Schwieterman: Cattle futures monderately lower, corn stronger

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Corn                                     Estimated Fund Position
Trends – December Contract
Short Term:Down                Net Long Futures and Options: -197991
Long Term: Down                Change: +5000
Overnight Trade: Z -2 @7:30 AM


The December corn had a firm close yesterday, but no follow through buying overnight. Yield reports are still good and it is unlikely that the December contract can move above $4.50 unless we see something friendly out of the October supply and demand report, but at this point we don’t know if or when that report will be released. Harvest isn’t half complete so a bit more “harvest pressure” is  likely. Plan on drifting lower the rest of the week.

Wheat                                   Estimated Fund Position
Trends – December Contract
Short Term: Up                     Net Long Futures and Options: -56219
Long Term:Up                       Change: +2000
Overnight Trade: Chicago: Z +4 KC: Z +5 @7:30 AM


The December KW is making a run at last week’s highs. I expected to see more than a one day correction, but so far we haven’t had much weakness. Bull spreading was active overnight and prices in Europe are on the rise, both of which are supportive to our markets. There will be strong overhead resistance at the $7.65 - $7.70 area. A close above that and we can start thinking about a move to the $8.20 - $8.25 area.

Soybeans                             Estimated Fund Position
Trends – November Contract
Short Term: Down                Net Long Futures and Options: 99218
Long Term: Down                 Change: +3000
Overnight Trade: X +4 @7:30 AM


November soybeans are still creeping higher. Good demand news is supporting the market, but one has to wonder how much longer it can last with most of harvest still ahead of us and yield reports coming in “better than expected.” The $13.00 area should continue to be strong overhead resistance. Look for a negative close today.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 10-30 Higher


Live cattle futures closed modestly lower on Monday and look to be set to take those losses back in early morning trade. There were 23 deliveries against the October contract, with 20 from Amarillo and 3 from Worthing. Our show list was down 15% from week ago levels, suggesting market ready cattle remain very current. Equity markets are modestly higher this morning, which should add some support to the meat markets. Unless we see a big pickup in delivery totals over the next couple of days, we expect the October to be the near term upside leader.

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


The front end of the feeder cattle futures closed moderately lower on Monday, with spring months narrowly mixed. Weakness stemmed from a combination of overbought conditions and surprisingly strong corn futures on Monday. Overnight trade in the feeders is mixed, with corn trending modestly lower. We expect to see some further correction in this market, though not too deep under current fundamental conditions.



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