Schwieterman: Feeder cattle futures extend streak to six days

Corn                                                Estimated Fund Position
Trends
Short Term:Down                         Net Long Futures and Options: 161539
Long Term: Down                         Change: -6000
Overnight Trade: H -3 @7:30 AM

Corn export sales were poor as usual at 258,900 MT, which will have traders assuming that USDA will cut the export estimate in the January supply and demand report. Other than that there is very little fresh news and traders are watching to see if the November lows hold. The market is oversold and due for a bounce back, but we don’t have a catalyst to get the rally started other than the strength in the soybean complex. The best case scenario is that the corn avoids new lows for the next two sessions and the shorts take profits going into Friday’s close.

Wheat                                             Estimated Fund Position
Trends
Short Term: Down                        Net Long Futures and Options: -38704
Long Term: Down                        Change: -4000
Overnight Trade: Chicago: H -1 KC: H +1 @7:30 AM

Wheat export sales were good at 518,600 MT. If we would see sales consistently at this level for several weeks, speculators might get excited about the wheat market. The charts look very bearish right now after the front months fell out of the very old sideways trading channel, so if we don’t get more good demand news, one has to plan on more pressure, at least in the old crop. The lack of moisture is still supportive, especially in the new crop contracts.

Soybeans                                      Estimated Fund Position
Trends
Short Term: Up                            Net Long Futures and Options: 81661
Long Term: Down                       Change: +4000
Overnight Trade: F Unch @7:30 AM

Soybean export sales were fantastic at 1.32 MMT and meal and oil sales were good as well. Since USDA didn’t increase the export estimate in the December supply and demand report, they will have to in January. The market has firmed considerably since the export sales report was released, but is still inside the recent trading range. Look for a test of $15.00 soon in the January contract and probably $15.35 shortly there after.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 20-40 Higher

Live cattle futures closed narrowly mixed on Wednesday, with the front two months modestly lower and April-June higher. Overnight activity turned to bull spreading, with December leading the complex higher. Cash enthusiasm and an on fire feeder cattle market are sparking new interest in the live cattle. Cutouts were mixed on the day, with slaughter slowed down to 119,000. We expect to see cash bids improving over the next two days. Open interest increased by 462 contracts on Wednesday.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 20-40 Higher

Feeder cattle futures closed moderately higher on Wednesday for their sixth consecutive positive close. Futures have established a solid premium to the cash index, which may lead to a correction, if corn can find any buying in the near term. Overnight activity remains firm in the feeders and modestly lower in the corn pit. The move by the Federal Reserve to print large sums of money on a monthly basis should be supportive for commodities in general.

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