Schwieterman: Feeder cattle futures higher as corn falls

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Corn                                       Estimated Fund Position
Trends – December Contract
Short Term: Up                    Net Long Futures and Options: -158692
Long Term: Down                Change: -8000
Overnight Trade: Z +5 @7:30 AM


The changing forecasts are pushing the corn market around. This morning’s model runs have taken some moisture out, which is sending the market higher. Yield estimates from Pro Farmer don’t look supportive, so this is definitely driven by dryness and maturity concerns. At the moment a lot of people are still hoping for a move to $4.90 to have another chance to sell, so plan on heavy overhead resistance.

Wheat                                      Estimated Fund Position
Trends – September Contract
Short Term: Down                 Net Long Futures and Options: -71017
Long Term: Down                  Change: -2500
Overnight Trade: Chicago: U +5 KC: U +4 @7:30 AM


Believe it or not, the wheat market is trading sideways again. This market is in serious need of some fresh news. I still like the potential of the bull spreads in the Kansas City wheat since demand has been good and planting conditions are much better than last year. Spreads and selling options seem to be the best bet right now.

Soybeans                                  Estimated Fund Position
Trends – November Contract
Short Term: Up                         Net Long Futures and Options: 33153
Long Term:Up                           Change: -5000
Overnight Trade: X +18 @7:30 AM


November soybeans made a new high for the move overnight thanks to weather concerns. Just cutting 1 bushel to the acre from the current yield estimate would make stocks very tight again, which has traders pretty fired up. Be prepared for volatility because one good rain through the bulk of the Corn Belt would have traders thinking about higher yields and big ending stocks again. Right now the charts look bullish and the momentum is up, but farmers should be looking at this as a chance to buy put options.

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


Live cattle futures closed narrowly mixed on Tuesday, with the front months modestly higher and deferred contracts modestly lower. The overnight theme is similar, with August up .40, while the remainder of the complex is between .12 higher and .10 lower. We like the cash market for another good week, with $124 in the south a reasonable target. Choice cutouts are now above 195.00 and the choice select spread is widening. No deliveries were posted against the August contract overnight.

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


Feeder cattle futures received a boost from lower corn prices on Tuesday, closing moderately higher across the board. Overnight corn values have gained some upward momentum, leaving feeders in a narrowly mixed position. Cash index levels remain on the move, reaching 155.25 on Tuesday. The crop tour this week is coming down to an Iowa-Illinois battle today, with the rest of the tour a balance of positive and negative surprises. Cash feeder trade may be leveling off the first couple days of this week.



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