Schwieterman: Feeder cattle futures lower, live cattle mixed

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Corn                                                      Estimated Fund Position
Trends – December Contract
Short Term: Up                                   Net Long Futures and Options: -62833
Long Term: Down                               Change: +6000
Overnight Trade: Z -3 @7:30 AM


The corn supply and demand numbers weren’t too interesting. Traders are much more concerned about the extended forecasts and Sunday night has the potential to be very exciting depending on how the weather looks. On the chart, the $5.28 area is proving to be strong resistance in the December contract. Weather concerns could easily take the market to the $5.40 - $5.50 area, however, if traders are happy with the forecasts the next leg down from here would take the market to $4.50, so producers should be prepared for that.

Wheat                                                    Estimated Fund Position
Trends – September Contract
Short Term: Up                                    Net Long Futures and Options: -62283
Long Term: Down                                Change: +3000
Overnight Trade: Chicago: U +2 KC: U +3 @7:30 AM


Yesterday’s wheat numbers were fairly bullish. USDA penciled in another 100 million bushels of export demand largely due to the Chinese purchases of SRW. The HRW ending stocks came in at the lowest level since 2008, which is very friendly. It would be extremely bullish if it was because of export demand and not just another poor production year. None the less, supplies are tight and if we see better HRW exports, the Kansas City wheat could get exciting. For the moment we have to watch the $7.20 resistance in the September KW. A close above that and we can start to get bullish.

Soybeans                                               Estimated Fund Position
Trends – August Contract
Short Term: Up                                     Net Long Futures and Options: 92086
Long Term:Up                                       Change: +4000
Overnight Trade: X -3 @7:30 AM


The 295 million bushels of new crop ending stocks that USDA reported will be burdensome if that proves to be correct. The problem at the moment is that traders are a little worried about the weather and losing a little bit of yield would change the supply and demand tables dramatically. The forecasts, of course, are the key and like the corn the Sunday action could be exciting. We are at a good point on the November soybean chart to start another leg down and that is what producers should prepare for.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 10-20 Lower


Live cattle futures closed narrowly mixed on Thursday, with all contracts within .15 of unchanged. No cash trade has been established, with southern bids of $117 countered by offers of $121+. We look for two sided trade today, with a decent chance of trading cash a dollar above week ago levels. Overnight strength in the US Dollar could limit commodity strength. Export sales for the week were up from the previous week but lower than the 5 week average. Open interest dropped 2,681 on Thursday, a trend we would like to see short lived.

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

Feeder cattle futures closed moderately lower on Thursday and are trading softer in overnight trade. Since last Friday August is off a full 2.00 and establishing new lows for the week in early morning activity. Corn prices are currently off 3-4 cents, which may lend to some short covering if the live cattle can firm. The big premium to cash in the front month feeders is weighing on futures prices, with the 150.00 level being breached.



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