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Home / Futures Blog / This Week in Grain -10/10 PM Wrap

This Week in Grain -10/10 PM Wrap

October 10, 2016 by John Payne

This Week In Grain (T.W.I.G)

Good afternoon friends!

Corn 343’0 (+3’2)

Soybeans 953’6 (-3’0)

Chi Wheat 404’4 (+9’6)

KC Wheat 408’2 (+5’0)

Cotton 67.35 (+.37)

 

 

 


Wheat futures led the charge this morning as short covering could be seen as wheat set the pace on everything at CBOT.  As I mentioned friday, the CBOT wheat market stands at a record short position with a bubble clearly forming on the short side. Here is some perspective on how the funds are trading wheat.  Crude oil speculators are long 20 days of crude oil production, soybean speculators are long about 45 days worth of soybean production, wheat speculators are short 3 YEARS of soft wheat production.  Is the story bearish? Yes. Does it look to change anytime soon?  No.  But that may not matter.  Stay long, figure out a way to avoid the carry charges (collar strategies).

Corn has a similar story in wheat, albeit less dramatic.  I dont see significant pressure coming from this USDA number. Seasonal’s point higher for October, I think we could see a run to 360 before corn is forced sold by bankers.  Stay long….

Soybeans look to be the most exposed to this USDA number with yields projected to come in as high as 53 by a few shops. I don’t think we will see that kind of number but something over 52 is definitely in the cards.  A disappointing report should not be bought though, farmers are well stocked of new crop soybeans and many need money.  With beans bringing in nearly 3x the cash flow than corn, I think the possibility is high we see selling regardless of the USDA number come late October. I would look at short term put strategies to hedge exposure to the report.  Cheap OCT puts would be my speed.

Cotton futures did it again….Sunday night run up only to be sold into the close back to the 67 cent level.  Cotton traders remain very long the board (managed money) and without loss of production somewhere (North Carolina could see losses) its hard to see an expected number from the USDA keeping prices above 67 in the long run.  I remain short and patient.

No podcast today, Ill be back in the AM with more to talk about.

 

https://media.blubrry.com/twigcast/p/content.blubrry.com/twigcast/TWIG1010AM.mp3

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Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

Filed Under: This Week In Grain, TWIG Cast

About John Payne

John Payne is a Senior Futures & Options Broker and Market Strategist with Daniels Trading. He is the publisher of the grain focused newsletter called This Week in Grain, along with being a co-editor of Andy Daniels’s newsletter, Grain Analyst. He has been working as a series 3 registered broker since 2008.

John graduated from the University of Iowa with a degree in economics. After school, John embarked on a 4 year career with the United States Navy. It was during two tours in Iraq and the Persian Gulf where John realized how important commodities are to the survival of society as we know it. It was this understanding that brought about John’s curiosity in commodities. Upon his honorable discharge in 2007, John’s intense interest in the world of commodities inspired him to move to Chicago and pursue his passion in a career in the futures arena.

After a three year position with a managed futures firm specialized in livestock trading, he was given the opportunity to join the team at Daniels Trading. Being in the business and seeing how other IB’s operated, it was the integrity and straightforward approach of the Daniels management team and brokers that attracted him to make the move. Since joining Daniels, John has broadened his fundamental and technical analysis of the markets even further. John has been writing his newsletter This Week in Grain under the Daniels banner since 2011.

Working in high pressure industries like the military and capital markets, John has learned the value of preparation in times of stress. He believes that instilling within his clients the value of a good plan and a cool head for dealing with the day to day swings of commodity markets. He treats every client as a teammate, understanding that his job is to help clients achieve their goals, whatever they may be.

John is a proud supporter of the Iraq and Afghanistan Veterans of America, the Veterans of Foreign Wars and the National Corn Growers Association. When he is not working, he enjoys athletics of all kinds and spending time with his wife and their two kids.

John’s commentary is featured in the following publications:

* All Ag Radio – Sirius Channel 80
* AM 880 KRVN – Lexington, Nebraska
* RFD TV
* Wall Street Journal
* Barron’s
* China News Daily (English version)

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Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

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