Schwieterman: Cattle futures finish Tuesday lower

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Corn                                   Estimated Fund Position
Trends – March Contract
Short Term: Up                  Net Long Futures and Options: -136309
Long Term: Up                   Change: -2000
Overnight Trade: H -2 @7:30 AM


The upward momentum in the corn market is waning. The reaction to the string of good export sales hasn’t been able to push the market sharply higher, so the bulls seem to be running out of enthusiasm. The market will need to see another positive close today to keep hopes of a move to the $4.40 - $4.50 area alive. The key number to watch today will be the ethanol production figure. Margins are still good, but the weather has kept production numbers in check.

Wheat                                Estimated Fund Position
Trends – March Contract
Short Term: Down              Net Long Futures and Options: -89729
Long Term: Down               Change: +1000
Overnight Trade: Chicago: H -1 KC: H -3 @7:30 AM


The March KW is back to testing the recent lows. Solid export sales figures and the threat of winterkill have not been able to propel the market higher. The market sentiment probably isn’t bearish enough for the market to make new lows right now, so we are probably set to see more sideways trade. It looks like the best course of action is to play the ranges.

Soybeans                           Estimated Fund Position
Trends – March Contract
Short Term: Down              Net Long Futures and Options: 111253
Long Term: Down               Change: -3000
Overnight Trade: H -5 @7:30 AM


The soybeans are consolidating. It is the same old news in the bean market, some traders are worried about cancellations and some traders are worried about fresh buying by the Chinese. Tomorrow’s export sales report will be very interesting to see because at the moment it looks like USDA is underestimating our exports and another big report will guarantee USDA will raise the estimate in the February report.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 20-40 Lower


Live cattle futures closed moderately lower on Tuesday, with the spot February contract leading the declines. Unpriced February contracts will have to be priced by Friday and we expect most of the Feb contracted cattle to be pulled next week. These two factors alone could limit this weeks’ cash trade and buyers in the futures market. Open interest gaining 1,591 contracts on Tuesday indicate new sellers rather than covering of long positions. We don’t think the bull market is over, but it could be delayed until after first notice day in the February contract.

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


Feeder cattle futures closed moderately lower in all but the expiring January contract on Tuesday. Steady corn prices and falling fat cattle futures weighed on feeders. Cash index levels were up .13 to 171.35 on Tuesday but seem to be peaking in the same general area as we did the last time. Overnight corn prices are off a couple cents but the weakness in the fat futures has been enough to keep pressure on the feeders ahead of the pit opening.



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