattle futures reverse early weakness

Corn                                          Estimated Fund Position
Trends
Short Term: Up                       Net Long Futures and Options: 174094
Long Term: Up                        Change: +4000
Overnight Trade: H -1 @7:30 AM

The corn failed to hold the early gains yesterday, but managed a positive close at the middle of the trading range. The overnight session has been directionless and quiet. Fresh news is still limited. There is talk of poor planting progress in Argentina and hopes for better exports. The charts suggest another day of consolidation trade.

Wheat                                        Estimated Fund Position
Trends
Short Term: Up                        Net Long Futures and Options: -23442
Long Term: Down                   Change: -2000
Overnight Trade: Chicago: H +2 KC: H+3 @7:30 AM

The March KW ended up closing near the session lows yesterday and made a new low for the move overnight. There is still no meaningful moisture for the HRW Belt in the foreseeable future, the Australians cut their production estimate by 1 MMT to 22 MMT and there are still ideas that the export market is improving, but that bullish news hasn’t helped the market this week. The wheat needs a positive close today to avoid a test of the bottom of the trading range.

Soybeans                                    Estimated Fund Position
Trends
Short Term: Up                          Net Long Futures and Options: 75150
Long Term: Down                     Change: +5000
Overnight Trade: F -2 @7:30 AM

The January soybeans have been trading on either side of the 38% retracement of the last move down for several sessions and it looks like more of the same today. There is talk of more Chinese soybean demand, but traders are becoming less confident in the bio-diesel blenders credit, so the market keeps chopping around waiting for clear direction. To me it still looks like the strong exports will prevail and the January contract will be at the $15.00 level fairly soon.

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

Live cattle futures reversed early weakness below the 40 day moving average to close moderately higher on Monday. The market is mixed so far this morning, with a slightly lower bias. Show lists are larger overall, with most of the growth coming in the Kansas/Nebraska regions. We continue to expect plenty of captive supplies filling void in cash traded cattle for another week. The weakening Dollar should provide a boost for exports. Key support in the February contract is 130.25 on a closing basis.

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

Feeder cattle futures closed modestly lower on Monday, with the recovery in fats and a late decline in the corn rally allowing the feeders to close well off of session lows. The cash index fell 64 points on Monday, with cash activity in the sale barns lower to sharply lower for the day. Overnight trade is steady to slightly higher, with corn trading narrowly on either side of unchanged. Support in the January feeders rests near the 144.75 level.

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