Schwieterman: Corn exports improving, cattle futures drop

Corn                                             Estimated Fund Position
Trends
Short Term: Up                         Net Long Futures and Options: 104837
Long Term: Up                          Change: +4000
Overnight Trade: H -1 @7:30 AM

Corn export sales were much better than what we have seen in recent weeks. The 393,300 MT total is close to what we need to see each week to meet the yearly estimate. This is definitely a sign of improvement, but totals over 500,000 would inspire much more spec buying. On the chart, the March corn is consolidating just below the 62% retracement of the last move down. $7.25 is acting as support and $7.34 is acting as resistance. Eventually we will see the March corn at $7.67, but we may have to see a pull back to $7.10 - $7.15 first.

Wheat                                         Estimated Fund Position
Trends
Short Term: Up                         Net Long Futures and Options: -49829
Long Term: Down                     Change: +1500
Overnight Trade: Chicago: H -1 KC: H -1 @7:30 AM

Wheat export sales were good at 536,200 MT. Sales totals consistently over 500,000 MT would draw down stocks and make the wheat outlook much more bullish. The $8.45 area is the resistance to watch in the March KW. Clearing that level would make $8.81 the next upside target.

Soybeans                                    Estimated Fund Position
Trends
Short Term: Up                          Net Long Futures and Options: 38466
Long Term: Down                     Change: +6000
Overnight Trade: H Unch @7:30 AM

Soybean export sales were ridiculously large at 1.61 MMT for the old crop and 180,000 MT for the new crop. China, of course, was the big buyer. This sales pace is not sustainable. There are still more than 7 months left in the crop year and sales are going to have to be sharply reduced to avoid shortages this summer. The March contract has moved through the $14.44 objective making $15.00 the next target.

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

Live cattle futures collapsed on Wednesday, along with cash as both markets dropped nearly 2.00 from previous levels. The technical selling was aggressive, with open interest gaining nearly 2,400 contracts in spite hedges that were lifted after the $125 cash movement. We expect two sided trade today, with recovery efforts finding willing new sellers. April live tested and held trend line support overnight near 132.30. Packers are expected to see an aggressive Saturday kill this week, which could jump start the seasonal demand. Super Bowl Sunday is just a couple of weeks away and is considered a very strong demand weekend.

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

Feeder cattle futures saw the active March contract drop 2.15 lower at the close on Wednesday. The market is oversold and could see an active recovery bounce if the corn continues its’ weaker overnight bias. The March contract tested trend line support near 147.50 in the overnight trade and has recovered to near unchanged. We expect cash buyers to remain defensive, with this weeks’ feedlot sales expected to lose $80-$100 per head on nonhedged cattle.

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