Schwieterman: Cash cattle ready for new highs again

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Corn                                     Estimated Fund Position
Trends – December Contract
Short Term:Down                 Net Long Futures and Options: -261702
Long Term: Down                 Change: -4000
Overnight Trade: Z +5 @7:30 AM


Corn export sales were much larger than expected for the 3 weeks combined coming in at 4.56 MMT for the old crop, plus another 738,000 MT for the new crop. The big buyers were Mexico, Japan, and China. The numbers are supportive and we should see an increase in the export estimate in next week’s supply and demand report. The yield estimate, of course, is still a huge concern, but there is nothing quite like demand to turn a market around. Once we get the supply and demand report out of the way, we have a good chance of seeing gains in this market.

Wheat                                  Estimated Fund Position
Trends – December Contract
Short Term: Down               Net Long Futures and Options: -23293
Long Term:Up                      Change: -3000
Overnight Trade: Chicago: Z -1 KC: Z -1 @7:30 AM


Wheat export sales were disappointing at 1.31 MMT. The sales total was by no means bearish, but the bulls had high hopes for this report. It was good to see that Brazil was the big buyer as it indicates that Argentina definitely has supply problems. Without bullish data from this report, however, we must keep looking for a deeper correction and keep waiting for the supply and demand report for something to feed the bull market.

Soybeans                             Estimated Fund Position
Trends – January Contract
Short Term: Down                Net Long Futures and Options: 44160
Long Term: Down                 Change: +5000
Overnight Trade: F +6 @7:30 AM


Soybean export sales were huge at 4.74 MMT. China and “unknown destinations” were the big buyers, which should come as no surprise. The meal and oil sales were disappointing, which dampens some of the bullish enthusiasm, but it still looks like the January contract should continue to drift up towards the upper end of the trading range. Demand for beans is obviously strong and if the yield estimate next week is not as high as expected then we will see much larger gains in the soybeans.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 20-30 Higher


Live cattle futures closed sharply lower on Wednesday, while cutout values continue to soar and cash appears ready to reach new highs as well. Some modest trade out of northern Kansas was reported at $212 in the beef on Wednesday. Futures are firming in overnight trade, with .30-.42 gains across the board. The monthly cattle on feed report will be released this afternoon at 2:00 pm, which will be the first time that markets are open for the report in recent memory. Cash remains the leading indicator in this market and it appears to be holding positive potential.

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


Feeder cattle futures settle sharply lower on Wednesday, with weakness in the live futures and the hogs dragging on the entire complex. Overnight activity, ahead of on feed and placement numbers is narrowly mixed. Corn is as much as a nickel higher overnight, which should keep a bit of a lid on feeder activity. The key is likely the cash trade out of the feedlots. As profitability creeps back into closeouts, the cattlemen will historically spend it aggressively on replacements.



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