NEXT WEEK | I will be out of the office next week on my family vacation. I typically do not go away during the summer because it is so busy around here. Now that we are in harvest October tends to quiet down and I get a way with the wife and kids for the week. There will be no newsletters or podcasts next week (Oct 9 – Oct 13).
NEW PODCAST | I just released a new Turner’s Take Podcast. We talk about why we think grains are range bound for the next couple of months, why Soybeans have the best potential of all the grain/oilseed markets, our bearish view on crude and our bullish view on OJ. Click here to listen to Turner’s Take Podcast.
GRAINS & OILSEEDS | I think Corn continues to trade in range for the next month or two. If we get into the $3.30s it will be a buying opportunity. Harvest pressure will keep grain prices in check. Short term traders should look to sell rallies and try to pick off a few cents. Farmers should look into short straddles in corn and beans with expirations in Oct and Nov to collect premium. Any gains should be used for hedges in the 2018 crop.
The US needs to reduce corn+wheat+soybean acres by about 5mm. I think most of it has to come from corn. The issue is how does corn go from 90mm to 85mm acres next year? It probably does not, but until we get to 85mm acres I can see corn trading $4.50 without major production issues.
Soybeans are still my “best bet” for the ag space next year. Beans have the best demand drivers (developing world’s need for protein) and we only produce beans for global exports in the US and South America. Beans below $9.30 look like a good value to me.
CRUDE OIL | Crude is breaking down on the charges and I still like being short Dec crude or in the Jan/April MRCI bear spread. The Jan/April is a MRCI seasonal spread and we tend to see the front months lose against the back months this time of year. The market is very long crude and we are starting to reverse on the charts. Also keep in mind when we get to $50 we tend to see the shale oil producers increase production.
ORANGE JUICE | OJ could be breaking out here. It is a hard market to find fundamental supply and demand figures for so we will have to rely on the charts. Some analysts estimate FL lost 50% of their production due to Hurricane Irma. However, we import about half our OJ in this country and we could probably import another 25% from Brazil if need be. It just depends how much global supply there is and how much more it costs the US when we have to rely on imports. As the cash market goes higher it should show up in the futures. I think we are breaking out and I like cheap calls in January OJ.
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