Schwieterman: Large show lists cap cattle rally attempts

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Corn                                           Estimated Fund Position
Trends
Short Term:Down                   Net Long Futures and Options: 151010
Long Term: Down                   Change: -18000
Overnight Trade: Z +2 @7:30 AM


The corn market fell out the bottom of the recent trading range and is beginning to test the harvest low. The December corn got within 7 ½ cents of the September low yesterday, but hasn’t seen follow through weakness yet. After such a sharp break, one would expect to see follow through at some point in the very near future and the harvest low will be very critical support. Failure there would suggest a move down to $6.33 in the December contract.

Wheat                                        Estimated Fund Position
Trends
Short Term: Down                   Net Long Futures and Options: -15976
Long Term: Down                    Change: -7000
Overnight Trade: Chicago: Z -1 KC: Z +1 @7:30 AM


The 40 and 50-day moving average support failed in the Kansas City wheat yesterday and the market is now headed to the bottom of the trading range that began in the summer. The news remains the same. Someday we hope to have better exports, but they haven’t materialized yet, and someday we hope to have widespread moisture in the HRW Belt, but that hasn’t happened yet either. Right now traders are most concerned with the fact that the grain markets in general are under pressure and we are lacking fresh demand news. Plan on a test of the bottom of the trading range.

Soybeans                                     Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: 99657
Long Term: Down                       Change: -10000
Overnight Trade: F +3 @7:30 AM


The January soybeans didn’t make a new low for the move overnight, but after the beating that this market has taken the past two sessions, follow through selling should be expected. $13.75 is a likely downside target for the January contract and we could see that soon unless the news changes. S. American weather is not threatening and it has been several days since we saw Chinese soybean buying. Buyers will probably be hesitant to act until there is a hint of fresh demand.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: 20-40 Lower


Live cattle futures closed moderately lower on Monday, with new sellers entering the market. Larger show lists this week and greater contract lists over the next several weeks could cap rally attempts. Beef prices saw an uptick on Monday, suggesting that east coast demand may be returning to the market. That demand influx could go a long way in offsetting the increase in product through year end.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: 20-80 Lower


Feeder cattle futures closed mostly higher on Monday, supported by .20 losses in corn futures. Overnight corn prices are firmer, with feeders selling off sharply in early morning activity. Cash index levels appear to be declining modestly to start the week. The feeders are nearing recent lows on the charts, which should act as major support levels. If these lows are breached, we expect to see more aggressive hedge activity.



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