Schwieterman: Cattle futures moderately lower, dollar weaker

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Corn                                                   Estimated Fund Position
Trends – December Contract
Short Term: Up                               Net Long Futures and Options: -68833
Long Term: Down                           Change: +2000
Overnight Trade: Z Unch @7:30 AM


Corn export sales were good with 392,000 MT of old crop sales and 657,800 MT of new crop. USDA may actually have to increase the old crop export estimate at some point. For the most part we have seen choppy, two sided trade overnight as traders wait on the report at 11:00. The Dollar is very weak, which will add to the support in the market if we see friendly numbers or soften the blow if we don’t. There is still some uncertainty regarding the forecasts, so that will continue to be a factor going forward, especially in the western Corn Belt.

Wheat                                                 Estimated Fund Position
Trends – September Contract
Short Term: Up                                 Net Long Futures and Options: -65283
Long Term: Down                             Change: +10000
Overnight Trade: Chicago: U +4 KC: U +2 @7:30 AM


Wheat export sales were outstanding at 1.437 MMT. China was the main buyer and the bulk of the sales had already been reported, so the big total wasn’t a surprise. However, this is exactly what the wheat market needs, especially in the face of a potentially large US corn crop, which will dry up the wheat feeding. The September KW tested the $7.15 resistance overnight and will probably need some help from the USDA to push through that today.

Soybeans                                             Estimated Fund Position
Trends – August Contract
Short Term: Up                                   Net Long Futures and Options: 88086
Long Term:Up                                     Change: +5000
Overnight Trade: X -1 @7:30 AM


Soybeans export sales were ok with cancellations of 70,900 MT of old crop and sales of 410,000 MT of new crop. The cancellations aren’t too important since we have already exceeded the sales expectations. What will be much more important is the data from USDA. Since the November soybeans reached the 62% retracement of the last move down yesterday, the market is in a perfect spot to start another leg lower if the report is negative.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 20-40 Higher


Live cattle futures closed moderately lower on Wednesday, with the market retreating slightly from the new recent highs of the move. Open interest in the live pit continues to rise on a daily basis, which bodes well for the market in our opinion. The 11 am supply demand report is likely to be a bigger story than cash, as most anticipate we will hold off for another Friday feedlot trade. The weaker Dollar and rising equities should bode well for commodities in general and red meat exports specifically. Overnight trade is trending higher, with gains of 15-25 in the front three months.

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


Feeder cattle futures closed moderately lower on Wednesday, with August now 1.25 lower for the week. The market did manage to find support above Tuesday’s lows, which should be solid support barring another big rise in corn values. We expect all eyes to be focused on the grain report this morning at 11:00 am. Wednesday’s 30 point drop in the cash index could weigh on rally efforts. August remains an 8.25 premium to the index. Corn has traded both sides of unchanged overnight with a higher bias.



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