Schwieterman: Cash market stronger, feeder futures improve

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Corn                                     Estimated Fund Position
Trends – December Contract
Short Term: Up                    Net Long Futures and Options: -228674
Long Term: Down                 Change: -4000
Overnight Trade: Z Unch @7:30 AM

The corn market traded both sides of unchanged overnight as everyone waits for the EPA announcement on the RFS mandate and fresh export sales data. It still looks like a run to $4.50 is likely, but it also looks like the market will test the $4.27 area first. Fresh news is hard to come by, so the day session will likely be a two sided choppy affair.

Wheat                                  Estimated Fund Position
Trends – December Contract
Short Term: Down                Net Long Futures and Options: -68038
Long Term: Down                 Change: -1000
Overnight Trade: Chicago: Z +6 KC: Z +6 @7:30 AM

December KW finally broke the string of lower highs in overnight trade, but the market will have to hold gains today to break the string of 11 consecutive lower closes. The market is overdue for a short covering bounce, but it has been very slow in coming. A positive close today would be a great step in getting a rally started and $7.30 would be a good upside target.

Soybeans                               Estimated Fund Position
Trends – January Contract
Short Term: Up                      Net Long Futures and Options: 90847
Long Term:Up                        Change: +5000
Overnight Trade: F -5 @7:30 AM

The January soybeans failed to make a new high for the move yesterday, which is a sign the market is running out of upside momentum. We are still seeing excellent demand for beans and the products, but there is still fear that the sales will stop this winter when the S. American crop becomes available. The inverse in the soybean market is a symptom of the upfront demand and the fear of the S. American crop. A negative close today will mark the end of the rally.

Live Cattle
Short Term: Up
Long Term: Up
Opening Calls: 10-30 Higher

Live cattle futures closed mixed on Wednesday, with bull spreading a feature for the day. The front two months are leading the market in overnight trade as well, with 133.25 resistance levels in the December contract being targeted. We look for ready cattle to continue to tighten into the end of the year. Open interest in the live cattle was up 4,829 contracts on Wednesday and continues to be the traders’ choice vs the lean hogs. Futures action indicates that feedlots have a great chance at better money this week.

Feeder Cattle
Short Term: Down
Long Term: Up
Opening Call: 20-40 Higher

Feeder cattle futures gained ground in the front 3 months on Wednesday and are seeing good underlying strength re-entering the cash market. Dodge City’s sale on Wednesday showed improved prices across the board. The cash index reached new all-time highs on Wednesday, with a 7 day average of 165.50. Corn prices are narrowly mixed in overnight trade and live cattle are lending support to the feeders.

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