Schwieterman: Feeder Cattle & Corn Vales Fall

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Corn                                  Estimated Fund Position
Trends
Short Term: Up                Net Long Futures and Options: 339233
Long Term: Up                Change: -8000
Overnight Trade: H -1 1/4
Opening Calls: 1-2 Lower


The corn market saw a little bit of follow through selling overnight and the March contract appears to be headed down to the bottom end of the trading channel, which would be at the $6.15 area today and the $6.18 area tomorrow. With the Argentine crop still at risk and a battle for acres approaching in the US, breaks are a buying opportunity.

Wheat                               Estimated Fund Position
Trends
Short Term: Up                Net Long Futures and Options: 6864
Long Term: Up                Change: +3000
Overnight Trade: Chicago: H -1 KC: H -4 1/4
Opening Calls: 1-2 Lower


The wheat ended up giving up most of yesterday’s gains and had further weakness overnight. After a surge higher and a failure, it won’t be surprising to see sideways/lower trade for a couple of days. The French market is weaker and traders are still concerned about Index Fund rebalancing, which will temper bullish enthusiasm today. However, the long term trend is still up and breaks are for buying.

Soybeans                          Estimated Fund Position
Trends
Short Term: Up                Net Long Futures and Options: 147449
Long Term: Up                Change: -6000
Overnight Trade: H +2 1/4
Opening Calls: 1-3 Higher


The soybeans had a poor close yesterday, but no follow through selling overnight. Forecasts for Argentina are more favorable, but the longer term weather outlook is still questionable. The market is consolidating as traders watch the forecasts and the export market. Like the other markets, breaks are a buying opportunity.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Seasonal: Up
Opening Calls: 10-20 Lower


Live cattle futures started the New Year on the defensive, with fresh sellers entering the market fairly aggressively. February dropped 1.37 for the day and some modest cash trade was seen in Kansas and the north at the high end of last week’s trade. Boxed beef prices continued to push higher on decent movement and slaughter rate was pulled back to 116,000 to start the week. Overnight activity is modestly lower as of 7:15 am. The rise in open interest on the break suggests the possibility of more than profit taking on the break.

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


Feeder cattle futures followed the fats lower on Monday, even though corn values fell sharply on the day. The setback came on increased open interest, suggesting new hedgers entering the market. Overnight activity was mixed, with strength in the spot month and steady to weaker prices in the deferred contracts. Corn prices are slightly softer in electronic trade.



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