Schwieterman: Cattle futures finish Tuesday lower, corn improves

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Corn                                    Estimated Fund Position
Trends – March Contract
Short Term: Up                   Net Long Futures and Options: -114067
Long Term: Up                    Change: +10000
Overnight Trade: H -2 @7:30 AM


The March corn cleared the $4.41 resistance and closed above the 100-day moving average making $4.50 the next upside objective. Demand has been very good and expectations are for a friendly supply and demand report next week. The corn even got some help out of the wheat market yesterday, which is something we haven’t seen in quite some time. The old crop corn fundamentals aren’t nearly as bearish as traders had feared a few months ago and that is finally being reflected by the futures market. One still wouldn’t call the fundamentals bullish, but with demand we have been seeing, perhaps someday we will.

Wheat                                 Estimated Fund Position
Trends – March Contract
Short Term: Up                   Net Long Futures and Options: -90005
Long Term: Down               Change: +7000

Overnight Trade: Chicago: H -3 KC: H -2 @7:30 AM

Wheat traders seemed to have woken up yesterday. The March KW has now made 4 consecutive higher closes, which hasn’t happened since the fall. The lower crop condition ratings really seemed to strike a nerve as the day wore on and the snow falling in the HRW belt didn’t seem to bother anyone. $6.50 is the next technical hurdle for the March KW. If that resistance fails then we will see a lot more short covering.

Soybeans                            Estimated Fund Position
Trends – March Contract
Short Term: Up                   Net Long Futures and Options: 116105
Long Term:Up                     Change: +8000
Overnight Trade: H -3 @7:30 AM


Yesterday traders were afraid that the Chinese wouldn’t cancel any soybean orders, but as the market approaches $13.30 then those fears will probably go away. Tomorrow’s export sales report will be very interesting though. If it is a big number, then the bears will get really nervous about the potentially tight supplies this summer. We could have very bullish fundamentals if the Chinese don’t cancel any beans.

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


Live cattle futures closed moderately lower in the front two months on Tuesday, with deferred contract once again posting modest losses to small gains. The liquidation of Feb futures ahead of option expiration and first notice day has been a feature over the past several sessions. Cutout values stabilized for a day at least, providing modest support in overnight trade. Equity weakness this morning could develop additional selling in the meat complex. Firm energy prices and additional heating expense due to the extreme cold could take a bit more out of the food budget for consumers. The extreme cold will also limit feed conversion over coming weeks.

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


Feeder cattle futures closed sharply lower on Tuesday, with March posting a second consecutive triple digit loss. Board weakness has turned our short term indicators lower and is causing some additional liquidation of spec long positions. Corn put in new highs for the move on Tuesday but is giving back a couple of cents overnight. Cash index levels fell .05 for the day, losing ground for the 4th straight session.



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