Schwieterman: Cattle futures sharply higher, cash trade improves

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Corn                                 Estimated Fund Position
Trends – July Contract
Short Term: Up                Net Long Futures and Options: -14777
Long Term: Up                 Change: +4000
Overnight Trade: N -1 @7:30 AM


The corn, so far, has been unable to build upon yesterday’s gains. The negative outlook for the new crop is still tempering traders’ buying enthusiasm. The bulls need some fresh news, and perhaps either the ethanol production figure or the export sales figure will provide it. In the meantime, look for consolidation type trade with the July contract stuck between $4.67 and $4.55.

Wheat                              Estimated Fund Position
Trends – July Contract
Short Term: Up                Net Long Futures and Options: -64772
Long Term:Up                  Change: +1000
Overnight Trade: Chicago: N -3 KC: N -2 @7:30 AM


Most of the wheat contracts were able to shake off the negative news from the cancellation of an SRW order by the Egyptians and the new crop HRW ended up fairing very well. The July KW made a new high for the move and now has a new upside target of $6.92. Drought concerns in the HRW Belt seem to be driving the market right now, which means the crop condition ratings in TX and KS Monday afternoon will be very important.

Soybeans                          Estimated Fund Position
Trends – July Contract
Short Term: Up                 Net Long Futures and Options: 188443
Long Term:Up                   Change: +6000
Overnight Trade: N -5 @7:30 AM


March soybeans touched $14.00 yesterday, but haven’t been able to clear it. The market is due for a correction, but yesterday’s large sales announcement has traders very nervous. If we don’t see some cancellations by the Chinese soon, we will have to look for the July contract to head to the $14.00 level soon. The March supply and demand report will be very interesting. I expect the USDA to do strange things with the residual usage estimate to make the supply and demand tables work out the way they want.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 30-50 Higher


Live cattle futures closed sharply higher on Tuesday, led by stronger beef prices and higher cash anticipation. February posted new all-time highs for a futures contract on Tuesday and has continued to make new highs in overnight trade. Deferred contracts are approaching contract highs as well, with .30-.60 gains across the board. Asking prices have firmed to $148 in the south, with northern beef asking prices around $238. Charts are getting a bit overbought but momentum remains intact. Open interest rose another 2,145 contracts on Tuesday’s rally.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 10-30 Higher


Feeder cattle futures posted sharp gains on Tuesday, following the fats higher in spite of lower cash index postings and higher corn futures. Overnight trade is firm, with corn off a couple of cents. The cash index is currently 170.32, which is 1.47 off of highs posted just a week and a half ago. Open interest gained 393 contracts on the Tuesday rally.



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