Corn Estimated Fund Position
Short Term: Down Net Long Futures and Options: 87078
Long Term: Down Change: +12000
Overnight Trade: H +3 3/4 Z +3
Opening Calls: 3-5 Higher
A combination of good news out of Europe and a cut in the bank reserve requirement by the Chinese sent many markets sharply higher after 7:00 this morning. The March corn erased sizable losses, but didn’t push through yesterday’s high. The lack of bad news more than anything is allowing grain markets to move higher and further short covering/buying could take the March corn up to the $6.40 area in the near future.
Wheat Estimated Fund Position
Short Term: Down Net Long Futures and Options: -86620
Long Term: Down Change: +3000
Overnight Trade: Chicago: H +8 ½ KC: H +5 1/2
Opening Calls: 5-10 Higher
The March KW posted an outside day higher on the charts and the late strength in the overnight session pushed the market to a new high for the move. More short covering is certainly possible as long as the corn is moving higher, but there are many layers of resistance above the market that will have to be broken before we see a change in trend, and right now there doesn’t appear to be much fundamental justification for that. A move to $7.00 in the March KW is possible in the short run, but rallies still look like they should be sold.
Soybeans Estimated Fund Position
Short Term: Down Net Long Futures and Options: -25522
Long Term: Down Change: +4000
Overnight Trade: F +6 ½ X +7 1/4
Opening Calls: 7-10 Higher
The soybeans are consolidating just above last week’s lows. The beans show signs of good buying interest at times, but haven’t been able to hold gains. The first resistance today will be near yesterday’s high at the $11.38 - $11.39 area, and a move through that level should generate more short covering. A few more big sales to China would certainly help the bulls.
Short Term: Down
Long Term: Up
Opening Calls: 30-60 Higher
Live cattle futures fell late in the day on Tuesday, settling moderately lower in most contract months. Overnight markets have trended higher since the open, with the lead December contract trading nearly a dollar higher as we write. Cutout values are struggling, while a weaker Dollar and firming equities lend support. Strong basis levels on many commodities, including cattle, suggest the market could stay much stronger than many have suggested.
Short Term: Up
Long Term: Up
Opening Call: 40-60 Higher
Feeder cattle futures shed early strength to close mixed to mostly lower on Wednesday. Like the fats, feeders have popped higher in early morning electronic trade. The weak Dollar and firming cash levels have buyers more willing to reenter the market. If technical can turn higher, attracting large speculative money, we could see a strong pop develop in this market. We are not there yet, but remain aware of the possibilities.