Schwieterman: Cattle futures can't capitalize on lower corn

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Corn                                                    Estimated Fund Position
Trends – December Contract
Short Term:Down                            Net Long Futures and Options: -146916
Long Term: Down                             Change: -6000
Overnight Trade: Z -3 @7:30 AM


The December corn fell to a new low for the move overnight due to the favorable forecasts. The trading funds keeps setting records for the size of their net short position, but we really have no idea how large that position could get. Export sales were ok with old crop showing new cancellations of 27,900 MT and new crop sales of 515,900 MT. With production expectations increasing, the exports are going to have to improve to keep stocks in control. Sell rallies.

Wheat                                                  Estimated Fund Position
Trends – September Contract
Short Term: Down                             Net Long Futures and Options: -74402
Long Term: Down                              Change: -1000
Overnight Trade: Chicago: U -2 KC: U -1 @7:30 AM


The wheat keeps hanging on, at least is Kansas City. Export sales were good again at 661,400 MT, which is exactly what this market needs to keep separated from the corn market. The September KW is still struggling with trend line resistance, which is just above the market and buyers won’t step in aggressively unless we clear some technical hurdles like that. I believe that the biggest problem with the wheat is still the corn.

Soybeans                                            Estimated Fund Position
Trends – August Contract
Short Term: Down                            Net Long Futures and Options: 67190
Long Term: Down                             Change: -6000
Overnight Trade: X -21 @7:30 AM


August soybeans are plummeting thanks to falling cash prices. Suddenly we have plenty of soybeans on hand. Export sales were good with 128,300 MT of old crop and 665,000 MT of new crop sales. USDA will have to increase the export estimate for the old crop and probably to new crop as well at some point. The charts look bearish and the November beans look like they are trying to play catch up with the corn. The next downside target is at $12.25.

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


Live cattle futures failed to hold morning gains once again, with the majority of the contracts closing moderately lower. Cash trade developed in Kansas, with about 10,000 head reported at $119. The steady bid at midweek looked supportive until it was accepted by feed yards in the area. Other regions remained quiet, with a majority of northern cattle already mailed in. Texas trade will be important, with smaller show lists and a higher resolve to hold for better money. Cutout values may be bottoming, with higher prices on Wednesday.

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

Feeder cattle futures took their lead from the live cattle rather than the corn on Wednesday. Futures closed with moderate losses in spite of new contract lows in the corn. Cash index levels fell for the second day in a row, creating more doubt about the August contracting being able to hold its’ current premium to the index. Overnight corn values are off another 3-5 cents, with feeders gaining 15-20 points.



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