Schwieterman: Friday's report to support cattle futures this week

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Corn                                   Estimated Fund Position
Trends – December Contract
Short Term:Down              Net Long Futures and Options: -173921
Long Term: Down              Change: -7000
Overnight Trade: Z -2 @7:30 AM


The corn market is drifting down towards the August low. Yield reports are still coming in very good and the normal timeframe for the harvest low is still ahead of us, so traders are still willing sellers. $4.45 will be critical support and failure there will allow the market to move down to the $4.00 - $4.25 level, which we have been talking about for the past couple of months.

Wheat                               Estimated Fund Position
Trends – December Contract
Short Term: Up                 Net Long Futures and Options: -85420
Long Term: Down             Change: -3000
Overnight Trade: Chicago: Z +1 KC: Z Unch @7:30 AM


The wheat market is doing nothing but trading sideways. There have been some flashes of brilliance, but no consistent gains. I like the fundamental set up of the wheat market, but there is a complete lack of speculative enthusiasm for the market. If export sales stay as strong as they have been, traders will have to wake up eventually, but for the time being there is no sense trying to pick a bottom in this market.

Soybeans                          Estimated Fund Position
Trends – November Contract
Short Term: Down             Net Long Futures and Options: 103301
Long Term:Up                   Change: -8000
Overnight Trade: X -3 @7:30 AM


The November soybeans slipped to another new low for the move overnight and with the market trading well below the 38% retracement, the next downside target will be the $12.85 - $12.95 area where the 50% retracement and the 40 and 50-day moving averages lie. We have the potential for a bullish October supply and demand report, so I don’t want to be too negative, but in the short run the momentum is clearly down.

Live Cattle
Trend
Short Term: Up
Long Term: Down
Opening Calls: 30-50 Higher


Live cattle futures closed modestly higher on Friday and should start the week on a positive note following improved cash trade and a supportive on feed report. Southern cash rose to $124 on Friday, with northern beef sales as high as $196. The big number on Friday was the continued light placements at 89%, which was 3-4% below trade estimates. We look for good support to develop for the deferred contracts, as most believe that first half of September placements were slow as well.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 30-50 Higher


Feeder cattle futures closed moderately higher on Friday and just slightly better for the week. The combination of supportive placement numbers and new lows for the move in the corn market should support feeders to start the week. Pasture conditions looked very favorable as I drove across Kansas this weekend. We look for the market to be well supported on any corrections over the coming weeks.



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