Schwieterman: Feeder cattle futures higher as corn struggles

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Corn                                             Estimated Fund Position
Trends
Short Term:Down                     Net Long Futures and Options: 54242
Long Term: Down                     Change: -3000
Overnight Trade: H +2 @7:30 AM


The Corn market continues to consolidate at the bottom of the trading range. Export sales were horrible, which should have been expected at 49,100 MT, so there isn’t any bullish news today. The best hope for the bulls is profit taking by the shorts today, which could give the market a pop. Otherwise, traders are now waiting for the supply and demand report, which is still a week away. Some traders are still eying that open chart gap at $6.83 ½. My guess is that it gets filled before the report.

Wheat                                         Estimated Fund Position
Trends
Short Term: Down                    Net Long Futures and Options: -73017
Long Term: Down                     Change: -1000
Overnight Trade: Chicago: H +1 KC: H +1 @7:30 AM


Wheat export sales were a little light at 400,400 MT. It is not a terrible total, but not big enough to do the market any good. Crop conditions aren’t getting any better and sales have been adequate for the past month, so the news isn’t too bad. One trade to watch is the Kansas City vs. Chicago spread. The poor conditions and some of the recent demand should support being long Kansas City and short Chicago.

Soybeans                                   Estimated Fund Position
Trends
Short Term: Down                    Net Long Futures and Options: 55076
Long Term: Down                     Change: -4000
Overnight Trade: H +6 @7:30 AM

Soybean exports sales were good at 434,900 MT despite the recent cancellations. USDA will have to increase the export estimate in the supply and demand report, because sales are still exceeding expectations by a considerable amount. The biggest negative factor in the market right now is the non-threatening weather in S. America. A big crop there will reduce our chances for large sales later in the crop year. It still looks like we will see a test of the November low before the report.

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


Live cattle futures closed sharply higher, with the spot month posting a new all-time high on the continuation charts. Open interest jumped another 7,441 contracts on Thursday, as new  money continues to flow into this market. Overnight trade has been narrowly mixed, with the higher Dollar limiting gains. Cash trade today is expected to be higher, but how much is the question. Asking prices are mostly $130 and $205, with bids remaining below week ago trade. Beef exports for the week were the lowest in some time at 8,400 mt.

Feeder Cattle
Trends
Short Term: Down
Long Term: Up
Opening Call: 20-30 Higher

Feeder cattle futures closed sharply higher on Thursday, supported by the strength in the fats and continued struggles in the corn. Overnight trade is firmer, with corn trading narrowly mixed. Cash index levels are firming, which should build solid underlying support for the futures. Some end of the week profit taking is possible but this market appears to have solid support on any correction.



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