Schwieterman: Feeder cattle, corn futures see modest gains

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Corn                                Estimated Fund Position
Trends – December Contract
Short Term:Down           Net Long Futures and Options: -208799
Long Term: Down           Change: +6000
Overnight Trade: Z +1 @7:30 AM


Today is option expiration for the December contracts. While it is very difficult to predict what strike price the corn market may gravitate to as the market closes today, it does look fairly obvious that there are a lot of in the money put options that would lose value if the market went up. If the market wants to cause pain it will move over $4.30 today. Other than that, the news is the same. Demand is great, ethanol prices are soaring, and technical indicators still suggest the market is oversold.
 
Wheat                              Estimated Fund Position
Trends – December Contract
Short Term: Down           Net Long Futures and Options: -92715
Long Term: Down            Change: -1000
Overnight Trade: Chicago: Z +2 KC: Z +3 @7:30 AM


The wheat seems to have an amazing ability to shrug off good news. The good export sales and the strength in world wheat prices, along with the corn and soybeans couldn’t make the wheat close positive. We have the same set up today. The Paris Milling Wheat made another new high overnight, we are seeing buying in the corn and soybeans, and we have a weak Dollar today, yet it will be a surprise if the wheat holds gains. I am still looking for the December and March KW to bounce back to $7.30, but they aren’t getting in any hurry.

Soybeans                         Estimated Fund Position
Trends – January Contract
Short Term: Up                Net Long Futures and Options: 78224
Long Term: Down             Change: +7000
Overnight Trade: F +12 @7:30 AM


The soybeans were higher again overnight as it seems the strong upfront demand is winning out against fears of demand loss when the S. American crop is available. So far there has been no follow through selling after Tuesday’s reversal lower, plus the market is higher for the week and has regained last week’s losses. At the moment it appears the January soybeans will make a run at the $13.20 resistance.

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


Live cattle futures closed about .40 higher across the board on Thursday, climbing back above the 100 day moving averages in the active Feb-Apr contracts. Some moderate trade developed in the south, with a few feedlots accepting $1.00 lower bids of $131. A majority of the trade remains for today, with asking prices of $133 in the south and $208+ in Nebraska. This afternoons’ on feed report is expecting 6% lower total on feed, 9-10% higher placements and 4% more marketed cattle. Overnight trade has been narrowly mixed on either side of unchanged.

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


Feeder cattle futures posted modest gains on Thursday, with the exception of the Jan contract closing up a solid .63 for the session. Overnight trade is trending modestly higher, with corn prices also seeing modest gains. We expect futures prices to remain shaky for another couple of weeks, with cash sales limited by the holiday period.



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