Schwieterman: Uncertainty in the cash market, corn market up

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Corn                                      Estimated Fund Position
Trends – March Contract
Short Term: Up                     Net Long Futures and Options: -134309
Long Term: Up                      Change: +7000
Overnight Trade: H -1 @7:30 AM


The March corn made a new high for the move yesterday thanks to the huge export sales number. The $4.35 area is now the critical resistance area that the market is bumping up against. This area has stopped the market twice before, but perhaps the strong demand we are seeing and the threat of lower ending stocks in the next report will be enough to get the market through the resistance and up to $4.50.

Wheat                                    Estimated Fund Position
Trends – March Contract
Short Term: Down                 Net Long Futures and Options: -94729
Long Term: Down                  Change: +1000
Overnight Trade: Chicago: H +2 KC: H Unch @7:30 AM


The wheat hasn’t seen any follow through selling since Wednesday’s plunge, but we haven’t seen much strength either. Attitudes are still quite negative despite the strong export sales and poor weather conditions in much of wheat country. There isn’t much about the charts that says “buy me” in the wheat, but it wouldn’t be a surprise to see a little end of week short covering help the wheat work a little higher going into the weekend.

Soybeans                             Estimated Fund Position
Trends – March Contract
Short Term: Down                Net Long Futures and Options: 109253
Long Term: Down                 Change: +4000
Overnight Trade: H Unch @7:30 AM


The soybean market remains choppy as traders balance fears of cancellations with the fact that export sales are much, much too strong. The $12.60 area has managed to support the March soybeans for about a month because despite the negative rhetoric, the fundamental outlook for the old crop soybeans could turn very bullish. If the Chinese don’t cancel more soybeans, then the July contract is too cheap. However, if we do ever see a negative export sales report, it will likely be a quick trip to $12.00 for the March contract. Thus, we have a great deal of nervousness and choppy trade.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 10-30 Lower


Live cattle futures settled steady to higher on Thursday, as traders continue to support the discounted market and cash trade remained relatively untested. The uncertainty in the cash trade ahead of a long awaited inventory report could keep the market skittish throughout early morning trade. The market should be able to survive moderately lower cash trade if necessary, due to the $5-$7 discount to last weeks’ cash. The report is expected to show a smaller herd with some heifer retention under way. The fruit of building a herd is probably a year and a half or two away.

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


Feeder cattle futures closed moderately lower on Thursday, as corn prices made new highs for their current move, gaining 6 cents on the day. Overnight trade, ahead of the inventory report is narrowly mixed, with corn backing off modestly from Thursdays gains. Producers around our area suggest that numbers of yearlings for sale is going to diminish significantly over the coming weeks. The lean hog market is putting in new highs for the summer months as we write.



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