Good morning friends!
Corn 353’0 -2’0
Soybeans 1010’2 -1’6
Chi Wheat 410’0 +1’4
KC Wheat 412’4 +1’2
Cotton 70.60 -.22
Grain markets opened the last trading day of October mixed, with corn and cotton slightly lower while beans and wheat are slightly higher on very low volume. As I mentioned on Friday, the seasonal trends for almost all of these markets turn south as we get into November. We should see harvest completing across much of the corn/bean belts this week while cotton harvest continues its push in W. Texas as the lack of moisture of late has been beneficial to those who can strip.
I expect the ranges to hold in all of the markets we follow ahead of next Tuesday (US election) and Wednesday (USDA report). This week holds little in the way of data releases from the USDA. There is a US FOMC meeting with a statement on Wednesday, but with the election a week later I would find it hard to expect any changes ahead of the polls.
N. Brazilian farmers are nearly 69% seeded through Friday. According to IMEA, the record fast soybean seeding pace was in 2013 when 72% of the crop was planted by the same date. The active planting pace should allow for early harvest starts which will allow the winter corn crop to be planted on a timely basis.
COT reports from Friday showed a push in new shorts from the wheat side, as longs clear out from last week. Cotton is in the opposite position as total longs are now just below highs from late September. Total short positions are up from last week but remain very low compared to where they have been over the past decade. The net long position in beans sits at the highest since late August as the short position dips below 20k for the first time since early Aug. Beans feel top heavy here with the OI structure leaving the long side really suseptable to a sharp pull back. Corn remains middled in OI with 60,000 net short on the books. Thats 100,000 less than 5 weeks ago, so significant short covering has been seen. Longs remain near 200,000 which leaves corn somewhat overbought as well.
The long range forecast offers improved rainfall chances for the Plains after November 7th. The forecast shows less than normal rains will fall across N Brazil over the next 10 days, but enough looks to drop for early crop needs. I am hearing some continue to worry about Argentina and S Brazilian dryness later in the crop cycle.
The OI structure leaves me bearish soybeans and cotton. I had a convo with a student at Texas Tech on Friday who was in town to tour the floor, he mentioned the lack of moisture giving the boys and girls near Lubbock a significant opportunity to get out and strip some cotton with the hopes of meeting December delivery in a few weeks. The way the longs are stacked up in cotton, I would worry more product is available for delivery than expected. Stay short cotton and sell rallies in Dec 17 in the 73 cent area. I would be shorting soybeans as well, in the Nov 17 contract. Corn should be looked at as a dip buyers market with selloffs into the 320’s front month a significant chance to get long into 2017 crop year. I remain bullish wheat as well but expect a step back as December delivery approaches in a few weeks.
If anyone needs COT charts hit me up and I can send, the COT data was delayed on Friday. Part of me wishes my Cubbies would lose already so I can get a decent night’s sleep, I couldn’t get them compiled this morning.
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