Schwieterman: Expect profit taking, hedge pressure this week

Corn                                              Estimated Fund Position
Trends
Short Term: Down                     Net Long Futures and Options: 149067
Long Term: Up                            Change: +8000
Overnight Trade: H -6 Z -4 1/2
Opening Calls: 3-5 Lower

The corn market didn’t get any follow through buying to start the week, but with support from the outside markets and strength in the soybeans, there is still a great chance that we see positive trade at some point today. The corn has been stuck in a sideways pattern for quite some time and there doesn’t appear to be any reason for it to change the pattern today. We have option expiration Friday, which is further incentive for the March contract to stay inside the recent range.

Wheat                                             Estimated Fund Position
Trends
Short Term: Down                        Net Long Futures and Options: -85056
Long Term: Up                               Change: +4000
Overnight Trade: Chicago: H -6 1/2 KC: H -5 3/4
Opening Calls: 5-7 Lower

Trend line support held in the July KW last week and although we didn’t see strength overnight it still appears that we will see a move up toward the top of the wedge near $7.30 in the near future. We have had positive demand news and the market is oversold, which are tow good reasons for short covering. The fundamentals are far from bullish, but a corrective bounce is underway.

Soybeans                                           Estimated Fund Position
Trends
Short Term: Up                                  Net Long Futures and Options: 67639
Long Term: Up                                   Change: +4000
Overnight Trade: H +1 ¾ X -1 1/2
Opening Calls: Mixed

The March soybeans continue to grind higher towards the $12.90 resistance. The market is overbought, but can stay that way for a long time. There isn’t much incentive for weakness while we have good demand news and the new crop is bidding for acreage. Plan on the soybeans being the upside leader for the time being.

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

Live cattle futures and cash were sharply higher on Friday, with April futures finishing 4.20 higher for the week. The cash market jumped to record levels, with $128 being paid throughout the feeding region. National show lists appear to be smaller than a week ago and beef prices started the week sharply higher on Monday. Slaughter was slowed to 104,000 on Monday, as packers continue to try to improve margins through slower production. Weather looks relatively mild over the next couple of weeks for a majority of the feeding region.

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

Feeder cattle futures posted triple digit gains on Friday, with the April contract a whopping 4.90 higher for the week. This weeks’ shortened trade is expected to open mixed, with a combination of profit taking and hedge pressure offsetting some of the bullish momentum. Overnight corn values were off .06, which should provide some added support for the feeders.