Schwieterman: Feeder cattle futures sharply lower, corn higher

Bret Crotts and Mark Green  |  Updated: 01/09/2013

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Corn                                             Estimated Fund Position
Trends
Short Term: Down                    Net Long Futures and Options: 45485
Long Term: Down                     Change: +6000
Overnight Trade: H Unch @7:30 AM

Fresh news is limited and we are all just waiting for Friday’s numbers from the USDA. Right now it doesn’t look like there is any reason to expect anything besides another day of consolidation trade. The hopes are that production is cut and the quarterly stocks are low, but ending stocks will probably be steady, which makes it hard to get excited about buying corn until we see some big export sales.

Wheat                                           Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: -80295
Long Term: Down                       Change: -1000
Overnight Trade: Chicago: H +1 KC: H +1 @7:30 AM

Like the corn, it looks like the wheat is in for another sideways day. The market is about to trade sideways through trend line resistance, but that won’t give the bulls much confidence to buy or the bears reason to take profit. Fresh news is hard to find, so we are stuck waiting for the reports.

Soybeans                                      Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: 51525
Long Term: Down                       Change: -2000
Overnight Trade: H +2 @7:30 AM

Guess what? The soybeans are just like the corn and wheat. We are going to see sideways trade today. If the March beans were to get above $14.00 today we could see some short covering, but the chances of that happening are low. There is some talk about dry weather in the parts of northern Brazil and if that lasts a few more weeks it could become an important factor to the market, but for the time being traders are waiting to see if USDA increases US production or not.

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

Live cattle futures closed moderately lower on Tuesday, firming off of their lows to close in the middle of the daily trading range. Some sprinkling of cash trade was seen on Tuesday, with modest numbers moved at last weeks’ highs. The cash trade is viewed with mixed emotions, with some feeling that short bought packers need inventory, while others are concerned that feedlots would give in to the extremely weak basis. Aprils penetration of week ago lows is viewed as a negative technical signal. We will become more aggressive hedgers on a close below Tuesday’s low.

Feeder Cattle
Trends
Short Term: Down
Long Term: Up
Opening Call: 20-30 Higher

Feeder cattle futures closed sharply lower on Tuesday, with March thru November posting triple digit losses on the close. Corn futures have had consecutive higher closes to move above the 200 day moving average in the spot month. Overnight prices are modestly to moderately firmer in the feeders and near unchanged in the corn. Friday’s grain reports are expected to be market movers for both grain and the feeders. Some additional profit taking is possible ahead of the 11:00 am release.


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