Schwieterman: Feeder cattle futures closed mixed on Thursday

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Corn Estimated Fund Position

Trends – December Contract

Short Term:Down Net Long Futures and Options: -7488

Long Term: Down Change: +4000

Overnight Trade: Z +4 @7:30 AM

The December corn is testing the open chart gap at $3.78. This is a key short term resistance point and a close above $3.78 would indicate the market has a shot at moving to $3.90. Meanwhile it is raining in Iowa at the moment and the forecasts suggest the bulk of the Corn Belt will get rain over the course of the next week. Crop condition ratings will remain near steady and expectations will be for great yields. The Pro Farmer crop tour will be next week, which will provide the market with some fresh news. Sell rallies.

Wheat Estimated Fund Position

Trends – December Contract

Short Term: Down Net Long Futures and Options: -85987

Long Term: Down Change: +2000

Overnight Trade: Chicago: Z +3 KC: Z +4 @7:30 AM

Wheat was higher yesterday and again overnight, but so far we haven’t had enough strength to get anyone excited about a turnaround in the wheat. The bulls need a close above $6.34 in the December KW and $5.77 ¼ in the December Chicago to encourage short covering. As usual what the bulls need most is some fresh demand news.

Soybeans Estimated Fund Position

Trends – November Contract

Short Term: Down Net Long Futures and Options: -63180

Long Term: Down Change: +5000

Overnight Trade: X +8 @7:30 AM

Soybeans were higher overnight thanks mostly to the tight old crop supplies. The weather, however, is still favorable, which makes chasing rallies seem futile. Demand is quite good, but it has to be to absorb the expected new crop production. So far there is nothing to indicate that the November contract will move out of its sideways/lower pattern any time soon. For the time being, strength is a selling opportunity.

Live Cattle

Trend

Short Term: Down

Long Term: Down

Opening Calls: 50-100 Higher

Live cattle futures reversed early weakness to close moderately to sharply higher on Thursday. Cash trade was $155-$156 in Kansas and Nebraska, well below week ago levels but much higher than current futures market prices. The current recovery in equities, along with the sharp discount to cash could stabilize or strengthen the board as we head into the weekend. There is growing concern about the higher carcass weights that have been developing in recent weeks. The weight could be a part of the plan that packers have to compensate for lack of numbers, similar to the hogs.

Feeder Cattle

Trends

Short Term: Down

Long Term: Up

Opening Call: 50-100 Higher

Feeder cattle futures closed mixed on Thursday, with August higher and deferred contracts softer. Overnight trade is more consistent, with .50-.70 gains across the board. The gains are coming is spite of another good start in corn futures, which have recovered a quiet 20 cents of Tuesday’s contract lows. We need to see a close above 214.42 in the September contract before turning more positive in this market.



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