Bret Crotts  |   December 2, 2011

Corn                                         Estimated Fund Position
Trends
Short Term: Down                Net Long Futures and Options: 85078
Long Term: Down                 Change: -9000
Overnight Trade: H +1 1/2 Z +2
Opening Calls: 1-2 Higher

Yesterday we saw a great deal of bear spreading in the corn market, which can at least be partially attributed to yet another poor export sales report. There won’t be any fear of tight supplies if export demand doesn’t improve, and if there isn’t fear of tight supplies the corn won’t be able to move higher. Fundamental news is limited, but the outside markets are supportive, which should give the corn a firmer bias today.

Wheat                                     Estimated Fund Position
Trends
Short Term: Down                Net Long Futures and Options: -88620
Long Term: Down                 Change: -1000
Overnight Trade: Chicago: H Unch KC: H -2 3/4
Opening Calls: Mixed

Wheat was the upside leader yesterday due to spread trade and two consecutive weeks of solid export sales. I don’t think the wheat will be able to muster two consecutive days of independent strength, so look for the wheat to return to being a follower of the corn. The March KW is in a consolidation pattern and there is no reason to believe it will break out today.

Soybeans                                 Estimated Fund Position
Trends
Short Term: Down                  Net Long Futures and Options: -24522
Long Term: Down                   Change: -4000
Overnight Trade: F +5 1/4 X +6 3/4
Opening Calls: 5-7 Higher

The soybeans have been in a choppy/higher pattern this week and today will continue that pattern. Look for a test of the strong resistance at the $11.45 area in the January contract. That area has stopped the market for two days in a row, but the decent demand in recent weeks and the supportive outside markets give traders reason for one more test this week. Confirmation of Chinese buying rumors would be a big help.

Live Cattle
Trend
Short Term: Up
Long Term: Up
Opening Calls: 40-80 Higher

Live cattle futures closed positive on Thursday, as a late round of buying kicked in in the closing minutes. Overnight saw more of the same, with the trade expecting further cash strength to develop today. Regional plants paid as much as $205 in the beef on Thursday. Option expiration for the December contract at the close of business today could create some fireworks. No deliveries are expected on Monday, unless the basis weakens significantly. Cutout values fell over a dollar in the choice and select cuts on Thursday.

Feeder Cattle
Trends
Short Term: Down
Long Term: Up
Opening Call: 30-50 Higher

Feeder cattle futures posted modest to moderate gains on Thursday, as last minute buying pushed prices to their daily highs. Cash index levels were up more than 1.00 for the day and corn futures struggles after a stronger opening. Overnight has seen additional strength in the feeders, supported by stronger deferred live cattle and higher equity markets. The highs for the past two trading weeks is now only .50 away.