Schwieterman: Feeder cattle futures lower as corn pushes higher

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Corn                                       Estimated Fund Position
Trends – March Contract
Short Term: Up                      Net Long Futures and Options: -124067
Long Term: Up                       Change: +4000
Overnight Trade: H +2 @7:30 AM


The March corn managed to close above the $4.35 ½ resistance yesterday, making the $4.41 level the next upside objective. We keep seeing a steady stream of export sales, which is very supportive and should lead to an upward revision to the export estimate and lower ending stocks. Look for the corn to creep higher and for some bull spreading in the days ahead.

Wheat                                      Estimated Fund Position
Trends – March Contract
Short Term: Down                   Net Long Futures and Options: -97005
Long Term: Down                    Change: +2500
Overnight Trade: Chicago: H +1 KC: H +2 @7:30 AM


The March KW has now made three consecutive higher closes, which is something that we haven’t seen in ages. Unfortunately we will probably have to see the March KW clear the $6.43 level before anyone gets too excited about being long wheat. The market has been in such a protracted downtrend that attitudes are very, very negative. Crop condition ratings in both Kansas and Texas both declined. Kansas is at 35% G-E and 20% P-VP and Texas is at 19% G-E and 41% P-VP. Kansas topsoil is rated at 57% Short to Very Short. Hopefully we see some snow from this event. So far in Garden City I would call it a trace.

Soybeans                                  Estimated Fund Position
Trends – March Contract
Short Term: Up                         Net Long Futures and Options: 108105
Long Term: Down                      Change: +5000
Overnight Trade: H +10 @7:30 AM


Old crop soybean demand is sending the bean market higher again this morning. The March contract has cleared the 40 and 50-day moving averages this morning and the indicators are far from overbought. So, a little more positive news and we could see the market at $13.30 at some point this week. If we get that high the talk will turn back to cancellations and S. American production.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 10-30 Higher


Live cattle futures closed sharply lower in the front two months, with moderate weakness in the deferred. Cutout values continue to implode, providing additional fodder for the bear camp. Friday is last trading day for the February options and Monday will be first notice day for deliveries. We expect to see additional weakness into the option expiration. Open interest is declining on the break, suggesting that liquidation rather than fresh selling is leading the decline.

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


Feeder cattle futures felt the double whammy of lower fats and higher corn on Monday. The front three months posted triple digit losses on the close and are trading no better than mixed in the overnight trade. Corn is up a couple of cents overnight but has not taken out Mondays’ highs. The cash index closed lower for a third consecutive day, with reports from Oklahoma City and Joplin on Monday suggesting a softer tone across the board.



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