Schwieterman: Higher corn triggers feeder cattle futures selling

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Corn                                      Estimated Fund Position
Trends – December Contract
Short Term: Up                     Net Long Futures and Options: -194044
Long Term: Down                  Change: +6000
Overnight Trade: Z +1 @7:30 AM


It is turn around Tuesday and the corn has given up all of yesterday’s gains. The December contract had been creeping towards trend line resistance, which lies at the $4.30 area today, but that has been put on hold for the moment. There shouldn’t be too much weakness this week since the basis levels are strong and the threat of delivery is low. We will probably continue to see the December contract gain on the March this week as well.

Wheat                                    Estimated Fund Position
Trends – December Contract
Short Term: Up                      Net Long Futures and Options: -97531
Long Term: Down                  Change: Unch
Overnight Trade: Chicago: Z +4 KC: Z +3 @7:30 AM


Yesterday the December KW closed at the highest level since November 11th, but the recovery effort isn’t too impressive. There is still potential for short covering by the funds as we move through the next few weeks. Supplies are tight and export activity has been decent, which is exactly what the market needs. The Paris Milling Wheat has not made a new high today, which will not help the cause, but the trend is still higher. Buy breaks in the old crop wheat.

Soybeans                              Estimated Fund Position
Trends – January Contract
Short Term: Up                      Net Long Futures and Options: 115096
Long Term:Up                        Change: +7000
Overnight Trade: F -6 @7:30 AM


The soybeans made an impressive close yesterday and reached the highest level since mid-September. Strong demand is keeping this market moving and for the time being traders are not worried about the S. American crop. However, I would be very cautious chasing this rally especially in the contracts from March forward, which are the ones most affected by the S. American production.

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


Live cattle futures closed mixed on Monday, with December lower on deferred contracts modestly better. Overnight trade has been two sided with a slightly higher bias. Show lists in Kansas and Texas are seen as larger than week ago levels. Our list was up a couple of percent, with just under 20% carried over from last week. Cutout values jumped 2.40 in the choice cuts, with hide and offal values rising above 15.00 for the first time ever. The increase in carcass values could re-energize the cash market on this Holiday shortened week. Cash trade could start taking shape as early as this morning.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: 10-30 Higher


Feeder cattle futures closed moderately lower across the board on Monday, with lower cash and modestly higher corn values triggering the selling. Flow of cash into the beef futures market over the past week is slowing down and adding to the negative attitudes. Overnight trade is firming as we write, with moderate gains in the feeders boosted by a nickel drop in corn values.



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