Schwieterman: Productive week for live, feeder cattle futures

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Corn                                          Estimated Fund Position
Trends – December Contract
Short Term:Down                  Net Long Futures and Options: -190491
Long Term: Down                  Change: -4000
Overnight Trade: Z +2 @7:30 AM


The corn market is still marking time waiting for this morning’s quarterly stocks report. The charts aren’t giving any indication as to which way this market is about to go and the range of guesses for the stocks estimate tells us that nobody has any idea what kind of number the government will release. All we can do is prepare for volatility and then make a move after the report. Yield reports are still very good so rallies are still a selling opportunity.

Wheat                                    Estimated Fund Position
Trends – December Contract
Short Term: Up                    Net Long Futures and Options: -61219
Long Term:Up                      Change: +2000
Overnight Trade: Chicago: Z -1 KC: Z +1 @7:30 AM


The wheat was strong last week and once we get the report out of the way the trend higher should continue. The December KW has a very good chance of reaching the $7.70 level soon, barring a disastrous report from USDA. The fundamental setup of the market is very good, and good enough to keep the market moving, so plan on further gains and bull spreading.

Soybeans                            Estimated Fund Position
Trends – November Contract
Short Term: Down            Net Long Futures and Options: 99218
Long Term:Up                    Change: +4000
Overnight Trade: X -6 @7:30 AM


Lastly, the soybean market is just like the corn and has been going nowhere. The November soybean contract has been consolidating around the 38% retracement of the last leg up waiting for Monday’s numbers. The fundamental outlook of the soybean market is pretty bullish and the stocks number may be able to kick start another leg higher in the market. Exports are strong and supplies are tight, so don’t under estimate the potential of the bean market.

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


Live cattle futures finished off a good week in positive fashion, with .50-.55 gains in the front four months on Friday. For the week December live cattle gained 2.40and are at their highest level since March 1st. Cash traded $2 higher in the south at $126, with northern trade $4 better in the beef a$200. We believe that the influence of no Zilmax in the rations has more than offset the expected increase in ready fed cattle into the fourth quarter. The hog and pig report could lead to some bear spreading in the cattle, with December getting the short leg.

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


Feeder cattle futures had a monster week in the futures and cash, with October futures up 4.05 for the week and the cash index setting new records at 159.37 which was up 2.48 for the period. This mornings’ grain report is likely to determine whether the feeders can sustain their recent strength. We like the idea of protecting feeders with put options heading into the 11:00 am report.



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