Schwieterman: Cattle futures higher, corn gains strength

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Corn                                   Estimated Fund Position
Trends – December Contract
Short Term:Down               Net Long Futures and Options: -201991
Long Term: Down               Change: -3000
Overnight Trade: Z +2 @7:30 AM


The December corn made a new high for the move overnight thanks in part to a weak dollar and talk of Chinese demand. Harvest activity and good yields will serve to cap rallies. With the government reopened it will be interesting to see if we have an October supply and demand report or not. If we  do, the yield reports suggest it will be bearish.

Wheat                                Estimated Fund Position
Trends – December Contract
Short Term: Up                  Net Long Futures and Options: -62219
Long Term:Up                    Change: -2000
Overnight Trade: Chicago: Z +5 KC: Z +5 @7:30 AM


The wheat market was very weak yesterday as the market finally showed signs of a deeper correction. There was no follow through overnight, however, and it is likely that the December KW will go back to check the bottom of the old trading range at the $7.55 area. When we see export sales data again there should be some very bullish information that will help support this market as we head into winter.

Soybeans                           Estimated Fund Position
Trends – November Contract
Short Term: Down              Net Long Futures and Options: 86218
Long Term: Down               Change: +6000
Overnight Trade: X +4 @7:30 AM


The soybeans are working their way higher thanks to strong demand and slow farmer selling. The November contract has cleared the $12.80 resistance and should now make a run at the $13.00 area. A move beyond that is unlikely because of fears of a higher yield estimate in the next supply and demand report, but for the time being the beans are in recovery mode.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 10-40 Higher


Live cattle futures closed at their best levels since Feb-Mar of this year. The strength in the market paid off with some moderate cash trade at $129 in the south on Wednesday. Cutout values have been firm all week and in spite of talk that kills would be cut significantly this week, packers were still short bought enough to pay higher prices on a Wednesday. RSI and Stochastics are showing divergences at these new highs for the move. We advise cattle feeders to use this opportunity to place option protection on part of this winters production.

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


Feeder cattle futures closed moderately higher on Wednesday, with the most strength seen in the first quarter of 2014. The early week selloff alleviated overbought conditions for the near term. Strength in overnight corn prices could keep follow through buying from becoming too prominent. Budget agreement euphoria is likely to be short lived. Cattle markets will keep a close eye on equity reactions.



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