Schwieterman: Cargill plant closing pushes cattle futures lower

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Corn                                              Estimated Fund Position
Trends
Short Term: Up                          Net Long Futures and Options: 97837
Long Term: Up                           Change: -7000
Overnight Trade: H +3 @7:30 AM


The March corn continues to chop sideways in between about $7.22 and $7.35. Indicators are overbought and there is potential for a setback down to $7.12, but the $7.67 area is still a viable upside objective. The tight stocks are going to keep this market supported, but now that we are a week past the Supply and Demand report, the bulls probably want to see some fresh news before trying to push the market higher.

Wheat                                         Estimated Fund Position
Trends
Short Term: Up                         Net Long Futures and Options: -51829
Long Term: Down                    Change: -2000
Overnight Trade: Chicago: H +1 KC: H -1 @7:30 AM


The March KW is still consolidating just below the 38% retracement of the last move down. The market didn’t get any help from yesterday’s good export sales report, which is discouraging since that is exactly the type of news this market needs. Failure to keep the upward momentum going this week could result in profit taking as we head into the 3 day weekend. However, a break down to $8.25 in the March KW would be a good buying opportunity.

Soybeans                                   Estimated Fund Position
Trends
Short Term: Up                         Net Long Futures and Options: 33466
Long Term: Down                     Change: -5000
Overnight Trade: H +4 @7:30 AM


The positive response to yesterday’s massive export sales number was short lived and the March beans stalled out just above the 62% retracement of the last move down. Demand fundamentals are bullish, but traders seem to be worried about the size of the S. American crop more than anything right now. The weather over the 3 day weekend could be the main force in the marketplace when trade resumes Monday night at 7:00 CST. A pullback to $14.10 in the March contract is possible today.

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


Live cattle futures closed sharply lower on Thursday, but more than a dollar off of their limit lower trade at midday. The closing of a Cargill processing plant in Plainview Texas was the catalyst for the limit move. The change will cause some short term logistic issues in our opinion, but the reason for the closure is a lack of cattle, which is not bearish. Cutout values are down 1.65 over the past week, which still provides better packer margins, with the drop in cash prices. A retest of Thursday’s lows are likely over the next few sessions.

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


Feeder cattle futures closed sharply lower on Thursday and continue to struggle in overnight trade. Cash auctions on Thursday reported prices falling off a good 6-10 dollars in yearling prices from the previous week. Corn prices were lower on Thursday, but are rebounding from key support levels in early morning trade. Some more near term pressure on any rebound in the feeders is to be expected.



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