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.