Schwieterman: Cattle futures higher, cash trade takes shape

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Corn                                              Estimated Fund Position
Trends – December Contract
Short Term:Down                      Net Long Futures and Options: -193064
Long Term: Down                      Change: -13000
Overnight Trade: Z +1 @7:30 AM


It looks like Monday’s reversal higher in the corn was a bust. Typically there is some follow through buying following an outside day higher, but yesterday we ended up seeing a new low for the move and a poor close. If all the market can manage is a one day corrective bounce, and we are already beginning another wave down, then we have to start looking for the December contract to head to the $3.90 area sometime in the next month.

Wheat                                             Estimated Fund Position
Trends – September Contract
Short Term: Down                        Net Long Futures and Options: -83424
Long Term: Down                         Change: -3000
Overnight Trade: Chicago: U -2 KC: U -2 @7:30 AM


The September KW is still range bound, but the market is at the bottom of the range, which will have bullish traders nervous. The fundamental outlook for the wheat market is still good, but the charts look like the market could fall out of bed any day. The trend line at $6.90 will be critical support today. Failure there would suggest a move towards $6.50.

Soybeans                                        Estimated Fund Position
Trends – November Contract
Short Term: Up                              Net Long Futures and Options: 15804
Long Term: Down                         Change: +4000
Overnight Trade: X -8 @7:30 AM


The soybeans had been the ray of hope the past few sessions, but that may have come to an end. Yesterday the November contract nearly reached the 62% retracement at the $12.44 area before closing in the bottom half of the range. The market was weak overnight and a negative close today would begin to generate short term technical sell signals. If the forecasts remain favorable the beans will be right back at the lows in no time.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 20-30 Higher


Live cattle futures closed moderately higher on Tuesday, with new highs for the move being posted. Overnight is seeing moderate gains in spite of other major packers stating that they will continue their current practices as far as Zilmax fed cattle are concerned. Cash trade should start to take shape, with asking prices of $124 in the south and $200 in the northern beef trade. Cutouts remained in an uptrend on Tuesday.

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


Feeder cattle futures closed moderately higher on Tuesday, with overnight trade trending steady to slightly lower. The weakness in the corn futures on Tuesday was enough to support strength in the feeders. Overnight corn values are modestly higher. The cash index on Tuesday was higher but only by a couple ticks. We expect the board to consolidate as we near the expiration of the August contract in a couple of weeks.



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