Schwieterman: Cattle futures lower, cash trade could take shape

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Corn                                            Estimated Fund Position
Trends
Short Term: Up                        Net Long Futures and Options: 75634
Long Term: Up                         Change: +2000
Overnight Trade: H +4 @7:30 AM


The March corn made a new high for move overnight and pushed through the $7.35 resistance. That puts an outside day higher, so far, on the chart, and a clear path to $7.67. Bull spreading is still active in the corn market due to the tight old crop supplies and the strong basis. The December contract is still struggling to work through the $5.90 - $5.95 resistance and will continue to lag behind the old crop contracts as long as there are ideas of a huge new crop out there.

Wheat                                             Estimated Fund Position
Trends
Short Term: Up                             Net Long Futures and Options: -55292
Long Term: Down                        Change: -1000
Overnight Trade: Chicago: H +2 KC: H +4 @7:30 AM


Wheat was the weak link yesterday and again overnight. Yesterday’s moisture in the HRW Belt put a damper on the market, so to speak, but the reality of the situation is that most areas didn’t get enough moisture to matter. It still looks like the March KW is poised to test the resistance at the 40-day moving average, which is at the $8.45 area. A move to that level today would put an outside day higher on the chart and have things looking very bullish.

Soybeans                                       Estimated Fund Position
Trends
Short Term: Up                             Net Long Futures and Options: 67481
Long Term:Up                               Change: +3500
Overnight Trade: H +16 @7:30 AM


The March soybeans made a new high for the move overnight thanks to the S. American  forecasts and ideas that the Argentine crop is shrinking. The market is closing in on the $15.00 objective and has a great chance of hitting it this week, barring a change in the forecast. Fresh demand news from the Chinese should make the market move even faster.

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


Live cattle futures closed moderately lower on Tuesday, with fresh hedge pressure visible after the recent gains. Cash trade could start to take shape today, but with the spread between bids and asking prices resting at least $4.00 apart, it will likely be Thursday or Friday before anything significant takes place. Key technical resistance for the April contract is going to be found between 134.50 and 135.00, the 50 and 100 day moving averages. The Dollar and equities are lower this morning, adding to the mixed near term signals.

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


Feeder cattle futures posted sharply lower closes on Tuesday, with the active March contract falling more than 1.00 for the day. A breakout above recent highs in the corn market overnight could add to selling pressure in the feeders. Open interest was up nearly 400 contracts on the decline Tuesday, suggesting new hedge pressure on the market. Most of the moisture across the plains remains well below the levels needed to replenish subsoil ahead of the grazing season. We see fats gaining on feeders over the coming months.



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