Schwieterman: Live cattle futures led by rising cash prices

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Corn                                      Estimated Fund Position
Trends – March Contract
Short Term:Down                  Net Long Futures and Options: -157356
Long Term: Down                  Change: -5000
Overnight Trade: H -2 @7:30 AM


One can probably blame most of this morning’s pressure on the S. American weather at the weakness in the soybeans. Other than that, news is limited. The March contract will probably test support at the $4.17 - $4.20 area. If that support holds, there is still a possibility of a return to the $4.50 area in the near future.

Wheat                                    Estimated Fund Position
Trends – March Contract
Short Term: Down                  Net Long Futures and Options: -94512
Long Term: Down                   Change: -3000
Overnight Trade: Chicago: H Unch KC: H +1 @7:30 AM


The wheat was slightly higher overnight and the March KW continues to consolidate. There is a little bit of discussion of winter kill both here and in Russia, but what this market really needs is better export sales. Supply concerns are helpful, but just don’t move a market very far without demand. Plan on another day of directionless trade.

Soybeans                                Estimated Fund Position
Trends – March Contract
Short Term: Up                       Net Long Futures and Options: 109823
Long Term:Up                         Change: +3000
Overnight Trade: H -18 @7:30 AM


The March soybeans gave back a big part of the post report gains overnight. The market slipped below the 40 and 50-day moving averages and it looks like we will see a test of the $12.91 support. The culprit behind the break is the S. American weather and everyone is convinced again that our exports will dry up and we will be buried in imported beans. We have been through this before. Another round of Chinese buying will send the market right back up, so use caution chasing this market.

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


Live cattle futures settled modestly higher on Friday in a quiet session. For the week the lead February contract was up 3.55, the best week for the futures market in several months. The pattern in place is for higher cash to lead the board. The action this past week was slightly in favor of the futures market. We will be more aggressive with put option strategies following last weeks’ futures rally. We will be collecting out show list data today and should have it available by midday.

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


Feeder cattle futures settled mostly lower on Friday, with the March contract up only .20 for the week. Over the past three weeks, March feeders have managed to gain only .50, in spite of the major bull market going on in the industry. The market could get a boost on the 9:05 opening this morning from the softer trade in the corn futures. The cash index was off almost .30 for the week, but appeared to gaining a little upward momentum the second half of the week. The index remains a full 1.50 premium to the lead futures contract.



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