Good afternoon friends!

Corn      356’2   +3’0

Soybeans  1023’2 +2’4

Chi Wheat   415’2  +3’6

KC Wheat 418’4   +’1’4

Cotton 69.34  +.08

 

I take off one day and the markets go bonkers to the upside! My apologies for the lack of TWIG reports, my kid needed an emergency babysitter and he has no concern about newsletters.

USDA export reports will be out in a few minutes, but Ill touch on those after the close today.  Demand is certainly worth monitoring, especially in soybeans as the lid seems to have come off price in recent days.  As someone who shorted Dec 17 about 15 cents ago, I would remain bearish and probably look at selling more on this rally, but I can understand the trepidation.  Soybeans traded higher in the overnight again with Nove 17 breaking below but holding the 10.00 level early in the session. Meal lead the soy complex higher on technical buying that put December above the 50-day moving average at the close yesterday for the first time since early July. Basis is weak but even with basis at multi year lows, cash prices across the Midwest are holding over last year. C IL cash this week has been quoted more than $.70 over a year ago, while W IA is up more than $.80 year over year. It’s really strange, in my opinion fundamentally, the outlook is just as bearish if not more than at this time a year ago. Remember, SAM production problems did not show up until spring.  This has me cautious here but not afraid to price. November soybeans stopped just short of the first target at the 100-day moving average. New crop soybeans over $10 are a sale with a 100+ MMT Brazilian crop?  If prices hold in beans with that kind of supply in the pipeline,  then corn and wheat are too low.

Corn found new buying interest amid this week’s strength in the Brazilian real, and talk of excessive rainfall in Argentina (Turner mentioned this yesterday in Turner’s Take).From what I read, the concern over Argentina is probably a little much, and a welcomed period of dryness lies ahead. But US corn is still well positioned in the world market for near term export demand and global milling wheat cash prices continue to inch higher. We remain much cheaper than Brazil and slightly cheaper than Argentina.

Wheat markets appear along for the ride as we are seeing Russian offers go up which raises the proverbial floor for the rest of the market.  I am very encouraged to see prices do well near the 4.00 level. I remain patient to buy closer to December delivery, but may jump in with more collar strategies if my patience wears thin.  Beans going up like this is bullish for the rest of the ag complex over the longer run.  So while I short beans I may buy some wheat against it.  Call if you have any questions on that.

Cotton prices have found some footing as well but are running into a wall near 69-70 cent level. It sounds like the damage from Hurricane Mathew is worse than the USDA is letting on. The dollar broke yesterday which is supportive for cotton prices. Chinese demand is what can push prices amidst a really long trade.  Copper and Soybeans are markets with heavy Chinese demand and they are up almost 3% for the week. Cotton lags, which may be telling.

I turn more bearish soybeans as the Nov 17 contract rallies above 10.00.  I am bullish corn and wheat as well, but I look for resistance a dime higher in both front month contracts.  Stay short cotton, patience is the key.