Schwieterman: Cash cattle index levels on slow downward spiral

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Corn                                        Estimated Fund Position
Trends
Short Term:Down                Net Long Futures and Options: 157010
Long Term: Down                Change: +4000
Overnight Trade: Z -1 @7:30 AM


The corn still looks like it is due for a short covering bounce, but the market has been quiet so far today. The export sales report is delayed until tomorrow, so we are lacking fresh news so far today. Basis levels are still strong around the country and around the world, so there is still that hope that exports will improve in the near future. Other than that, traders will keep an eye on the stock market watching for further weakness that may cause selling pressure in all markets.

Wheat                                     Estimated Fund Position
Trends
Short Term: Down                Net Long Futures and Options: -20476
Long Term: Down                Change: -1500
Overnight Trade: Chicago: Z +3 KC: Z +2 @7:30 AM


The wheat failed to hold gains yesterday, and today looks like it will be another day of consolidation. The market is oversold and due for a bounce, but we haven’t got it yet and we don’t have any fresh news to get it started. As usual the bulls just need to see a couple of good export sales to get the market moving, because the poor start to the growing season already has traders edgy. The December KW should work up to the $9.00 - $9.05 area in the next few sessions, but it looks like it will be a slow start today.

Soybeans                                  Estimated Fund Position
Trends
Short Term: Down                  Net Long Futures and Options: 108657
Long Term: Down                   Change: +5000
Overnight Trade: F -5 @7:30 AM

We saw good demand news for the soybeans yesterday with a large sale of beans to China and a large sale of soybean oil to unknown destinations. Plus the NOPA crush numbers was better than expected. All in all, the demand outlook is still quite good an USDA is likely underestimating both crush and exports, which fits with my idea that we will use all the beans we produce this year. Plan on short covering in the next few days.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: Mixed


Live cattle futures closed moderately lower in the front months and down significantly in the deferred. December remains in the middle of its two week trading range, with no cash activity taking shape. Friday’s on feed report is expected to show total on feed below 95%, with placements of 87% and marketing totals up 2 ½%. The numbers should prove friendly to the first quarter of 2013. Overnight trade is narrowly mixed under light volume, with December modestly higher and deferred modestly lower. Bids remain a good $5 below asking prices.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: 20-40 Lower


Feeder cattle futures broke key support levels on Thursday, posting triple digit losses in the January contract. Open interest in the feeders rose over 500 contracts, suggesting new hedgers entering the market. Overnight activity is off another 25-40 cents, with corn prices trading near unchanged. The report should be friendly, but cash index levels are definitely on a slow downward spiral.



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