Corn – Funds have returned to selling and in a big way, the COT report showed funds sellers of 63K
↓ Most of last week we saw all the signs that hint towards fund selling and Friday’s COT report confirmed it with funds selling 63K, now short 87K or 25% of record
↔This returned fund selling explains why price remains under fair value of 420
↑ We still expect almost equal size buying near 400, fund selling is pressing price lower but importers, ethanol and cattle feeders are all using this lower price to lock in their end user needs
↔Now we are back to guessing how long funds will keep selling, when short covering we always know the target is to get flat but when building a position it is uncertain, 1 week? 8 weeks (like last time)?
Beans – Fund selling but not as active, overnight likely anticipating 8 AM sales, harvest may pass 75%
↑ Overnight traders likely expecting to see sizable 8 AM sales, recently trade has been on the right idea looking for more exports but they have overestimated exports in the last 3 weeks
↓ Funds were sellers of 19K, not as active as corn, now short 40K or 22% of record
↔Harvest may pass 75% complete on today’s report which is generally when trade turns more attention to SA, this morning BRA still sees active rains and ARG moderate rains in the 10 day outlook
↑ Even after the overnight bounce Nov remains well under the fair value of 1010 – 1020, exports likely to pick up even further the closer Nov gets to contract lows of 955
Wheat – Some HRW rains on days 9 – 10, funds buyers of 3K, reduced weather concerns
↑ Although small it was positive to see funds buyers of 3K while they were sellers of corn/beans
↔There isn’t much in the way of HRW rains but lately something in the forecast is better than nothing
↔Similar situation in Russia, rains have not fixed all dryness concerns but the forecast is improved
Cattle – BB continues the grind higher, slaughter -4.7%, funds still buyers of cattle +9K
↔Yesterday’s PM BB was choice +1.39 select +0.68 packer BE at 195.21, packer cushion $8.25
↑ Even if we assume last week’s cash at +$1 packer profits still start the week at $7.25
↑ Funds continue to be active buyers of cattle, +9K, now long 86K or 55% of record
↔Funds have now been buyers of cattle for 4 weeks in a row and are holding the largest long position they have had in almost exactly a year
↔Futures ended Friday pre pricing in a $0.75 higher cash trade this week, BB suggests that is possible