Schwieterman: High Corn Trade Forces Feeder Cattle Futures Losses

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Corn                                                  Estimated Fund Position
Trends
Short Term: Up                                Net Long Futures and Options: 296539
Long Term: Up                                Change: -2000
Overnight Trade: H +1 3/4
Opening Calls: 1-2 Higher


The corn inched higher overnight in low volume trade. There is clearly a wall of resistance at the $5.89 level in the March contract, which will likely fail today as the market continues its slow grind up to the $5.95 area. The outside markets are negative this morning and fresh news is lacking, so plan on another two sided trading session.

Wheat                                              Estimated Fund Position
Trends
Short Term: Down                          Net Long Futures and Options: -22707
Long Term: Up                               Change: -5000
Overnight Trade: Chicago: H +3 3/4 KC: H +4 1/4
Opening Calls: 3-5 Higher


The wheat was under pressure yesterday due to drier forecasts in Australia and a lack of any fresh news to counter that. Egypt is tendering for wheat again and if the US gets a large portion of the business it would certainly be supportive to our prices. The wheat needs some supportive news because the charts suggest the next technical support level in the March KW is down at the $7.95 area.

Soybeans                                         Estimated Fund Position
Trends
Short Term: Up                               Net Long Futures and Options: 129853
Long Term: Up                                Change: -4000
Overnight Trade: H +4 3/4
Opening Calls: 3-5 Higher


News for the soybean complex is mixed. It is still dry in Argentina, but most of Brazil has adequate moisture. Export demand has slowed, but it is still at a much faster pace than we need. The outside market influences are mostly negative, but passage of the blenders credit would be very helpful. Two sided trading is highly likely again today, but the long term pattern should remain up.

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


Live cattle futures traded lower on Tuesday, closing well off of daily lows, with the December contract leading a late day recovery. Boxed beef prices were mixed for the day and reports of packer closures for Friday and Saturday should shrink weekly slaughter numbers well below recent totals. Overnight activity traded both sides of unchanged, with current outside influences holding a slightly negative bias.

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


Feeder cattle futures posted triple digit losses in the front two months on Tuesday. Spill over pressure from Monday’s higher corn trade, along with soft live cattle prices weighed on feeders. Overnight activity is narrowly mixed, with no current bias in trade direction. A continued sideways pattern could be seen into the holiday’s.



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