Schwieterman: New buying interest supports feeder cattle

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Corn                                                 Estimated Fund Position
Trends
Short Term: Down                        Net Long Futures and Options: 46525
Long Term: Down                         Change: -14000
Overnight Trade: H +3 @7:30 AM


The corn has traded both sides of unchanged overnight after making a new low for the move. Technical indicators are still oversold, but that means very little at this point and there is no indication of a turnaround in the market at this point. Friday will be the Quarterly Stocks report as well as the supply and demand report, both of which have the potential to be friendly, but so far there isn’t any rush to be a buyer ahead of the report, since export sales are still poor and every Quarterly Stocks report must be treated with extreme caution. Plan on a few days of choppy trade.

Wheat                                                Estimated Fund Position
Trends
Short Term: Down                           Net Long Futures and Options: -80795
Long Term: Down                            Change: -4000
Overnight Trade: Chicago: H +4 KC: H +4 @7:30 AM


The story is basically the same for the wheat except we also have the Winter Wheat seedings report to deal with and export sales over the past month have been much better for the wheat than the corn. However, the wheat market is still pushing lower and there is little indication of a turnaround. It looks like the March KW is headed down to the $7.90 area ahead of the report.

Soybeans                                           Estimated Fund Position
Trends
Short Term: Down                            Net Long Futures and Options: 46525
Long Term: Down                             Change: -8000
Overnight Trade: H +8 @7:30 AM


The March beans made a test of the November low and held, then follow that with a bounce overnight. Combined, that is a glimmer of bullish hope, but I doubt there will be a rush to buy beans with the fear of export sales cancellations and the fear of higher production in this week’s report. The overall demand outlook still looks solid despite the cancellations, but at this point it will take some fresh, big, demand numbers to change the bearish attitude in the market.

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


Live cattle futures closed lower on Friday, in spite of $1-$2 gains in the week’s cash trade. For the week February futures were off about .40, but remain a 5.00 premium to southern cash trade. The Goldman roll is scheduled to take place over the next week, which should limit some of the front month advance. Outside market influences were quiet overnight, with mixed equities and slightly stronger Dollar. The limited cash movement in the south could lead to larger show lists in that region this week.

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


Feeder cattle continued to find new buying interest on Friday, in spite of the lower live cattle trade. March futures gained a buck and a half for the week, with open interest up nearly 1,200 contracts again on Friday. Overnight corn prices have firmed slightly, but remain in a clear down trend ahead of Friday’s key reports. Some profit taking in feeders could be seen ahead of the grain reports at 7:30 am on Friday. Lower than normal volatility value in the feeder options make owning feeder options an opportunity at these historical price levels.



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