Schwieterman: Firming corn prices to limit meat production

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Corn                                          Estimated Fund Position
Trends
Short Term: Up                      Net Long Futures and Options: 92837
Long Term: Down                 Change: +14000
Overnight Trade: H +2@7:30 AM


The March corn has traded above the 50-day moving average for two consecutive sessions, but we are still waiting for a close above that level. A close above $7.25 would indicate we are in for a move to $7.33 and then $7.67. The bull spreading continues in the market and probably will until the basis levels weaken from their exceptionally strong levels. Some good export news would be like lighting the fuse on a rocket.

Wheat                                       Estimated Fund Position
Trends
Short Term: Up                       Net Long Futures and Options: -57329
Long Term: Down                  Change: +5000
Overnight Trade: Chicago: H +5 KC: H +6 @7:30 AM


The wheat is firm in overnight trade as the market tries to keep itself out of the feed mix. The $8.45 and $8.63 levels are likely upside objectives for the March KW this week. If the corn and soybeans are moving higher the wheat will be too. Better export news would of course be a big help to this market, but for now the driving force in the market will be rising corn prices and poor crop conditions.

Soybeans                                   Estimated Fund Position
Trends
Short Term: Up                         Net Long Futures and Options: 37466
Long Term: Down                    Change: +15000
Overnight Trade: H +12 @7:30 AM


The March soybeans are trading above the 50-day moving average and appear to be headed to the 62% retracement of the last move down, which is at the $14.44 level. It is possible that USDA is understating both crush and exports and this recent price break is only adding to potential demand this year. The S. American crop will have to kill US exports in order for the USDA’s balance sheet to work out. S. American weather is still very important to the global price of soybeans.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: 20-30 Lower


Live cattle futures closed mixed on Monday, as the trade tried to diagnose the mixed picture that is developing. Overnight trade is weaker, with lows for the move being established. National sources are promoting smaller show lists for the week, while our numbers suggest that western Kansas is up 20% from a week ago. Firming corn prices could limit meat production over the next several months. Overnight lows in the February futures tested the December lows, with the next support just below 129.00.

Feeder Cattle
Trends
Short Term: Down
Long Term: Up
Opening Call: 30-50 Lower


Feeder cattle futures recovered from early weakness to close mixed on Monday. Weakness in the nearby contracts and moderately higher closes in the August forward offerings are a direct relationship of the corn values for those feeding periods. Cash index levels have begun drifting lower over the past two days, as the reaction to the grain report takes hold.



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