Schwieterman: Cattle Prices Down Despite Dip In Corn Futures
11/02/2009 08:24AM
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Corn Estimated Fund Position
Trends
Short Term: Down
Long Term: Up Net Long Futures and Options: 108431
Overnight Trade: Z +1 Change: -10000
Opening Calls: 1-2 Higher
The corn was very active overnight. First the December corn tested the 50% retracement of the last leg up, then the market bounced back to close positive. Weather forecasts are dry and conducive to harvest, but weakness in the Dollar was supportive. The key today will be whether or not the Dollar stays weak and the stock market stays positive. The direction of the Dollar will likely determine the direction of today’s close.
Wheat Estimated Fund Position
Trends
Short Term: Down Net Long Futures and Options: -35009
Long Term: Up Change: -3000
Overnight Trade: Chicago: Z -1 KC: Z -1 3/4
Opening Calls: 1-2 Lower
The December KW is finding support near the 40 and 50-day moving averages. The market needs to hold here this week to avoid a move back down to the $4.50 area. This afternoon’s progress report will show that SRW planting is still behind normal, but weather will be favorable for the next couple of weeks. Like the corn, the Dollar is the key in this market.
Soybeans Estimated Fund Position
Trends
Short Term: Down Net Long Futures and Options: 37268
Long Term: Up Change: -4000
Overnight Trade: X +7
Opening Calls: 5-10 Higher
The January soybeans continue to consolidate and trade both sides of the $9.75 area. Demand is supportive, but open weather is negative, therefore we have a sideways market. For the time being it looks like you can sell the January soybeans above the $9.85 level and buy below $9.65. The Dollar will be a big influence, of course, but it will take a sizeable move to break the soybeans out of the trading range.
Live Cattle
Trend
Short Term: Up
Long Term: Up
Seasonal: Up
Opening Calls: Mixed
Live cattle futures finished the week with the December contract down 1.70 for the five days. Cash prices, on the other hand traded for a high of $88 in Texas and $87.50 in Kansas on Friday. The strength in the cash market and aggressive kill pace indicate better packer demand and margins than common rhetoric would indicate. The improvement in the hide and offal value over the past two weeks, along with an improvement in beef prices, likely has the packers in good shape. With the October contract and its active northern deliveries gone after Friday, the market should get back to cash trade and the winter storms in Colorado and western Nebraska that stripped tonnage off the markets once again.
Feeder Cattle
Trends
Short Term: Up
Long Term: Down
Seasonal: Up
Opening Call: Mixed
Feeder cattle futures finished the week losses of .72 basis the January contract. The modest setback came in spite of .30 losses in the corn futures for the week. Cash strength has been slow to materialize in the sale barns, but reports of higher to sharply higher calf prices late in the week and the drier scenario developing in the central U.S. looks to be supportive. We’ll be watching Oklahoma City prices today closely for signs of improving cash demand.