Schwieterman: Cattle futures higher ahead of cattle report

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Corn                                 Estimated Fund Position
Trends – December Contract
Short Term:Down            Net Long Futures and Options: -153260
Long Term: Down            Change: +4000
Overnight Trade: Z +3 @7:30 AM


The corn slipped lower in low volume overnight. The December contract has struggled with overhead resistance at a down trend line and the 9-day moving average at times this week, so it is very clear that if technical traders are going to buy this market we will have to see a move through $4.63 ½ today. Technical indicators are not particularly oversold and harvest activity is expanding, which will make it very difficult to rally the market. Plan on more sideways/lower trade today.

Wheat                              Estimated Fund Position
Trends – December Contract
Short Term: Up                Net Long Futures and Options: -82412
Long Term: Down            Change: +1000
Overnight Trade: Chicago: Z +8 KC: Z +8 @7:30 AM


The wheat market has the best hope for the bulls yesterday and although the wheat closed higher, the market did give up a big part of the gains and then saw selling pressure overnight, which is putting the December KW right back into the old trading range. US wheat has a very good fundamental set up, but is still lacking any speculative enthusiasm. Right now this market probably has the best upside potential, but be patient and wait for a good technical signal to buy.

Soybeans                        Estimated Fund Position
Trends – November Contract
Short Term: Down           Net Long Futures and Options: 108310
Long Term:Up                 Change: +4000
Overnight Trade: X +10 @7:30 AM


November soybeans fell to a new low for the move overnight and appear to be heading to the $13.15 area. This market has had quite a bit of bullish news thrown at it and has failed to respond, which is very bothersome. If traders keep hearing yield reports that are better than expected, the huge export sales we are seeing may not matter. Plan on a great deal of volatility and big price swings.

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


Live cattle futures posted moderate gains on Thursday, with October closing above the 40 day moving average. Open interest ahead of this weeks’ cash trade and the cattle on feed report was up 3,351 contracts. We should see solid resolve from feedlots to get better money this week. The premium in the futures and anticipation of friendly report numbers could finally push southern cash above the $123 landmark. Overnight trade is narrowly mixed, with a slightly higher bias in the front months.

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


Feeder cattle futures were sharply higher in all but the expiring September contract on Thursday. The gains came in the face of stronger corn trade. Cash index levels rose .34 on Thursday and traders are looking for the August placement number to fall 8-9% from a year ago. Overnight feeders are trending slightly lower in spite of corn being off a couple cents. We continue to see numbers at tight levels this fall, with strength in the live cattle needed to promote much more of an upward move.



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