Schwieterman: Weak corn futures boost enthusiasm in feeder cattle

Corn                                                Estimated Fund Position
Trends
Short Term:Down                       Net Long Futures and Options: 184539
Long Term: Down                       Change: -18000
Overnight Trade: H -4 @7:30 AM

The March corn fell to a new low for the move overnight and now appears to be headed for a test of the November low. Lack of good export sales seems to be the main problem with the market right now, and although we probably won’t see any changes in tomorrow’s supply and demand report, there is fear that we will eventually see another cut to the export estimate. Plan on pressure through the day.

Wheat                                           Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: -21704
Long Term: Down                       Change: -1500
Overnight Trade: Chicago: H -3 KC: H +1 @7:30 AM

The wheat is hanging on better than the corn, so far. The wheat has the same export problems that the corn does, but the moisture outlook for the HRW Belt is still horrible, which is keeping the wheat supported. Tomorrow’s supply and demand report probably won’t have any changes for the wheat, so don’t plan on any market moving information. News is limited and traders are waiting for some export news.

Soybeans                                       Estimated Fund Position
Trends
Short Term: Up                             Net Long Futures and Options: 79661
Long Term: Down                        Change: -5000
Overnight Trade: F+2 @7:30 AM

So far the January soybeans haven’t made a new high for the move, but it is too early in the day to rule it out. Friday’s close was poor and the market is overbought, so the bears probably hold the advantage today, but unlike the wheat and corn, there is no problem with the soybean export demand. The soybeans and products have the best chance at seeing demand revisions, because it is obvious that USDA is underestimating export demand and need to increase the estimates. Breaks are for buying.

Live Cattle
Trend
Short Term: Down
Long Term: Up
Opening Calls: 20-40 Lower

Live cattle futures closed moderately lower on Friday, with cash trade finally surfacing at $124 in the south and $196-$198 in the beef market up north. For the week February live cattle were basically unchanged. Deliveries on the December contract can start after today’s business. Some are expecting heavy deliveries, while history would tell us that December deliveries are rare. Equities are steady overnight and the US Dollar is softer. Show lists should be larger, with the limited clearance on Friday.

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

Feeder cattle closed moderately higher on Friday and January finished up more than 3.00 for the week. Recent weakness in corn futures is boosting enthusiasm in the feeder market and corn is down another 3-4 cents in overnight trade. November placements were off another 8-10% according to analysts’ expectations. We expect a mixed start to the week, with pressure from the live pit and support from lower corn.

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