Schwieterman: Cattle futures settle lower prior to USDA report

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Corn                                     Estimated Fund Position
Trends – December Contract
Short Term:Down                 Net Long Futures and Options: -248195
Long Term: Down                 Change: -4000
Overnight Trade: Z -1 @7:30 AM


After the export sales data was released yesterday, traders began to refocus on fears of a higher production estimate in next week’s supply and demand report. The market slipped to a new low for the move again overnight and we may finally see the December corn touch $4.25 today. There will be a number of private estimates of corn production and ending stocks released today that could have market impact, but for the most part traders have priced in ending stocks over the 2 billion level.

Wheat                                  Estimated Fund Position
Trends – December Contract
Short Term: Down                Net Long Futures and Options: -31431
Long Term:Up                      Change: -3000
Overnight Trade: Chicago: Z -2 KC: Z -8 @7:30 AM


Kansas City wheat was the weak link overnight. Bear spreading has been active the past two sessions, which is a negative sign. Larger export sales numbers would have been a help to the market, but we can’t lose sight of the fact that the supply and demand report could be exceptionally bullish for the HRW. That being said, we have been looking for a deeper correction in the wheat and we are seeing it. The December KW is holding at the $7.31 area so far, but $7.26 and $7.21 are still possible downside targets for today or early next week.

Soybeans                             Estimated Fund Position
Trends – January Contract
Short Term: Down                Net Long Futures and Options: 77297
Long Term: Down                 Change: -6000
Overnight Trade: F -5 @7:30 AM


The January soybeans have fallen back to the bottom of the trading range. The huge export sales numbers are apparently not enough to offset the fears of a higher production estimate next week. However, we seem to be creating a situation where a yield estimate at 42 or less would be treated as bullish and will take something over 42.5 to be very bearish. Next week’s numbers will obviously be pivotal.

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


Live cattle futures settled mostly lower ahead of the on feed report, with very little cash trade reported week to date. The report held no major surprises and saw no significant reaction after the report was released. For the week December futures are off modestly from last Friday’s close. That fact may limit feedlots ability to capture better money this week, as basis advantages may allow for steady to lower trade in some cases. Strength in the US Dollar over the past several days is weighing on commodities in general. In spite of all the potentially negative news, fundamental news remains supportive into the first quarter of 2014.

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


Feeder cattle futures closed moderately to sharply lower on Thursday, in spite of new contract lows in the corn futures. Overnight trade is mixed, with as much as .95 trading range. Volatility of this sort is usually a sign upcoming movement. We have seen a 50% correction of the move from September lows to contract highs. Next support in the November contract would be near 162.50 if we close below overnight lows of 164.00. The cash index moved to new record high levels but has been very flat for the past four days.



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