Schwieterman: Feeder Cattle Futures Close With Modest Gains On Lower Corn Prices & Improving Cash Demand
10/28/2009 08:16AM
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Corn Estimated Fund Position
Trends
Short Term: Up
Long Term: Up Net Long Futures and Options: 113163
Overnight Trade: Z -5 3/4 Change: -8000
Opening Calls: 1-2 Lower
The corn traded both sides of unchanged overnight in a broad range and ended the session near the lows. The failure of the $3.71 support yesterday points to a move down to the $3.58 to $3.45 area in the December contract. The long range forecasts look less threatening and it also looks like we will see more weakness in the stock market and more strength in the US Dollar Index.
Wheat Estimated Fund Position
Trends
Short Term: Up Net Long Futures and Options: -39592
Long Term: Up Change: -6000
Overnight Trade: Chicago: Z -9 3/4 KC: Z -8 3/4
Opening Calls: 8-10 Lower
Wheat led the way lower yesterday and was weaker again overnight. Perhaps traders are remembering that the wheat has the poorest fundamental outlook of the grains. The $5.03 area that the December KW reached overnight is an important support zone and if it fail we will have to look for a move down to the $4.98 or $4.93 areas.
Soybeans Estimated Fund Position
Trends
Short Term: Up Net Long Futures and Options: 44097
Long Term: Up Change: -4000
Overnight Trade: X -11
Opening Calls: 10 -15 Lower
Soybeans were under pressure as well overnight. The $9.70 support failed, which makes the $9.50 area the next downside target. The outside markets will be a major influence again today, but the forecasts will be important as well. If the extended forecasts are not threatening traders will fear “harvest pressure.”
Live Cattle
Trend
Short Term: Up
Long Term: Up
Seasonal: Up
Opening Calls: 10-20 Higher
Live cattle futures closed narrowly mixed on Tuesday, with a late round of selling taking away most of the days gains. Beef prices continued higher, with gains of more than 1.30 in choice and select cuts. Cash trade could start to take shape today, if packers are willing to raise bids closer to this weeks asking prices of $88-$89 in the south and $137+ in the north. More than likely, it will be Thursday or Friday before significant business take shape. Overnight trade is showing modest strength inside of yesterday’s range.
Feeder Cattle
Trends
Short Term: Up
Long Term: Down
Seasonal: Up
Opening Call: 10-20 Higher
Feeder cattle futures closed with modest gains on Tuesday, with support from the lower corn prices and improving cash demand. Overnight trade is producing more upward bias, with continued weakness in the corn pit as a key supporting factor. New weekly highs in the November feeders overnight, should promote a test of last weeks highs of 96.70. The 50 day moving average of 97.10 looms as the next target for bullish traders.