Schwieterman: Corn overbought, cattle higher

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Corn                                                Estimated Fund Position
Trends
Short Term: Up                             Net Long Futures and Options: 182823
Long Term: Up                              Change: -6000
Overnight Trade: Z -2 @7:30 AM


The March corn almost made a double top yesterday, did post a poor close, and saw follow through selling overnight. The market is overbought and due of a correction after the strong move higher we saw in the second half of November. The 38% retracement of the move up and the 40 and 50-day moving averages are near the $7.47 area, making that a very good downside target in the next few sessions.

Wheat                                           Estimated Fund Position
Trends
Short Term: Up                           Net Long Futures and Options: -16505
Long Term:Up                             Change: -2500
Overnight Trade: Chicago: Z -9 KC: Z -9 @7:30 AM


The wheat has seen fairly heavy selling pressure so far today, but at this point the market is just consolidating. If the March KW takes out Wednesday’s low of $9.23 ½, then we should start looking for a move down to the 40 and 50-day moving averages at the $9.16 area. It will remain dry in the HRW Belt for the foreseeable future, which will provide good underlying support.

Soybeans                                    Estimated Fund Position
Trends
Short Term: Up                          Net Long Futures and Options: 91779
Long Term: Down                      Change: +3000
Overnight Trade: F -9 @7:30 AM


The 38% retracement of the last leg down, which is at the $14.50 area is proving to be strong resistance in the January soybean contract. The upward momentum in the market has run out and we are probably going to see the market correct. Meanwhile demand numbers are still strong, which means USDA will have some upward revisions to make in future crop reports and that should keep support under the market

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

Live cattle futures closed moderately higher on Thursday, with no major action developing in the cash market to this point. The standoff could last into the late afternoon, depending on today’s board action. We know that due to December contracts being available next week, packers may limit their buying volume today. December is down .75 for the week, heading into today’s action. A very sideways pattern continues to exist. Dollar strength this morning could give the edge to some weakness in the fats.

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


Feeder cattle futures posted moderate gains on Thursday, with support from lower corn and higher fats. Cash index levels have shot higher this week, with the seven day index now over 146.00. Overnight trade has been two sided, with a slightly higher bias. Corn prices are couple cents lower as we write, due mostly to weakness in the beans and a stronger Dollar.



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