Schwieterman: Live, feeder cattle futures move higher Tuesday

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Corn                                          Estimated Fund Position
Trends – December Contract
Short Term: Up                         Net Long Futures and Options: -203044
Long Term: Down                      Change: -9000
Overnight Trade: Z +2 @7:30 AM


So far there hasn’t been any follow through selling in the corn market after yesterday’s poor performance. With the strong basis levels that we have in many parts of the country the threat of delivery seems limited so I doubt we see sustained pressure in the market. Look for the corn to drift back up to yesterday’s high during today’s session.

Wheat                                        Estimated Fund Position
Trends – December Contract
Short Term: Up                          Net Long Futures and Options: -99531
Long Term: Down                       Change: -2000
Overnight Trade: Chicago: Z +5 KC: Z +4 @7:30 AM


The December KW made a new high for the move overnight, which is keeping the broad saucer bottom formation alive and well. The December vs. March KW spread has reached the highest level since 2008 and judging by past performance adding another 5 – 15 cents to that spread looks possible. One doesn’t typically see bull spreading in a bear market, so perhaps this is a sign of good things to come in the wheat market. I’m still looking for a move up to the $7.30 area.

Soybeans                                   Estimated Fund Position
Trends – January Contract
Short Term: Up                           Net Long Futures and Options: 113096
Long Term:Up                             Change: -2000
Overnight Trade: F +6 @7:30 AM


The soybean market has shrugged off news of a 300,000 MT cancellation by the Chinese and made a new high for the move overnight. The fact that we also had a 360,000 MT sale to unknown destinations definitely helped to soften the blow. At this point, more export demand will mean tighter stocks this summer and S. American production will be critical. The bearishness in the bean market, when we see it, all stems from ideas that we will be buried by S. American beans and that crop isn’t even completely planted yet. S. American weather will obviously be critical.

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


Live cattle futures closed sharply higher on Tuesday, setting the stage for a possible rise in cash prices ahead of the Thanksgiving holiday. Packers are buying for a full kill week and cutout values have been firm so far this week. Overnight trade has trended modestly higher, with volume continuing to be seasonally light. Open interest did rise 920 contracts on Tuesday’s up day. We will be surprised if packers don’t become more aggressive and procure cattle today.

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


Feeder cattle futures posted triple digit gains on Tuesday, with the lead January contract leading the way higher. Futures are trapped in between the 50 and 100 day moving averages but appear ready to turn shorter term indicators back up on any further strength. Overnight corn values are trying to rebound from Tuesday’s sharp decline. Cash index levels remain on the defensive, with Tuesday’s average falling to 164.21.



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