Schwieterman: Moisture provides strength to cash cattle trade

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Corn                                                 Estimated Fund Position
Trends
Short Term:Down                         Net Long Futures and Options: 26851
Long Term: Down                         Change: +12000
Overnight Trade: K –1 @7:30 AM


Bull spreading continues in the corn despite the overnight weakness. The lack of deliveries tells us that the March contract is too cheap, but any new buying will likely be done in the May contract. The May corn has traded through the 38% retracement of the last move down and the next upside objective is likely the 62% retracement, which lies at the $7.22 area. The December contract is still consolidating and hasn’t built upon Tuesday reversal higher.

Wheat                                                Estimated Fund Position
Trends
Short Term: Down                           Net Long Futures and Options: -76947
Long Term: Down                            Change: +2000
Overnight Trade: Chicago: K Unch KC: K -2 @7:30 AM


The wheat market is slowly trying to climb, but yesterday’s poor export sales and moisture in the forecast for the HRW Belt are not helping the cause. At the moment, strength in the corn is the major supporting factor for the wheat. On the charts the May KW is trying to move through trend line resistance. A close above $7.58 would be a major step for the bulls.

Soybeans                                         Estimated Fund Position
Trends
Short Term: Down                         Net Long Futures and Options: 102248
Long Term:Up                                 Change: +5000
Overnight Trade: K -12 @7:30 AM


The soybeans have given up yesterday’s gains, but since we have seen good demand news the past few days, it wouldn’t be surprising to see strength in the market as we go into the weekend and a test of yesterday’s high. Support in the May contract today will be at the trend line just below the overnight low at the $14.35 area. Breaks are a buying opportunity.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: 30-50 Higher


Live cattle futures closed narrowly mixed on Thursday, but have firmed in overnight trade, following a $4.00 increase in packer spending by midafternoon. Kansas spending rose to $129, with northern beef trade as high as $204. There were incidents of feedlots passing the better money, which may lead to even better money spending today by short bought packers. Open interest on Thursday climbed more than 4,200 contracts, indicating new money entering the market. Short term indicators have turned up on the April contract.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: 30-60 Higher


Feeder cattle futures closed moderately higher on Thursday, and are getting a further boost from the live futures in overnight trade. The cash feeder index remains low at 138.17, but does appear to be rounding out a bottom as bearish momentum wanes. A gain of nearly 1.00 in overnight trade has the March contract close to a 5.00 point premium to the cash index. Recent moisture in the plains should provide some strength to the cash trade as prospects for pasture conditions improve.



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