Schwieterman: Higher new crop corn pressures cattle futures

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Corn                                                      Estimated Fund Position
Trends
Short Term: Up                                  Net Long Futures and Options: 18287
Long Term: Up                                   Change: +10000
Overnight Trade: N -6 Z -2 @7:30 AM


Yesterday the July corn filled the gap left after the March stocks report then proceeded to sell off. The market did close positive, but traders shifted to bear spreading, which continued overnight. The overall pattern for the July corn is still sideways to higher and one should look for further gains in the days ahead. The December contract has stalled out at the $5.50 - $5.55 resistance area and will need fresh news to break through that level.

Wheat                                                  Estimated Fund Position
Trends
Short Term: Down                             Net Long Futures and Options: -49031
Long Term: Down                              Change: +2000
Overnight Trade: Chicago: N -1 KC: N Unch @7:30 AM


Yesterday the wheat closed higher, but failed to push through Monday’s high. The wheat was mostly lower overnight in response to the weaker corn and will probably need to see the corn turn positive in order to see a new high for the move. The charts are definitely pointing to a correction, but we don’t have any indication of a change in trend.

Soybeans                                              Estimated Fund Position
Trends
Short Term: Down                              Net Long Futures and Options: 103571
Long Term:Up                                      Change: +2000
Overnight Trade: N +1 X -1 @7:30 AM


Old crop soybeans have been very choppy and inconsistent. There is no reason to expect that to change. Traders are waiting for option expiration and next Friday’s reports to give them guidance. One can certainly make the case that the stocks figure will be bullish and the acreage figure bearish, which will encourage bull spreading, but since the stocks numbers from USDA have been so random the last few years it is very nerve wracking to place bets ahead of the quarterly reports. Key support in the November contract is at the $12.75 area. If that fails  we will see the market at $12.00 soon.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: 10-30 Higher


Live cattle futures closed modestly lower on Tuesday, with pressure stemming from technical indications and spillover from the feeders. We are at midweek and bids and asking prices will be thrown around but we are unlikely to see cash trade until late on Friday. Friday’s on feed report estimates were released on Tuesday, with averages for on feed of 96.5%, placements 96% and marketing 98%. The numbers are supportive but will they be enough to move the fat market out of the recent range bound trade.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: 20-40 Higher

Feeder cattle futures closed moderately to sharply lower on Tuesday, with pressure coming from a sharp rise in new crop corn values. We expect feeders to have a better day today, with corn prices struggling in overnight trade. Friday’s report should add support to the market and the cash index is continuing its slow but steady rise. Today’s release of information from the FOMC meeting is expected to be monitored very closely as the day progresses.



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