Schwieterman: Live Cattle Futures Lower On Losses In Equity Markets, Corn Falls To New Lows

Corn                                       Estimated Fund Position
Trends
Short Term: Down                Net Long Futures and Options: -645
Long Term: Down                Change: -11000
Overnight Trade: N -3 1/2 Z -3 3/4
Opening Calls: 2-4 Lower

The corn fell to new lows for the move overnight. Both the July and December contract fell to within 2 cents of the September low. Technical indicators are oversold and we have a supply and demand report coming up on Thursday, so this area should act as support for a few days. Ideas of climbing crop condition ratings will cap any rally attempt today.

Wheat                                    Estimated Fund Position
Trends
Short Term: Down                Net Long Futures and Options: -76865
Long Term: Down                Change: -4000
Overnight Trade: Chicago: N Unch KC: N - 1/2
Opening Calls: 1-2 Lower

The wheat fell to new contract lows again overnight. The selling pressure wasn’t heavy, but if the corn is lower and if the outside markets aren’t extremely supportive, then there is little reason for the wheat to be positive. Technical indicators are oversold, but can stay that way for a long time. Rallies are for selling.

Soybeans                              Estimated Fund Position
Trends
Short Term: Down               Net Long Futures and Options: -24147
Long Term: Down               Change: -5000
Overnight Trade: N -1
Opening Calls: 1-2 Lower

The July soybeans tested the bottom of the trading range in overnight trade, then bounce back. The soybeans are following the outside markets, so the recovery it the stock futures and the crude oil helped the beans. Plan on similar action in the day session as well. If the stock market can avoid a sharp break, the beans will stay range bound.

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

Live cattle futures closed sharply lower on Friday, with losses fueled by sharp losses in equity markets and heavy long liquidation. Preliminary numbers show open interest dropping more than 11, 000 contracts on Friday. With cutouts losing 4.00-5.00 for the week and cash moving higher, packer margins have tightened but remain lucrative. Overnight saw early stock market weakness spill over into other commodities, but a recovery to green numbers in equities this morning is allowing for more mixed calls in commodity markets. Show lists will be green this week, with numbers expected to remain tight. Until outside influences become less threatening, we expect bounces in the cattle to be seen as selling opportunities.

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

Feeder cattle futures closed .65-.80 lower on Friday, but remained positive for the shortened trading week. Losses for the week were subdued by the .19 drop in corn values for the four days. Cash index levels were back on the rise for the week, but could see some softer sales to start this week. Monitor equity and energy markets this morning for early direction in the feeders. Corn was off another .03 in overnight trade, lending some pre-opening support for the FC.

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