Howdy market watchers! 

November is here and so is the time of year to turn your clocks back one hour.  Now that the tricks have been treated, let the holidays begin!  There’s little more that gives me greater joy than watching my two kids sport their costumes and gather candy only to return to our front porch and hand out most all of it to other in-character visitors.  

While weather continues to be anything but typical for this time of year, we graciously welcomed recent rains in the Southern Plains after a ferocious end to October with Dust Bowl-like conditions. Forecasts lean towards much more rain over the weekend that is desperately needed in many areas with totals from this last system less widespread than expected.  The maps have now upgraded 62 percent of the US winter wheat areas to some level of drought conditions.  
 

Interestingly, this weekend system looks to nearly miss most of the large wheat production areas of Western Kansas and Eastern Colorado.  That would help to explain why wheat markets, while being choppy this week, held more ground than expected considering the sudden shift to wetter conditions.  
 

The USDA’s first winter wheat ratings were released on Monday this week that showed overall conditions as the second lowest since 1986, with Oklahoma and Texas being the lowest on record in the past 37 years.  Trade expectations for this first winter wheat rating were 47 percent Good-to-Excellent while the USDA surprised with actual ratings down to only 38 percent G/E.  Oklahoma’s G/E rating was half of last year’s rating at just 21 percent while Texas was just 30 percent versus last year’s 42 percent.  
 

US export demand from global buyers also continues to support the grain and oilseed complex.  While the corn export pace is in the lead, China was back in the market this week for US soybeans.  Algeria tendered for wheat and though the volume was nominal in the grand scheme of the market, the price indicated tightness in the international market at $263 CIF per metric ton, but still below Russia’s minimum price.  

The US dollar has continued to maintain strength although it has been more sideways action in the recent weeks.  

Just days away from the US Presidential Election, everything could be about to change.  It is difficult to provide much of an outlook on any market until this election is in the rearview mirror.  However, we may not have certainty even by Wednesday morning.  My advice is to expect the unexpected and stay protected in the market. 

The biggest concern I have is for the cattle market.  We saw long liquidation this week with some strength returning on Friday, but any risk off sentiments in the broader market could result in further liquidation until more certainty is regained.  Monday’s action will be important given Friday’s strong rebound off the session lows and strong close, but just below key support levels.  

Fed cash cattle peaked at $190 again this week, which was expected to be higher.  October feeder contracts expired Thursday and traded higher into expiration coming off the Board around $252.000.  With November now the front-month and down near $247.000, there is thinking we could see that contract push higher given its discount to October.  
 

Recent and coming rains are supportive of grazing potential and likely calf prices, but the primary window for producers to take advantage of winter wheat pasture grazing has passed.  More producers are sending smaller calves to feedlots including farmer feedlots that are becoming more prevalent since the drought emerged over the past several years.  Opportunities are there for stockers and cattle feeding, but positive margins need to be protected as they can evaporate quickly in these volatile markets.  

Friday’s October jobs report was skewed by union strikes and hurricanes and showed payrolls expanding by a mere 12,000 jobs versus some 100,000 expected.  

Perhaps job seekers were more preoccupied with the World Series than looking for employment. What an amazing series it was concluding with the LA Dodgers incredible comeback for the win to end the series early. It doesn’t get much more American than that and it was nice to take a break from the barrage of political news and ads.  

Corporate earnings this week showed some signs of weakness, but they are far from being the norm across industries.  In fact, there are growing signs that inflation is beginning to re-emerge.  

As far as the US economy is concerned, we could see capital expenditures and hiring return after the election, no matter who wins. Uncertainty for the markets seems to be more vulnerable from geopolitical conflicts in the Middle East than weakness in the US economy at this point.  Counter attacks continue between Israel and Iran and their neighbors.  I’m expecting this leadership transition period in US politics to invite continued escalation in that conflict until there is a more organized, collective response from the new Administration.  

Energy markets have been extremely volatile with oil locations in Iran so far left alone in attacks by Israel.  However, this could change at anytime as attacks intensify.  Along these same lines, we are probably due for more stepped-up attacks by Russia on the Ukraine as winter approaches.  

If international demand for US origin grains and oilseeds can continue to hold and further firm, I believe there is scope for futures to rally further.  US row crop harvest is nearing completion as wetter conditions are ahead.  

US soybean harvest is now 89 percent complete, which is the fastest harvest since 2010.  Corn harvest is 81 percent complete and also well ahead of average.  As the size of the US crop is essentially known, there is an opportunity for markets to move higher.  
 

December corn futures closed near Friday’s highs and right at the 100-day moving average just above $4.14.  The next level of resistance is around $4.20 and I think we could see this next week.  
 

First Notice Day for November soybeans was Thursday and so January futures are now the front-month. Soybean futures will need support from increased demand as South American continues to improve.  January futures closed Friday within one cent of it’s opening near $9.95 and right at the 9-day moving average after a strong session with highs above $10.08 and the 20-day moving average.  

US cotton conditions reduced to just 33 percent G/E this past week versus 37 percent expected.  Harvest continues to progress, now 52 percent complete and ahead of average. Weaker crude oil prices and concerns over China’s economy and import appetite has pressured cotton futures lower.  It looks like we could be reaching levels of support, but I would advise caution until we know more about the election results with cotton futures sensitive to crude and stock market movements.  

Sidwell Strategies is the one-stop shop to protect cattle with futures, puts, LRP or a combination of all, which is probably the best strategy overall.  If you’re ready to trade commodity markets, give me a call at (580) 232-2272 or stop by my office to get your account set up and discuss risk management and marketing solutions to pursue your objectives.  Self-trading accounts are also available.  

It is never too late to start and there is no operation too small to get a risk management and marketing plan in place.  

Wishing everyone a successful trading week!  Let us know if you'd like to join our daily market price and commentary text messages to stay informed!

Brady Sidwell is a Series 3 Licensed Commodity Futures Broker and Principal of Sidwell Strategies.  He can be reached at (580) 232-2272 or at brady@sidwellstrategies.com.  Futures and Options trading involves the risk of loss and may not be suitable for all investors. Review full disclaimer at https://www.sidwellstrategies.com/fccp-disclaimer-21951.