Schwieterman: Cash index expected to drop by weeks' end

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Corn Estimated Fund Position

Trends – December Contract

Short Term:Down Net Long Futures and Options: -1751

Long Term: Down Change: -6000

Overnight Trade: Z +4 @7:30 AM

The December corn fell to a new low for the move yesterday, but did post a low volume rally overnight. It still looks like the market is going to relieve the oversold condition by going sideways and that the overall trend of the market will remain down unless we see a dramatic change in the weather. We should be hoping for a test of the open chart gap near the $4.14 level so that there is a better opportunity to sell.

Wheat Estimated Fund Position

Trends – December Contract

Short Term: Down Net Long Futures and Options: -73022

Long Term: Down Change: +1000

Overnight Trade: Chicago: Z +2 KC: Z +3 @7:30 AM

If it weren’t for the fact that the Paris Milling wheat made new lows yesterday I would be confident in a turn in the wheat. The December Chicago wheat did close higher yesterday and the wheat market was higher overnight, but the market really hasn’t done anything to tell traders it is time to exit short positions. As usual, what we need is some good demand news to get speculators excited about buying wheat. A close above $6.47 ½ in the September KW would be a good buy signal.

Soybeans Estimated Fund Position

Trends – November Contract

Short Term: Down Net Long Futures and Options: -56642

Long Term: Down Change: -2000

Overnight Trade: X +8 @7:30 AM

The soybeans were able to build on yesterday’s solid close and push higher overnight. The recent weakness has created some fresh demand, so the market is getting some help from that. The $11.00 area should be strong resistance in the November contract, but if that level is cleared, the $11.35 area would be the next upside target. However, unless the weather changes, rallies are for selling.

Live Cattle

Trend

Short Term: Down

Long Term: Up

Opening Calls: 20-40 Lower

Live cattle futures closed moderately to sharply higher on Tuesday, with October leading the way with gains of 1.00 on settlement. Cutouts were lower on the day, with choice off .61 and select down .96. Overnight trade is moderately lower on lower cutout expectations and fear of further cash weakness. Asking prices remain a couple dollars above last weeks’ cash averages but near term bullish enthusiasm is waning.

Feeder Cattle

Trends

Short Term: Down

Long Term: Up

Opening Call: 50-100 Lower

Feeder cattle futures closed moderately higher on Tuesday but are giving back all of the days’ gains and then some in overnight trade. The cash index was off on Tuesday and is expected to drop into weeks’ end.

Overnight corn prices have firmed 3-5 cents, providing additional pressure for the feeders. Concerns over cooler than normal temps is bringing the question of crops finishing in some of the northern growing regions.



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