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.