Schwieterman: Cattle futures mixed, cash levels improve

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Corn                                   Estimated Fund Position
Trends – March Contract
Short Term: Up                  Net Long Futures and Options: -134309
Long Term: Up                   Change: +4000
Overnight Trade: H -1 @7:30 AM


The corn market didn’t see any follow through buying overnight, but the bull flag formation is still alive and well and hopefully that means we see the March contract head to the $4.50 area. There isn’t much fresh news, but we do continue to see a steady stream of old crop export sales. The recent activity suggests that USDA is still too low with the export estimate, which means they are too high with ending stocks. The fundamentals of the corn market, at least the old crop, are much less bearish than what traders wanted to believe a few months ago.

Wheat                                  Estimated Fund Position
Trends – March Contract
Short Term: Down               Net Long Futures and Options: -90729
Long Term: Down                Change: -1000
Overnight Trade: Chicago: H +4 KC: H +3 @7:30 AM


There is still no love for the wheat market. We see strong gains at times in the wheat do to fresh demand or fresh supply concerns, but the gains fail to hold for very long due to expectations for large world wheat supplies and for a good US crop. The March KW has attempted to break out of the range it has been stuck in, but for the most part we are looking at 11 sessions of directionless trade.

Soybeans                             Estimated Fund Position
Trends – March Contract
Short Term: Down                Net Long Futures and Options: 114253
Long Term: Down                 Change: +4000
Overnight Trade: H -2 @7:30 AM


A move to $13.00 in the March soybeans still looks possible, but by the time the market gets there traders will turn their focus back to the possibility of Chinese cancelations and the size of the S. American crop. The economic chaos in Argentina will have to be watched closely because farmers may not be willing to sell their products if the Peso is plunging. If they don’t sell it means more business for US grains exporters, at least in the short run.

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


Live cattle futures recovered from early weakness to settle mixed on Monday and near session highs. April led the recovery, finishing .45 higher on the day and 1.10 off of early morning lows. Packers will likely pull as many February contracts as possible next week, as they attempt to slow the cash cattle market down. The large discount to week ago cash will allow contracted cattle to be purchased far cheaper than the recent open sales. Friday’s inventory report is expected to remain friendly.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 10-30 Lower


Feeder cattle futures recovered along with the fats from early weakness to close modestly lower in most months. Cash index levels jumped .88 for the day and now carries a 2.50 premium to the March futures. Corn is trading modestly lower overnight, but posted its’ highest close in two weeks on Monday. Feeders need to see additional strength in the deferred live cattle, in order to garner more enthusiasm.



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