Schwieterman: Cattle futures strong last week, corn also improves

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Corn                                 Estimated Fund Position
Trends – March Contract
Short Term: Up                Net Long Futures and Options: -30672
Long Term: Up                 Change: +7000
Overnight Trade: H +2 @7:30 AM


The March corn is slowly creeping back to the $4.49 resistance. Last week’s sideways action relieved the overbought condition of the market and Friday reversal higher should set the market up for another leg higher. $4.49 is obviously a major hurdle, but we should at least see a test of that today. A close above $4.49 and we can start thinking about $4.75.

Wheat                              Estimated Fund Position
Trends – March Contract
Short Term: Up                Net Long Futures and Options: -80547
Long Term:Up                  Change: +1000
Overnight Trade: Chicago: H +4 KC: H +2 @7:30 AM


The wheat was firmer overnight, but so far it looks like the March KW is just consolidating around the $6.74 resistance area. The wheat won’t be left behind if we see further gains in the corn and soybeans, but we will probably have to see either some bullish wheat specific news or a correction lower in order to see the wheat have any independent strength.

Soybeans                        Estimated Fund Position
Trends – March Contract
Short Term: Up                Net Long Futures and Options: 153692
Long Term:Up                   Change: -4000
Overnight Trade: H +15 @7:30 AM


The March beans are making a run at the recent highs and the July contract made a new high for the move overnight. As usual, traders seem to flip flop between fearing running out of soybeans in the US and fearing the Chinese cancelling large quantities of soybeans. Today it looks like everyone is afraid of tight stocks. The chart suggests a move to $14.00 is possible in the March contract and if a few more days pass without large cancellations it will probably happen.

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


Live cattle futures settled stronger for the week and saw cash trade no worse than steady, with many selling cattle at least $1 better for the week. Cutout values reclaimed nearly all of last weeks’ losses on Monday, with choice cuts a 3.00 higher for the day. Show lists today will be interesting, with several lots appearing to hold out for better money on Friday. The spec long position continues to grow as of last Tuesday. Open interest on Friday was off a significant 5,636 contracts, with lifting of hedges on sold cattle a good portion of the drop.

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


Feeder cattle futures had a strong week, gaining 2.92 in the April contract, in spite of slightly higher corn values. Corn is up another 1-2 cents in overnight trade, which could limit feeder strength on todays’ 9:05 opening. Fridays’ on feed report is expected to show higher than year ago placements for the January time frame. Continued strength in the fats will be needed to push drag feeders much higher.



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