Schwieterman: Strong nearby corn futures take feeder cattle lower

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Corn                                           Estimated Fund Position
Trends
Short Term: Up                       Net Long Futures and Options: 15333
Long Term: Up                        Change: +7000
Overnight Trade: K -2 @7:30 AM


May corn closed back above the 50-day moving average yesterday, but it wasn’t strong enough to take out
Monday’s high, thus leaving an inside day on the chart, which doesn’t make me very confident I a rally today.
Basis levels are still strong, which means the front months of the market should be well supported on any break.
Look for sideways trade today and consolidation around the 50-day moving average.

Wheat                                        Estimated Fund Position
Trends
Short Term: Down                   Net Long Futures and Options: -69171
Long Term: Down                    Change: +1000
Overnight Trade: Chicago: K -4 KC: K -5 @7:30 AM


The May KW can’t seem to get away from the recent lows. Ideas that crop condition ratings are improving and the lack of export news is still weighing on the market. The wheat has to see strength in the corn in order to move higher at this point. The best hope for the bulls seems to be a short covering rally because the market is very oversold and that isn’t much to go on. A new low for the move today would suggest a move down to $7.00.

Soybeans                                  Estimated Fund Position
Trends
Short Term: Up                        Net Long Futures and Options: 119599
Long Term:Up                           Change: +3500
Overnight Trade: K +1 @7:30 AM


The bright spot of the week has been the soybeans, but even that market failed to hold gains yesterday. Demand is still strong and stocks will be very tight this summer, so it won’t be a surprise to see the May soybeans right back up at yesterday’s high at some point today. Buy breaks when we get them.

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


Live cattle futures closed sharply lower on Tuesday, as the April contract failed to follow through after making new highs for the move. The 1.40 reversal closed the April futures below the 130.00 level, confirming the strong resistance above that level. Cutout values were sharply higher again, with levels not seen since the first of the year. Overnight trade has been lower throughout the session in most contracts, with the front two months narrowly mixed. Cash trade is not likely to take flight on Wednesday unless bids improve above week ago levels.

Feeder Cattle
Trends
Short Term: Up
Long Term: Down
Opening Call: 30-50 Lower


Feeder cattle futures closed sharply lower on Tuesday, with all but the March contract posting triple digit losses. A slowdown in the cash recovery and strength in nearby corn futures were seen as culprits. Early estimates of the February placement number are calling for a significant decline. Weakness in corn is developing as we write, which may offer some support for the struggling feeders.



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