Schwieterman: Feeder cattle futures closed lower on Friday

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Corn Estimated Fund Position

Trends – December Contract

Short Term:Down Net Long Futures and Options: 14818

Long Term: Down Change: -10000

Overnight Trade: Z -3 @7:30 AM

The December corn made a new low for the move and reached the $3.80 objective overnight. The market is oversold, but there isn’t much incentive for a rally when crop condition ratings are expected to be near steady and the weather is non-threatening. Expectations will be for a yield increase in the August supply and demand report, so there won’t be any help there either. Sell any rallies until the weather changes or we see a surge in new crop demand.

Wheat Estimated Fund Position

Trends – December Contract

Short Term: Down Net Long Futures and Options: -78022

Long Term: Down Change: -8000

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

The wheat finished the overnight session higher, but the December Chicago wheat did make a new low for the move early on. The funds are quite short, so one has to wonder about the downside potential in the wheat, but as I have pointed out before, one of the biggest issues for the wheat right now is the pressure in the corn and soybeans. Before one gets too excited about a turnaround in the wheat market, we have to see a positive close first.

Soybeans Estimated Fund Position

Trends – November Contract

Short Term: Down Net Long Futures and Options: -59642

Long Term: Down Change: -7000

Overnight Trade: X +2 @7:30 AM

Soybeans were higher overnight thanks to a little bit of short covering. The news is still mostly bearish since the weather still looks good, but there is certainly a chance at seeing some good demand news during the week, which could justify a strong bounce. However, just like the corn, as long as the weather is non-threatening, the trend will remain down.

Live Cattle

Trend

Short Term: Down

Long Term: Up

Opening Calls: 40-60 Higher

Live cattle futures closed moderately to sharply higher on Friday, and should see additional strength on todays’ opening. Reports of cattle scheduled for shipment next week being picked up by the end of this week continues to paint a picture of tight supplies. Open interest on Friday’s rally was up 1,773 contracts. Last weeks boxed beef price gained more than 3.00, while cash prices declined, creating great margin opportunities for the packers.

Feeder Cattle

Trends

Short Term: Down

Long Term: Up

Opening Call: 40-60 Higher

Feeder cattle futures closed lower on Friday but did show some solid recovery in the post 1:00 pm trade. We look for some solid strength to start the day, with support coming from the live cattle and lower overnight corn values. Cash index values dropped .24 on Friday to 214.58, but remain a strong premium to the current futures market. Overall activity this week could remain quite choppy as traders attempt to get their handle on last weeks’ selloff.



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