Schwieterman: February live cattle futures soar to record highs

Corn                                         Estimated Fund Position
Trends
Short Term: Down                Net Long Futures and Options: 130085
Long Term: Up                       Change: -8000
Overnight Trade: H +1 Z +1/2
Opening Calls: 1-2 Higher

The corn market is getting left behind by the soybeans. The corn was higher overnight, but it looks like we should expect another sideways session. Strength in the soybeans will be supportive as will the outside markets, but the corn market could still stand to see some fresh export business to encourage spec buying. Buy breaks and sell rallies.

Wheat                                      Estimated Fund Position
Trends
Short Term: Down                 Net Long Futures and Options: -83072
Long Term: Down                  Change: -2000
Overnight Trade: Chicago: H +3 KC: H +3
Opening Calls: 2-4 Higher

The wheat market is oversold and support is still holding, which indicates that the chances of a rally are improving. Some fresh demand news would be a big help as opposed to talk of a record Australian crop. The world doesn’t need any more wheat. Chances are this will turn into another sideways session since the wheat has to have strength in the corn in order to rally.

Soybeans                                Estimated Fund Position
Trends
Short Term: Up                      Net Long Futures and Options: 49923
Long Term: Up                       Change: +4000
Overnight Trade: H +7 1/2 X +2
Opening Calls: 5-7 Higher

The soybeans are off and running. The beans made a new high for the move overnight and we are seeing bull spreading in the market. The indicators say the market is overbought, but they can stay that way for a long time. It looks like the March contract should be able to reach $12.90 before we see a pull back. More daily sales announcements will only fuel the fire.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 10-30 Higher

Live cattle futures closed sharply higher for the second time in as many days on Tuesday, with February closing at new record highs. Cash asking prices have risen to $127 in the south and as high as $204 in the north. Open interest was up nearly 3,000 contracts for the day, but remains well below the last rally high of 400,000+. Overnight activity is positive, with outside markets supporting. The April contract is retesting contract highs, which we expect to be taken out. Deferred contracts still have a ways to go to reach those levels.

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

Feeder cattle futures posted triple digit gains for the second day in a row, setting new contract highs in all months. The new record highs come with solid cash support and a continued rise in open interest. Softer corn values on Tuesday added support to the feeders. Overnight activity in the corn was very modestly higher, with feeders trading both sides of unchanged. Technical patterns continue to project new highs ahead.