Schwieterman: Cash cattle basis levels getting weaker

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Corn                                                  Estimated Fund Position
Trends
Short Term: Up                              Net Long Futures and Options: 28023
Long Term: Up                               Change: +5000
Overnight Trade: K Unch @7:30 AM


The May corn has now made two consecutive closes above the 50-day moving average and is working towards the $7.22 objective. Basis levels are not dropping off, which tells us that futures are still too low. Fresh news is pretty hard to come by and traders will be watching the ethanol production figure out later today closely. Export sales will be out tomorrow and are expected to be poor again.

Wheat                                               Estimated Fund Position
Trends
Short Term: Down                          Net Long Futures and Options: -69987
Long Term: Down                           Change: +1000
Overnight Trade: Chicago: K +1 KC: K +2 @7:30 AM


Yesterday’s trade in the wheat was directionless and it is shaping up to be more of the same today. We don’t seem to have any information that will spark a short covering rally in the wheat. Either the corn needs to surge higher or we will have to see several good export sales reports in a row. Right now the oversold condition of the market is being relieved by going sideways, which doesn’t bode well for the market if we don’t get some fresh news soon.

Soybeans                                             Estimated Fund Position
Trends
Short Term: Up                                   Net Long Futures and Options: 102422
Long Term:Up                                     Change: -4000
Overnight Trade: K -8 @7:30 AM


The May soybeans are trading back towards trend line support. Despite the strong demand and tight supplies the beans have been losing to the other markets in the spread trade. Tomorrow’s export sales report could change people’s minds about selling soybeans, but time will tell. The $14.50 area should be good support today for the May contract.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: Steady/Higher


Live cattle futures settle moderately higher on Tuesday, showing solid follow through to Monday’s key reversal. Open interest dropped over 3,000 contracts on the day, with all the liquidation coming in the April contract (-9,407). Cash basis levels are getting weaker, which should strengthen feedlot resolve at their higher asking prices. Recent weeks have seen cash trade take shape by Wednesday. We wouldn’t be surprised if some business surfaced at some point today.

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


Feeder cattle futures closed moderately higher on Tuesday, with support from the live cattle and in spite of another .40 drop in the cash index. Overnight activity is continuing to strengthen, with the spot March contract now 2.60 above Tuesday’s cash index. Corn is trading modestly higher and remains in a positive mode. Open interest was up 554 contracts on the feeder rally on Tuesday. Deferred contracts are giving some early buy signals on the daily charts.



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