Schwieterman: Feeder cattle weakness expected early in the week

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Corn                                Estimated Fund Position
Trends – December Contract
Short Term:Down           Net Long Futures and Options: -202991
Long Term: Down           Change: +3500
Overnight Trade: Z Unch @7:30 AM


Corn was slightly higher overnight as the market marks time waiting for the government shutdown to end. Yield reports are still good, but traders would like confirmation from USDA. For the moment it looks like traders are content to let the market drift, but things may become more chaotic as we approach the debt ceiling, which is about 10 days away.

Wheat                             Estimated Fund Position
Trends – December Contract
Short Term: Up              Net Long Futures and Options: -58219
Long Term:Up                Change: -1000
Overnight Trade: Chicago: Z +5 KC: Z +4 @7:30 AM


Wheat was firm overnight thanks to good exports. One cannot rule out a deeper correction than the one we saw on Friday, but regardless of the size of the correction there will be very good buying interest on any break. Obviously it would help the bullish traders if USDA would show exactly how tight HRW stocks are, but we will have to wait. Look for the December KW to move up to $7.70 eventually.

Soybeans                      Estimated Fund Position
Trends – November Contract
Short Term: Down         Net Long Futures and Options: 96218
Long Term: Down          Change: +4000
Overnight Trade: X -1 @7:30 AM


The November soybeans moved back above $13.00 overnight, but finished the session lower. Traders are caught between good yield reports and good demand, and are probably wishing that USDA would release their report on Friday to give everyone some numbers to work with. I am looking for sideways/lower trade this week. The oversold condition has been relieved and the market should resume its trend lower.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 10-30 Lower


Live cattle futures closed moderately higher on Friday and narrowly mixed for the week. The cash was mostly steady for the week, with some Friday trade in the north at slightly lower than we saw on Thursday. First notice for delivery on the October contract takes place after the close of business this afternoon. With the current premium to cash, we expect to see deliveries posted early in the process.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 10-30 Lower


Feeder cattle futures closed with moderate gains on Friday and modest gains for the week in the lead contract. The late week bounce in the corn futures did little to alter the direction of the feeders. Setbacks are being bought aggressively, even though cash index levels remain unavailable due to the government shutdown. We should see some modest weakness to start the week, as traders await the results of the delivery process in the live pit.



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