Schwieterman: Feeder cattle futures, corn prices fall

Corn                                                Fund Position
Trends
Short Term:Down                        Net Long Futures and Options: 64301
Long Term: Down                        Change: -10000
Overnight Trade: H Unch @7:30 AM

The March corn made a new low for the move overnight and yesterday the December corn fell to a multi-month low. The lack of export sales and the low ethanol production is weighing on the old crop, while ideas that the new crop carryover will balloon are putting pressure on the new crop. Expectations are for a slightly negative supply and demand report, which hasn’t helped matters either. We will need to see neutral to friendly numbers at 11:00 AM this morning to see the market turn around.

Wheat                                              Estimated Fund Position
Trends
Short Term: Down                         Net Long Futures and Options: -57625
Long Term: Down                          Change: -2000
Overnight Trade: Chicago: H +3 KC: H +3 @7:30 AM

The March KW is at least consolidating as opposed to pushing to new lows like the corn. The weather is still a supportive factor in the wheat market, but what we really need to see is better exports. Today’s report may not hold much excitement for the wheat, so it will probably be the corn and soybean numbers that determine the direction of the wheat market today. Another close above $8.00 in the March KW today will keep hopes of a turn around alive.

Soybeans                                       Estimated Fund Position
Trends
Short Term: Up                             Net Long Futures and Options: 78776
Long Term:Up                               Change: -1000
Overnight Trade: H +7 @7:30 AM

The March soybeans are still working against the $14.95 - $15.00 resistance for the 5th consecutive session. The Demand numbers we are seeing still suggest we need higher prices to slow down demand to avoid shortages this summer. Unless we are surprised by negative supply and demand report numbers, the March soybeans should make it through $15.00 today.

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

Live cattle futures closed mixed on Thursday, with the front two months firmer and deferred contracts moderately lower. Cash trade has waited for Friday this week, with feedlots holding to their $127+ asking prices and bids remaining below week ago levels. Something has to give. We expect bids to rise to steady or a dollar higher as the day unfolds. Deliveries have remained nonexistent since Monday, providing additional strength for the cash trade.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: 10-30 Higher

Feeder cattle futures closed moderately lower on Thursday, with the March contract now off 2.00 from last Friday’s close. The feeder break comes in spite of a .25 retreat in corn prices over the same period. Continued sizable losses coming out of feedlots are pressuring feeder prices, as cattlemen try to get a handle on profitability. This morning we will see the release of the February supply demand report on the grains at 11:00 am. The report is likely to have an effect on feeder trade for the next several weeks.

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