Schwieterman: Live cattle futures higher overnight

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Corn                                             Estimated Fund Position
Trends – December Contract
Short Term: Up                          Net Long Futures and Options: -184064
Long Term: Down                      Change: +9000
Overnight Trade: Z -4 @7:30 AM


Yesterday the December corn reached the 38% retracement of the last leg down, but saw no follow through buying overnight. The FSA’s prevented planting data gave the market a shot in the arm, but it is doubtful whether the information can propel the market beyond the $4.80 - $4.90 level since is it subject to a great deal of revision. There is a little bit of concern about dry weather in parts of Iowa, Illinois, and Missouri, but for the most part the weather is favorable and crop condition ratings won’t be dropping drastically. Sell rallies.

Wheat                                            Estimated Fund Position
Trends – September Contract
Short Term: Down                      Net Long Futures and Options: -81424
Long Term: Down                        Change: +1500
Overnight Trade: Chicago: U -1 KC: U -2 @7:30 AM


The wheat market just can’t get anything going and is still stuck in a holding pattern. It looks like spread trade between the wheat and the other markets will keep the market headed sideways until we see either much better or much worse export sales data. For the time being plan on directionless trade and wait for either a solid buy or sell signal before taking action.

Soybeans                                     Estimated Fund Position
Trends – November Contract
Short Term: Up                           Net Long Futures and Options: 20804
Long Term:Up                             Change: +5000
Overnight Trade: X -4 @7:30 AM


The November soybeans continue to exceed expectations. The combination of strong demand, acreage concerns, and weather fears have pushed the November contract above the 50-day moving average. The market is overbought, but the momentum is clearly to the upside. It is likely that we see the market pause for a couple of days as we wait for fresh crop condition data and for crop tour results. The tour results will be critical in determining whether or not this rally was warranted. Any suspicion that USDA is still overstating yield potential will keep this market moving higher.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 20-40 Higher


Live cattle futures closed modestly lower on Thursday after a day of quiet consolidation. Overnight has been a different story, with solid gains in the August contract ahead of today’s expected cash trade. The strength in the front month is just what the doctor ordered for feedlot managers. The board activity should bolster resolve in their higher asking prices of $124 in the south and $200+ in the north. Cutout values remained on the upswing on Thursday, with choice and select posting solid gains. We should see cash $2-$3 higher in this in this weeks’ trade if the board holds gains.

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

Feeder cattle futures closed moderately lower on Thursday, as sharply higher corn values have more than offset cash enthusiasm over the past couple of days. Overnight is narrowly mixed, with a slightly higher bias. Corn values are currently off a few cents from Thursday’s rally levels. The spread between the cash index and August futures is now under 2.00. Hedgers should look into option strategies for protecting inventory, in order to leave upside potential in this market.



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