Schwieterman: Higher corn prices force feeder cattle futures down

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Corn                                  Estimated Fund Position
Trends – December Contract
Short Term:Down             Net Long Futures and Options: -169921
Long Term: Down             Change: +6000
Overnight Trade: Z -2 @7:30 AM


The December corn is beginning to trade through trend line resistance, but it is doing so by going sideways, not higher. Our key overhead resistance now stands at Tuesday’s high of $4.57 followed by the $4.70 area. Meanwhile our support is from $4.45 to $4.48. Export sales were better at 640,100 MT. Mexico and China were the big buyers. China was also the big buyer of grain sorghum, so they are definitely still in the market for our feed grains.

Wheat                                 Estimated Fund Position
Trends – December Contract
Short Term: Up                   Net Long Futures and Options: -75920
Long Term:Up                     Change: +6000
Overnight Trade: Chicago: Z +2 KC: Z +2 @7:30 AM


Wheat charts are looking bullish and the bull spreaders are active, which is also bullish. Export sales were good again at 620,200 MT and there is talk at Brazil and China will continue to be active in the market. I like the fundamentals of the market and the technical indicators have turned positive so I’m not seeing any reason not to bullish right now. The next upside target for the December KW is the $7.25 area.

Soybeans                            Estimated Fund Position
Trends – November Contract
Short Term: Down               Net Long Futures and Options: 108391
Long Term:Up                     Change: +4500
Overnight Trade: X -6 @7:30 AM


The November soybeans are still consolidating around the 38% retracement and waiting for Monday’s report. Export sales were huge at 2.82 MMT, but this was expected so it won’t have much market impact. Once we get past Monday’s report traders will go back to focusing on the October supply and demand report, which has the potential to be bullish so this may be the time to buy call options against any forward sales.

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


Live cattle futures settled modestly higher on Wednesday, closing near the middle of the days’ trading range. Cutout values were mixed on the day, slowing a bit of the enthusiasm by midday. Overnight trade remains all over the place, with a .50 trading range that has been .25 on either side of unchanged. Cash trade is untested for the week, with strength of the board raising feedlot asking prices in the south to $126-$127 and near $200 in the northern beef trade. Some sideways trade at these levels would be healthy for a continuation of the bullish move.

Feeder Cattle
Trends
Short Term: Up
Long Term: Up
Opening Call: 20-40 Higher


Feeder cattle futures closed moderately to sharply lower on Wednesday, with pressure stemming from higher corn prices and fresh sellers at new contract highs. Overnight trade is firming back up, with corn modestly lower for the session. Cash index levels rose .37 on Wednesday to establish a new all-time high of 157.48. We look for hedgers to become more aggressive at these new highs, while overall pattern suggest that new multiyear highs may be in the waiting.



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