Schwieterman: Cash trade unsettled, feeder futures higher

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Corn                               Estimated Fund Position
Trends – March Contract
Short Term: Up              Net Long Futures and Options: -178958
Long Term: Down          Change: -3000
Overnight Trade: H +1/2 @7:30 AM


The initial reaction to yesterday’s report was positive and the March corn tested the 50-day moving average for a few moments, but the market eventually reversed lower as the wheat market collapsed. The market then made a mid-range close and followed that up with two sided trade overnight. The lower than expected US and World ending stocks estimates are supportive, but the bulls will have to see the market clear the resistance at the 50-day moving average quickly in order to maintain what little bullish momentum the market has. A move to $4.57 is still possible if we see good export sales and continued weakness in the Dollar.

Wheat                             Estimated Fund Position
Trends – March Contract
Short Term: Down           Net Long Futures and Options: -111005
Long Term: Down            Change: -5000
Overnight Trade: Chicago: H -1 KC: H -3 @7:30 AM


The wheat numbers were disappointing to the bulls. It wasn’t much of a surprise to see the world ending stocks increase due to the higher production in Canada and Australia, but many traders are still looking for USDA to increase our export estimate due to the strong pace we have seen so far this year. The charts look negative, but the market is oversold and the indicators are showing divergence, so if the Dollar pushes lower there is a good chance at a temporary turn around.

Soybeans                          Estimated Fund Position
Trends – January Contract
Short Term: Up                  Net Long Futures and Options: 116667
Long Term:Up                    Change: -5000
Overnight Trade: F +2 @7:30 AM


The soybean numbers came in as expected with ending stocks falling to 150 million. The March beans made a new high for the move yesterday, but closed poorly, because now we are back to watching export sales and S. American weather. The bulls need some fresh news if the market is going to continue higher. A setback, or more consolidation trade is likely in the short run. It will probably take a weather event to see a major move higher, but big export sales will keep traders on their toes.

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


Live cattle futures recovered to close mixed on Tuesday, after trading under pressure for much of the day session. Overnight activity is firmer, with the front two months leading the advance. Open interest has fallen about 8,000 contracts in the past two sessions, which may be end of the year position squaring by large specs. Cutouts were mixed on Tuesday, with choice modestly lower and select higher. Cash is expected to be a day or two away, with asking prices of $134 and bids near $130 in the south.

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


Feeder cattle futures closed higher on the session Tuesday, with a late recovery in the fats and softer corn values inspiring the advance. Overnight trade is narrowly mixed and corn is trading slightly higher. The cash index was up .49 for the day and significantly higher on a single day average. Customers report that the past few days have been on fire in the area sales.



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