Corn                                Estimated Fund Position
Trends – December Contract
Short Term:Down           Net Long Futures and Options: -211799
Long Term: Down           Change: +8000
Overnight Trade: Z -2 @7:30 AM

The corn couldn’t build on yesterday’s gains overnight, but yesterday’s strength was enough to create some divergence in the technical indicators, which is an indication that this market is bottoming, at least temporarily. The main news of the day will be the ethanol production figure. Margins are excellent right now, which should mean plants are running at full capacity. Ethanol demand and the strong export sales pace are two reasons that the basis levels are still very strong despite a nearly 14 billion bushel harvest. There has also been some bull spreading in the market, which is an indication of strong up front demand.

Wheat                             Estimated Fund Position
Trends – December Contract
Short Term: Down          Net Long Futures and Options: -89715
Long Term: Down           Change: +3000
Overnight Trade: Chicago: Z -1 KC: Z +1 @7:30 AM

The December KW took out yesterday’s high in overnight trade, which has been a very rare occurrence lately. Indicators are still, of course, oversold, but we haven’t seen any indication of a change in the trend. The December KW will probably have to close at $7.05 or so to induce any short covering, but if that does happen look for a quick move to $7.30.

Soybeans                          Estimated Fund Position
Trends – January Contract
Short Term: Up                 Net Long Futures and Options: 73224
Long Term: Down             Change: -5000
Overnight Trade: F -1 @7:30 AM

The January soybeans posted an outside day down yesterday, which is a good indication that this market is headed to $12.50. Yesterday was a good example of traders being more afraid of a big S. American crop than they are of the strong up front demand. Talk of declining crush margins in China and yesterday’s Chinese purchase of 2014/2015 soybeans instead of 2013/2014 doesn’t help matters.

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

Live cattle futures suffered their second consecutive sharply lower close, falling below the 100 day moving average in all but the lead December contract. Cutout weakness continues to be a contributing factor in the break. This weeks’ cash trade remains untested, with asking prices of $133+ not being approached by packers who finally feel they have some market leverage. Estimates for Friday’s on feed report call for 94% on feed, 110% placements and marketing 101.5%. the numbers could be negative to the 1st qtr of 2014.

Feeder Cattle
Short Term: Down
Long Term: Down
Opening Call: Mixed

Feeder cattle futures have now dropped more than 3.00 in the past two sessions. The weakness is piggybacking the decline in the fat market and comes in spite of corn being within a few cents of its’ yearly lows. The retreat also coincides with two straight days of lower equity closes. We will monitor that relationship for further direction. The projected 10% rise in October placements would still be the second smallest placement total for that month in the past 10 years.