Corn                                             Estimated Fund Position
Short Term:Down                     Net Long Futures and Options: 210873
Long Term: Down                     Change: -22000
Overnight Trade: Z -1 @7:30 AM

The corn was basically flat overnight, but the market is falling out the bottom of the trading range. There will be a lot of talk about heading to the $7.18 level in the December contract and with days like yesterday, it wouldn’t take long to get there. The weakness is most likely generating new demand and end users will view this as a buying opportunity. The market is oversold and due for a bounce, but trying to pick a bottom will be dangerous.

Wheat                                           Estimated Fund Position
Short Term: Up                            Net Long Futures and Options: 11664
Long Term:Up                               Change: -8000
Overnight Trade: Chicago: Z +8 KC: Z+9 @7:30 AM

The wheat is the only market trying to make up for yesterday’s terrible close. With the fundamental outlook for the wheat still improving and the fund position very small, the wheat is in good position to win the spread battle for a while, so look for traders to buy wheat and sell the other markets in the short run. Look for the December KW to reach $9.25 again quickly.

Soybeans                                        Estimated Fund Position
Short Term: Down                         Net Long Futures and Options: 185769
Long Term:Up                                Change: -20000
Overnight Trade: X -24 @7:30 AM

The soybeans were under heavy selling pressure again overnight. The November soybeans are currently trading below the 50-day moving average, which is an ominous sign, but the market is now in oversold territory so perhaps we can see a corrective bounce. Meanwhile, demand doesn’t seem to be slowing and end users have to be looking at this break as a gift. The fundamentals of the market suggest we need higher prices, so buying breaks is still wise.

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

Live cattle futures closed sharply lower on Monday, with heavy liquidation of longs seen throughout the session. Open interest was off 9815 contracts on the break. Overnight activity has moderated, with narrow two sided trade in the live cattle. Better basis for producers could initiate some activity at steady to slightly lower levels in the cash market, if packers make an attempt at securing cattle in the first half of the week. Overnight lows in the October contract approached the 40 day moving average support level.

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

Feeder cattle futures managed to close moderately higher on Monday, supported by the sharply lower trade in the corn market. Futures remain premium to the cash index and appear out of line with live cattle pricing. We are nearing the top of the daily channel in the October feeders, which may offer a lower risk hedging opportunity for producers. A rally of 1.00-1.50 will enter our sell zone. Corn is trading near unchanged in overnight trade.