Schwieterman: Feeder cattle futures continue historic climb

Corn                                      Estimated Fund Position
Trends
Short Term: Down             Net Long Futures and Options: 133067
Long Term: Down              Change: -16000
Overnight Trade: H -2 1/4 Z -2 1/4
Opening Calls: 2-3 Lower

The corn moved back to the bottom of the trading range. Support from the outside markets, strength in the soybeans, and a large daily sales announcement did nothing for the corn market. A test of last week’s low may be in the works, but sustained pressure is unlikely due to our improved export business and firm basis levels. Buying early weakness should work today.

Wheat                                    Estimated Fund Position
Trends
Short Term: Down               Net Long Futures and Options: -88056
Long Term: Down                Change: -3000
Overnight Trade: Chicago: H -2 3/4 KC: H Unch
Opening Calls: 1-3 Lower

Wheat followed the corn lower yesterday and again overnight. There isn’t much fresh wheat news, so the wheat market is at the mercy of the corn. Friday’s export sales report will be watched closely because the recent surge in demand is just what this market needs. Plan on a two sided trading session with a test of yesterday’s low at some point.

Soybeans                               Estimated Fund Position
Trends
Short Term: Up                     Net Long Futures and Options: 70639
Long Term: Up                      Change: +3000
Overnight Trade: H -4 3/4 X -6 1/4
Opening Calls: 5-7 Lower

The March soybeans gave up all of yesterday’s gains in overnight trade. There has been plenty of positive demand news, but there seemed to be concern about the weather in S. America and how much recent rains could improve production. The soybeans are overbought and due for a correction, but I think we will see the March contract reach $12.90 first.

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

Live cattle futures continued to trade positively to start this week, with a moderately lower open turning positive by midsession. The ability that this market shows in rejecting any negativity continues to impress. Overnight saw a continuation of Tuesday’s pattern, with lower early trade turning positive by this morning. Boxed beef and hide and offal continue to climb, with sharply higher prices seen on Tuesday. Friday’s on feed report is expected to show total on feed of 102.5%, placements of 98.3% and marketing totals equal to a year ago. Outside markets look slightly negative this morning.

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

Feeder cattle futures continue their historic climb on Tuesday, with all but the March contract posting new all‐time highs. Overnight trade is very narrowly mixed, with modest movement on either side of unchanged. Corn futures followed Tuesday’s sharp losses with another 2‐3 cent drop in their overnight trade. There doesn’t appear to be anything in the upcoming on feed report to slow the grind higher in this market. We continue recommend the use of put options from these levels for all producers.