Schwieterman: Cash index levels remain on the rise

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Corn                                    Estimated Fund Position
Trends – March Contract
Short Term: Up                   Net Long Futures and Options: -141309
Long Term: Up                    Change: -5000
Overnight Trade: H +3 @7:30 AM


Export sales were tremendous at 1.84 MMT of old crop corn. This number calls into question USDA’s current export estimate and it is very likely that they will have to increase the estimate in the February report. There is a good chance that at some point in the crop year we see the old crop ending stocks estimate fall below 1.5 billion. Right now I like the old crop vs. new crop spreads.

Wheat                                 Estimated Fund Position
Trends – March Contract
Short Term: Down              Net Long Futures and Options: -95729
Long Term: Down               Change: -6000
Overnight Trade: Chicago: H +5 KC: H +5 @7:30 AM


Wheat export sales were also great with 794,900 MT of old crop sales. Wheat sales have not been consistent and since USDA raised the export estimate last month, we probably won’t see that happen again in February. However, this week’s number does show that we are competitive in the world market and coupling that with the declining crop condition ratings should help support the wheat. The charts look awful though, and we haven’t gotten any buy signals yet, so be cautious trying to pick a bottom.

Soybeans                             Estimated Fund Position
Trends – March Contract
Short Term: Down                Net Long Futures and Options: 105253
Long Term: Down                 Change: -6000
Overnight Trade: H +1 @7:30 AM


Soybean export sales are slowing, but 494, 800 MT of old crop and 371,000 MT of new crop sales are outstanding when you consider that what we actually need to see are cancellations and not more sales. The March beans did make a new low for the move overnight, which is negative, but the market is oversold and we are still waiting for the Chinese cancellations to materialize. Look for a recovery today.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 20-30 Lower


Live cattle futures reversed early weakness to close mostly higher on Wednesday. The lead February contract was the only lower close in the live pit. Open interest was up a whopping 5,124 contracts on the day, suggesting new buyers entering the game on the morning break. Cash bids are sparse, with any interest buy packers many dollars below week ago levels. Asking prices remain firm, with most lots looking for steady to better money again. Overnight trade is moderately lower across the board. Cutout values were sharply lower on Wednesday and are expected to see more near term weakness.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 30-50 Lower


Feeder cattle futures finished at the top end of a nearly 3.00 trading range on Wednesday, with March trading from 2.00 lower to .85 higher into the close. Cash index levels remain on the rise, with daily number for Tuesday reaching above 175.00 and the index itself rising to 171.61. Corn was weaker on Wednesday but is recovering most of those losses after strong export sales released this morning.



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