Good evening friends!
Corn 348’6 + ‘6
Soybeans 990’6 +1’2
Chi Wheat 414’2 +2’2
KC Wheat 411’4 +1’0
Cotton 68.53 +46
It was a really slow day in everything, with little price action in any of the CBOT markets. Cotton traded with a little more range, scratching back to yesterday’s high. Next week the markets will have two really important market moving events with the US election on Tuesday and the USDA WASDE report on Wednesday. Today’s OI charts are smaller scale, only going back 2 years. I think they better reflect current conditions. That said, cotton remains within 20 k of being record long going back 10 years.
In my opinion, the cotton and soybean markets stand to move most. Cotton is the only market with short term factors not just associated with the USDA and weather. Cotton stripping around Lubbock has come to a halt as rains and hail have caused damage and inaccessibility to fields. The hail was spotty so don’t assume a lot of damage, but the delay could remove supply available for December delivery. That said, I have heard of from a few people about the substantial amount of cotton coming into the gins of late. The NET OI remains really long, I look for liquidation before the trend continues higher next year IF this demand story from China is at play. Regardless, roll shorts into March if you haven’t yet and get hedges on for 2017 production, targeting 73 if the market would rally in Q4.
Soybeans will probably get a yield bump, but how much is debated. I worry about a double whammy in beans if the US election would result in risk off. The COT data for beans shows the longest outright and net position since late August. If the specs sell beans, I expect some farmers to chase which could put Jan back on its support near 940 really quickly. A bullish report could put beans into the mid-10’s but I dont see much upside from there yet, SAM weather has yet to worry the trade.
Corn and wheat markets have seen short covering and longs coming in with fresh positions. Demand is strong but I don’t see a story out there that will cause the mass short covering we need for a rally. The higher longs and the seasonal weakness usually seen in November would have me ready to buy a dip rather than here. March delivery will see a lot of farmer selling if prices get near profitability. The time is approaching for a big move in corn but I don’t think it comes in Q4. I can not imagine the USDA giving much love to corn in the coming report.
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.