Schwieterman: Higher cash trade support live cattle futures

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Corn                                            Estimated Fund Position
Trends
Short Term:Down                    Net Long Futures and Options: 140565
Long Term: Down                    Change: +5000
Overnight Trade: Z +5 @7:30 AM


Friday the corn posted an outside day higher on the charts and followed that up with a new high for the move overnight. The market is oversold and due for a correction, we got a good technical buy signal in the form of the outside day higher, there is a great deal of open interest in the $7.40 and $7.50 options that expire on Friday, and we have Dollar weakness and stock market strength this morning. So, we have numerous things that point to corn market strength today and this week. Look for the December contract to hit $7.50 at some point this week.

Wheat                                           Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: -18776
Long Term: Down                       Change: -4000
Overnight Trade: Chicago: Z +4 KC: Z +3 @7:30 AM


The December KW reached the lowest level since mid July on Friday, which does not look good on the chart. The market managed a mid range close and saw some strength overnight, but there is no indication of a bottom so far. If the corn and soybeans stay strong the wheat should be able to hold gains, but it will take a move to at least $8.90 to make traders think about covering shorts or making new buys. Crop condition ratings will probably continue to decline, which is supportive.

Soybeans                                        Estimated Fund Position
Trends
Short Term: Down                         Net Long Futures and Options: 90054
Long Term: Down                          Change: -5500
Overnight Trade: F +15 @7:30 AM


The January soybeans finally found some support near the 75 and 78% retracements of the entire move up on Friday. Like the wheat, the market managed a mid range close and has seen some good buying so far today. It will take a move to $14.02 to get back Friday’s losses and a move to $14.10 to clear Friday’s high. News is limited today. Traders will be looking for information about last week’s possible cancellations by the Chinese and also for news of new sales.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: 20-50 Higher


Live cattle finished the week with moderate gains on Friday, supported by higher cash trade and bullish expectations for the on feed report. The report came out as expected, confirming increasingly tight supplies as we head into the first quarter of 2013. Overnight weakness in the US Dollar has provoked some solid gains in commodities in general, which should support the cattle as well. World equity markets are firming as well, providing better economic confidence.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: 10-30 Higher


Feeder cattle futures were basically flat for the week, but could find support from the fats and outside markets this morning. Strength in overnight corn prices may limit the feeder gains, but the seemingly endless stream of lower placements is bound to support. Cash index levels were off about 70 points for the week and should be watched closely for stabilization in the first half of this shortened holiday week.



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