Schwieterman: Live cattle futures rebound sharply

Corn                                          Estimated Fund Position
Trends
Short Term: Up                       Net Long Futures and Options: 178026
Long Term: Up                        Change: +17000
Overnight Trade: Z +10 @7:30 AM

As expected, corn exports were terrible at 31,900 MT for the old crop and 148,800 MT for the new crop. The market is doing its job and slowing export demand and there is also the suspicion that old crop corn is very difficult to source. The September corn did make new all time highs overnight, which makes the $8.50 area the next objective for that contract. The December didn’t make it over $8.00 yet, but it is just a matter of time.

Wheat                                         Estimated Fund Position
Trends
Short Term: Up                          Net Long Futures and Options: 16672
Long Term:Up                            Change: +4500
Overnight Trade: Chicago: Z+12 KC: Z +12 @7:30 AM

Wheat export sales were good at 589,200 MT. The bears don’t want to see good export sales, because that will make this market explosive. Feed users don’t want any foreign competition for our wheat either. Minneapolis wheat is already over $10.00, Kansas City will be next if we have good demand.

Soybeans                                     Estimated Fund Position
Trends
Short Term: Up                           Net Long Futures and Options: 235676
Long Term:Up                             Change: +10000
Overnight Trade: X +28 @7:30 AM

Soybeans continue to make new all time highs and the November contract has cracked $16.50. Export sales were ok with old crop at 135,300 MT and new crop at 272,000. Meal and oil sales were solid. We probably aren’t slowing soybean sales enough considering how fast the crop is deteriorating. August beans are over $17.00, which makes $18.00 the next objective. Basis levels are firming, so the futures aren’t keeping up with the cash market.

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

Live cattle futures rebounded sharply on Wednesday, with trading to or closing at limit up levels. Many attributed the gains to a dead cat bounce, while we believe there is more to the move. Open interest was higher for the day, indicating more than short covering. News that Japan will be widening the age for imported beef in November could be the start of several countries doing the same thing. Outside markets should be supportive this morning, with a lower Dollar and higher equities.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: 40-80 Lower

Feeder cattle futures had their 5th consecutive day of limit moves on Wednesday, with the direction changed from the previous four. The limit higher move appears to be some short covering, along with support from the Japanese announcement. Stronger overnight corn prices have feeders softer again this morning, with some remaining support holding beneath the market. We continue to favor selling bounces into the new all-time highs in the corn futures.

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