Schwieterman: Firm cash trade supports live cattle futures

Corn                                                 Estimated Fund Position
Trends
Short Term:Down                         Net Long Futures and Options:
Long Term: Down                         Change:
Overnight Trade: Z -6 @7:30 AM

The corn was weaker overnight and it looks like we will see a test of Tuesday’s low. The market lacks fresh bearish news, so we probably won’t see new lows for the move. Export sales were poor, at 103,900 MT for the old crop and 208,200 MT for the new crop, but this was expected. Look for choppy trade today and watch the key support level of $7.10 ½ in the December contract.

Wheat                                              Estimated Fund Position
Trends
Short Term: Down                         Net Long Futures and Options:
Long Term: Down                          Change:
Overnight Trade: Chicago: Z -1 KC: Z -2 @7:30 AM

The December KW continues to consolidate at the lower end of the trading range. Export sales were poort at 314,600 MT. We really need to see sales in the 500,000 – 600,000 MT range to avoid another cut in the export estimate. We keep hoping that the world will turn to us soon, but it hasn’t happened yet. The market is due for a bounce back towards $9.00, but with the pressure in the soybeans and the lack of enthusiasm in the corn, it will be tough to get that done today, but the wheat should be the favored leg of the spread trade.

Soybeans                                           Estimated Fund Position
Trends
Short Term: Down                            Net Long Futures and Options:
Long Term: Down                            Change:
Overnight Trade: F -16 @7:30 AM

Soybean export sales were back on track at 559,700 MT, which is about double what we need each week. Meal and oil sales were good and we can plan on very large oil sales in next week’s report, so it still looks like demand is solid and I maintain my idea that we will use all the beans we produce. The charts, however, look negative and the January contract is testing the $13.75 downside objective. The market is oversold, but the momentum is clearly down. Trying to pick a bottom is likely a futile exercise, so be patient if you want to get long.

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

Live cattle futures settled moderately higher on Thursday, supported by some firmer cash trade in Nebraska. Dressed trade in the north of $195-$196 was not enough to clean up show lists in eastern Nebraska, but it did give other feeders hope of higher cash trade today. Asking prices in the south remain in the $127-$128 level, with remaining northern cattle near $198. This afternoon’s on feed report expects on feed to be down 5-6%, placements off 13-14% and marketing to be 3% higher.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: Mixed

Feeder cattle futures closed .20-.30 higher on Thursday, with softer corn and higher live cattle supporting. Overnight action is similar, with corn down another nickel and feeders moderately higher. Support from the impending low placement number could add to friendly sentiment. Beef exports for the week were smaller, which could weigh on the complex.

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6. Smooth transitions

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