Schwieterman: Weaker corn overnight could pickup feeder cattle

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Corn                                        Estimated Fund Position
Trends – December Contract
Short Term: Up                    Net Long Futures and Options: -150692
Long Term: Down                Change: +8000
Overnight Trade: Z -6 @7:30 AM


The December corn has found strong resistance at the 50% retracement of the last move down and the 40-day moving average. Weather and crop maturity concerns are still supporting the market while high yield numbers from the Pro Farmer crop tour are capping rallies. It does look like the yield numbers from Iowa and Minnesota will be disappointing when they are released this evening, but the question will be how much will those states drag down the rest of the country? Export sales were a little light with 58,200 MT of old crop and 434,400 MT of new crop sales. On the chart today resistance is at $4.87 with support at $4.67.

Wheat                                     Estimated Fund Position
Trends – September Contract
Short Term: Down                Net Long Futures and Options: -69017
Long Term: Down                  Change: +2000
Overnight Trade: Chicago: U -4 KC: U -1 @7:30 AM


The wheat is still trading sideways. Export sales were good at 494,000 MT, but that isn’t quite enough to get anyone excited. The December KW has worked its way to the bottom of the trading range and the bull spreads are not working, both of which are bothersome if you are bullish. The December KW needs to hold above $6.94 ½ to keep bullish hopes alive.

Soybeans                                Estimated Fund Position
Trends – November Contract
Short Term: Up                      Net Long Futures and Options: 38153
Long Term:Up                        Change: +5000
Overnight Trade: X -10 @7:30 AM


A little bit of rain in the Corn Belt in an overbought market creates a correction and that is what we are seeing this morning. There are still big concerns about crop development and export sales were big again at 926,000 MT for the new crop so there is still plenty of concern about our stocks levels next summer. This market will get exciting with an early freeze, but keep in mind that a little more rain and a late frost will put the pressure on. Plan on volatility as we head into fall.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 10-20 Lower


Live cattle futures closed mixed on Wednesday, with August higher and deferred contracts modestly lower. We could see some cash trade develop today, if packers come up with better money. Non fed kill appears to be slowing, based on the sharp rise in 90% trimmings of more than 12 cents a pound. Cutout values were lower on Wednesday, with movement described as light for midweek. Friday’s monthly on feed report is expected to show 96% on feed, 97.5% placed and marketings of 104.4%. the numbers would be supportive at those levels.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 10-20 Higher


Feeder cattle futures closed moderately lower on Wednesday, with the exception of the August contract. Cash index levels backed off for the first time in nine days. Overnight weakness in the corn market could provide a lift, along with expected positive numbers in Friday’s report. The possibility of a long wet winter along with added wheat pasture this year could put a lid on first quarter of 2014 feeders.



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