Both KC and Chicago continued their descent again today as both traded and settled below the 5.00 level. The question going forward for traders possibly will shorts put on the breaks and potentially buy into the weekend? There’s talk that the Russian Ag minister is meeting with major exporters this weekend giving thoughts to export quotas and tightening supplies. There is a potential bull story long term given global supply shortfalls, but some of the bull story for wheat is stale for now as funds await further data to possibly re-enter to the long side of the market. Managed funds as of 10/16 were long 22K of Kc and short 16 K of Chicago. Given the slide in price, it appears that funds could have a combined net short in the market given where prices stand as of today’s close. Those long and wrong in wheat can go back to the wishing well and buy the Dec Chicago 530 calls for 3 cents OB into the Nov crop report on 11/8. That is a level or target that the market will trade up to in my view on any fundamental bullish news or weather event. We need to hold at current levels for 530 to be achieve in 30 days or so.
Corn-the best thing you can say about it is that its not beans and not wheat. Corn has gained on both KC and Chicago wheat as those spreads have tightened from 1.50 to under 1.30 wheat over. Its one reason corn has not retreated further. Funds have gone from a decent short of 100 K contracts (early Sept) to a net long of 21 K as of 10.16. Despite a failure at key trend line resistance at 377.4 last week, this market has held together and the funds moving from short to long may be telling down the road if they add to their positions. Like wheat, there are some bullish inputs for corn long term but as we sit in the middle of harvest, there’s no reason to buy and chase this market. No recommendations at this juncture.
Beans -we settled today at 851 basis November. This level is halfway back from the September lows to the October high. Soy meal which is the key here needs to hold major trend line support at 303-305 in my view. If we hold here for beans and meal, we could rally 30 cents into month end or at least into the monthly crop report. Wall of beans? Maybe but Nov options are off Friday with first notice next week. If we cant break to the September lows into Nov 2, I don’t see it happening until February at the earliest and I will be happy to discuss why if anyone wants to chat. Despite all the rumblings about trade, I feel a framework for a deal still can be achieved with china prior to year end. My opinion here. Soymeal will be the driver here for beans.
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