Schwieterman: Cattle futures decline, cash trade lower

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Corn                                     Estimated Fund Position
Trends – March Contract
Short Term: Up                    Net Long Futures and Options: -138309
Long Term: Down                 Change: +1000
Overnight Trade: H -1 @7:30 AM


Corn was flat overnight in low volume trade. Fresh news is hard to come by, so perhaps the technical of the marketplace will take control. The bull flag formation in the March contract still looks viable, so it still looks like we could see a little more strength based off of that. Otherwise we need to see more good export sales numbers and solid ethanol production to keep the market moving. Plan on two sided trade today.

Wheat                                   Estimated Fund Position
Trends – March Contract
Short Term: Down                 Net Long Futures and Options: -89729
Long Term: Down                  Change: -2000
Overnight Trade: Chicago: H +3 KC: H +4 @7:30 AM


Wheat was firm overnight. Perhaps some traders in the HRW Belt are beginning to look in their own backyard because conditions are certainly getting worse. There is also continued talk about winterkill due to the cold temperatures around the country. The supply side of the equation is getting less bearish, but what we really need is bigger export sales. A few big sales would scare more shorts out of the market. In the short run, look for a test of last week’s high in the March KW.

Soybeans                             Estimated Fund Position
Trends – March Contract
Short Term: Down                Net Long Futures and Options: 110253
Long Term: Down                 Change: +4000
Overnight Trade: H +2 @7:30 AM


Traders are concerned about cancellations by the Chinese, but we ended up seeing a reversal higher in the March contract on Friday, follow through buying overnight, and bull spreading. That really doesn’t look like something that would happen if we were never going to sell another soybean this year. Look for another move back to the $13.00 area in the March contract.

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

Live cattle futures closed moderately lower on Friday, with February only .80 higher for the week, in spite of another $4-$5 explosion in the cash market. Placement and marketing numbers were both on the disappointing side in Friday afternoons’ on feed report. Futures discount to cash could keep bears at bay for a while but Friday’s sell off may have been more new sellers and less profit taking than originally perceived. Historic bull markets like the current one in the live cattle usually don’t end with a whimper.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 20-40 Lower


Feeder cattle futures closed moderately to sharply lower in all but the expiring January contract on Friday. For the week, March feeders were up 1.07, with cash index values off .98 for the same period. Higher than expected December placements should start the feeders out moderately lower this morning. Corn prices have been narrowly mixed in overnight trade. Mondays big southern feeder sales will be closely monitored for early week direction.



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