Schwieterman: Weakening basis levels to boost cash cattle trade

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Corn                                                   Estimated Fund Position
Trends
Short Term: Up                               Net Long Futures and Options: 111385
Long Term: Up                                Change: +6000
Overnight Trade: K +1 Z -1 @7:30 AM


Yesterday the May corn made a new high for the move and bull spreading was active. This morning we are seeing quiet trade with just a touch of bull spreading. Export sales were much improved from last week with 295,100 MT of old crop at 18,900 MT of new crop sales. That still isn’t enough to get anyone excited, but another week like that could keep USDA from lowering the export estimate again. Right now we are just waiting for the reports to dictate direction.

Wheat                                                Estimated Fund Position
Trends
Short Term: Up                                Net Long Futures and Options: -49651
Long Term: Down                            Change: +4000
Overnight Trade: Chicago: K +4 KC: K +4 @7:30 AM


Yesterday the May KW moved through the $7.74 objective, which will make $7.90 the next upside target barring disastrous numbers from USDA today. Export sales were very good at 580,300 MT. A few more weeks like that would help get speculators excited about wheat and spread traders might work on getting wheat out of the feed mix, but export sales have been anything buy consistent.

Soybeans                                            Estimated Fund Position
Trends
Short Term: Up                                  Net Long Futures and Options: 93172
Long Term:Up                                    Change: +6000
Overnight Trade: K -2 @7:30 AM


May soybeans made a new high for the move yesterday, but saw no follow through buying overnight. Old crop export sales came in at only 66,400 MT, but that is still more than we need each week. If we didn’t have reports today I would say this market would continue to climb towards $14.90, but it is impossible to predict what USDA will do with their numbers today. Stay tuned.

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


Live cattle futures surged sharply higher on Wednesday, closing 1.40-1.80 higher in the front three months. Liquidation in the April and new buying in the deferred contracts were features. Overnight activity has been mixed, with April up another .30 and June off .15 as we write. Cash trade is now expected to get a boost, based on the weakening basis levels. Asking prices have risen to $127-$128 in the south and $202+ in the north. The board will be closed on Good Friday, which could lead to cash activity being more aggressive today.

Feeder Cattle
Trends
Short Term: Up
Long Term: Down
Opening Call: 20-30 Higher


Feeder cattle futures closed sharply higher on Wednesday, with short term technical indicators ready to turn higher on any positive close today. Country spending has accelerated over the past couple of days. The cash index should see a good pop in its last two recordings before March expiration. Overnight trade is mixed, with two sided trade expected ahead of the grain report due out at 11:00 am central time. Any major move in the corn could ignite fireworks in the feeder pit.



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