Schwieterman: Cattle futures modestly higher Wednesday

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Corn                                     Estimated Fund Position
Trends – March Contract
Short Term: Up                    Net Long Futures and Options: -187411
Long Term: Down                Change: +8000
Overnight Trade: H -5 @7:30 AM


The corn market is testing the top of the recent trading channel and the March contract made its highest close since mid-November. The market was lower overnight partly on renewed fears of the Chinese rejecting US corn and partly due to the lower than hoped for export sales at 593,600 MT. So far, it’s just an inside day on the charts so further short covering taking the March contract to the $4.57 area looks possible.

Wheat                                  Estimated Fund Position
Trends – March Contract
Short Term: Up                    Net Long Futures and Options: -99425
Long Term: Down                Change: -2500
Overnight Trade: Chicago: H -8 KC: H -6 @7:30 AM


The past two sessions have taken the wheat from the top of the trading range to the bottom. The poor export sales figure of 229,200 MT isn’t helping the bulls overcome the Canadians 37.5 MMT production figure. US wheat stocks are still tight, but the availability of extra bushels in Canada is going to make it more difficult to keep selling wheat on the world market. Failure to hold at the lows will look ominous on the charts.

Soybeans                            Estimated Fund Position
Trends – January Contract
Short Term: Up                   Net Long Futures and Options: 101667
Long Term:Up                     Change: +4000
Overnight Trade: F -6 @7:30 AM


We aren’t seeing too much consistency in the soybean market. One moment traders are concerned about the large export sales and the next they are worried about the size of the S. American crop. This week’s sales figure of 805,200 MT was down from recent weeks, but still about 15 times larger than what we need each week to meet USDA expectations. Plan on USDA increasing the export estimate next week.

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


Live cattle futures closed modestly higher on Wednesday, with firmer cutouts and continued cash optimism providing support. The cash still appears to be a Friday activity this week, with bids and asking prices a good $3-$4 apart. Technical indicators remain positive, supporting any intraday weakness in the fats. Overnight trade is quiet, with a slightly better bias. Option expiration on Friday and first notice for deliveries at the close on Monday will contribute to near term activity. Open interest is on the rise, with Wednesday’s totals rising 3,602 and getting back near the highs of November.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 20-40 Higher


Feeder cattle futures settled modestly higher on Wednesday, in spite of another higher close in the corn market. Overnight corn prices are down a nickel, providing additional support to the feeders. Weekly highs are being approached in the complex. The cash index dropped 1.17 on Wednesday and is now in line with front month futures. Cash sales tend to slow down into the holidays and year end. New highs for the week will likely create fresh interest from the trading community.



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