Schwieterman: New buyers push live cattle futures higher

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Corn                                    Estimated Fund Position
Trends – December Contract
Short Term:Down               Net Long Futures and Options: -175921
Long Term: Down               Change: -5000
Overnight Trade: Z +2 @7:30 AM


The December corn made a slightly lower low yesterday, but the market isn’t getting in a big hurry about going anywhere. With the stocks report coming out on Monday there isn’t a lot of incentive to put on fresh positions which keeps the market relatively quiet and drifting sideways/lower. The market is still holding above the August lows, which is encouraging to the bulls, but if yield reports stay good we will see that support fail after the report.

Wheat                                   Estimated Fund Position
Trends – December Contract
Short Term: Up                     Net Long Futures and Options: -81920
Long Term:Up                       Change: +1500
Overnight Trade: Chicago: Z +4 KC: Z +6 @7:30 AM


The wheat market is coming alive. The December KW closed above the 50-day moving average yesterday and saw follow through buying overnight. Weather concerns in S. America and Australia are helping, but the real reason for strength has to come back to our good export sales and the tight supplies of HRW. The next major hurdle is the $7.25 area in the December KW.

Soybeans                              Estimated Fund Position
Trends – November Contract
Short Term: Down                 Net Long Futures and Options: 103691
Long Term:Up                        Change: +4000
Overnight Trade: X +5 @7:30 AM


The November soybeans are consolidating around the 38% retracement of the last leg higher. Since the market hasn’t made a push to the $12.85 objective yet, we may just be in for consolidation ahead of the report. Indicators are oversold and there is fear that we may see bullish numbers Monday and in the October supply and demand report, which will keep the bears from pushing the issue right now. Look for a two sided trading session today.

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


Live cattle futures closed with gains of at least .70 in the front 3 months, as new buyers continue to enter this market. Technical are becoming somewhat overbought but can remain that way for an extended period of time. Asking prices are firmly set at $126+ and near $200 in the north. Overnight activity has slowed, with all contracts trading within .10 of Tuesday’s closing prices. Cutouts were better again on Tuesday, while the weekly slaughter pace is picking up from recent levels. The ability of the beef market to sustain strength in the face of higher slaughter rates is key to maintaining the current rally.

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


Feeder cattle futures posted new contract highs in all but the expiring September contract on Tuesday. The strength came on increased open interest, suggesting new money continuing to enter this market. The cash index posted new highs for the move and are within .22 of the all-time record highs. Overnight activity is firm in the front months, with deferred contracts softer as we write. Look for any midweek pullbacks to be well supported in the feeders.



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