Schwieterman: Friday's report expected to support cattle futures

Corn                                      Estimated Fund Position
Trends
Short Term: Up                  Net Long Futures and Options: 67634
Long Term: Up                   Change: -4000
Overnight Trade: H Unch @7:30 AM

The corn started the overnight session firmer, but the gains have faded. The trade has been a low volume affair so far. Weather is not ideal in S. America, which is supportive, but the forecasts are not in agreement, which of course causes uncertainty. On the charts we are looking at another day of sideways trade, with the March contract trading near the 40 and 50-day moving averages.

Wheat                                   Estimated Fund Position
Trends
Short Term: Up                   Net Long Futures and Options: -55292
Long Term: Down              Change: +2500
Overnight Trade: Chicago: H Unch KC: H Unch @7:30 AM

The poor rainfall totals in the HRW Belt supported the wheat for a while overnight, but the market has slipped back into consolidation mode. The lack of rainfall is certainly supportive, but the failure of the other markets to hold gains is weighing on the market. US SRW is still the cheapest wheat in the world, but we have to have large export sales in order for that to impact the market.

Soybeans                            Estimated Fund Position
Trends
Short Term: Up                  Net Long Futures and Options: 59981
Long Term: Down             Change: +4000
Overnight Trade: H +1 @7:30 AM

It is the same story for the soybeans. There were solid overnight gains, but they didn’t hold. The weather in Argentina is hot and dry, but there is moisture in the forecast. There is supportive news, but traders don’t want to chase the market higher. Like the corn and wheat it looks like the market will see consolidation type trade today.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: 50-100 Higher

Live cattle futures are expected to open sharply higher on Monday, fueled by very supportive numbers in Friday’s on feed report. Placement numbers well below expectations and marketing numbers well above expectations should support new money investment in the meat complex. Six percent fewer cattle on feed should bode well for the complex over the next several months. Show list distribution will be the other news distributed this morning. We expect numbers to pick up slightly, due to carryover and higher cash expectations.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: 30-60 Higher

Feeder cattle futures had a strong week, picking up more than 1.50 in the active March contract. We should see a strong start to this week, based off of lower than expected December placements and strength in the live cattle. Due to the continued losses being posted in feedlot closeouts, we could continue to see some struggles in the cash feeder market. Losses have been going on long enough to detour some money away from this market from investors. Corn is flat in overnight trade at this time.

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