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Sidwell Strategies Week-in-Review CommodityBuzz: Pray for rain


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Howdy market watchers! Its dry and we need prayers for rain. Today, is actually the best chance for precip over the coming week and hopefully it becomes a reality. Producers with early planted wheat planning to graze stocker cattle have held off or limited buying cattle due to uncertainty of wheat pasture forage. This lighter demand for calves has impacted feeder cattle prices which sold off again this week losing around $6 per cwt since October 6th back to levels in June. November feeders closed the week at $135.025. A little shower would go a long way, but with La Nina conditions strengthening, the outlook doesnt look very reassuring. Producers should strongly consider Annual Forage protection through crop insurance. Contact Brenda or Bambi at Sidwell Insurance to learn more about this program that pays on drought conditions. Dryness has also continued to drive the wheat market higher. KC wheat broke above recent highs on Thursday and closed the week at $5.58 . This puts new crop July 2021 wheat at $5.75. Dryer conditions in Russia and Ukraine in addition to the US have continued to support prices as has fund buying. Managed funds added another 4,800 longs to their already net long position this past week. Ukraine has caught some rain, but export prices continue to rise from the Black Sea region. Ukraine export prices hit a two year high while Russian wheat export prices jumped another $8 per ton. Corns bull market has also been spilling over into wheat prices. Prospects for much higher exports to China that could reach 20 million tons has traders positioning and managed funds adding 36,400 longs this week. Chinese corn futures on the Dalian exchange this week hit an all time record high at $9.70 per bushel. These demand prospects drove US corn futures to new recent highs with December 2020 reaching $4.09 during Fridays trade. December corn closed the week at $4.02. The carry to future months in both corn and beans has flattened indicating strong nearby demand. Harvest progress in the US advanced more than expected this week at 41 percent versus 39 percent expected. Soybean harvest also progressed 2 percent faster than expected at 61 percent complete. Yields have been variable, but were heard a lot of reports of impressive yields for soybeans. Continued delays in Brazil soybean planting has supported the soybean market as has continued China buying. On average for this time of year, Brazil is typically 10 percent planted whereas it is only 2 percent planted this year and has been for two weeks. For Mato Grosso, the largest soybean planting province, and Parana and Mato Grosso do Sul, early planting is historically slow as rains are awaited. First crop corn planting remains in line with last year and the average levels. Should China buying continue and planting delays persist, we are likely to see continued firmness in bean futures. Despite these conditions however, soybean futures did not top last weeks highs. November soybeans closed the week at $10.50 after making a weekly high at $10.73 . November bean options expire on October 23rd and so be mindful of protection you have that is expiring if you havent marketed beans yet. Sesame harvest is just getting underway and Enterprise Grain is having a harvest workshop this next week on Tuesday at 8:30 AM at the Sidwell Seed facility in Goltry along highway 45 with coffee and donuts provided and then at 5:30 PM at P&K in Enid with dinner and drinks provided by Enid Brewing Company. We will have combine expert John Aubin at both locations for a practical presentation on setting your combine and header to optimize harvest yield. All sesame growers are welcome to attend and so invite your neighbors. Whether youve planted sesame or not, all growers with combines will benefit from this workshop. A few closing comments on cattle. Live cattle have been trading cash at $108 this week. There has been long liquidation by the funds in cattle ahead of the election with concerns over demand and higher corn and feed prices. If youre buying cattle and need to protect, I would advise put options versus hedges although if you hedge, consider buying a call option to keep the upside open as believe there will be opportunities for this cattle market to recover later in the year. Hogs continue pushing higher with continued buying from China and other Asian countries and this could spill over into the beef market at some point. If selling cattle in the near term as these prices have dropped, consider buying a call option to stay in the market should this market rebound after you sell physical cattle. We have talked to a number of producers about this strategy that are selling physical cattle now and can be a good way to recoup the recent losses. Give me a call at (580) 232-2272 or stop by our office to get your account set up and discuss strategies to protect your exposure to these markets. It is never too late to start and there is no operation too small to get a risk management and marketing plan in place. Remember, I am on-site at the Enid Livestock Market on Thursday, sale day. If youre needing seed wheat of any variety, be sure to call Sidwell Seed at (580) 874-2286. We have a wide variety of bulk and bagged seed including WestBred, Limagrain CoAXium, OGI/OSU, Agri-Pro and KWA with multiple pick up points in Kremlin, Goltry and in bags at 81 Feed and Seed in Enid and Medford with advance notice. Wishing everyone a successful trading week!

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 http://www.sidwellstrategies.com/disclaimer.



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About the author


Brady Sidwell is the Founder and President of Sidwell Strategies, Enterprise Grain Company, Enterprise Grain Malt, Sidwell Solutions, Sidwell Seed, 81 Feed and Seed, Sidwell Transport, Arbitrage αlpha Solutions and co-founder of Enid Brewing Company. Mr. Sidwell is also a Limited Partner and member of the Advisory Board of Germin8 Ventures, a Food Tech Venture Capital firm based out of Chicago, and a founding partner of Ninja Ag, LLC, a precision agriculture technology business that creates variable-rate nutrient applications from corrected NDVI imagery. Mr. Sidwell was recently appointed to the Board of Directors of the Kansas City Federal Reserve Bank, Oklahoma City Branch.
 
Prior to his recent change in becoming an entrepreneurial business owner and commodity broker, Mr. Sidwell was Vice President of Global Strategy, Mergers & Acquisitions for the OSI Group, based out of its headquarters near Chicago. He first joined the company as VP of Corporate Strategy and Business Development for the Asia Pacific, Middle East and Africa (APMEA), based in Hong Kong. At OSI, Mr. Sidwell was responsible for spearheading global strategy and M&A.
 
Before joining OSI, Mr. Sidwell was Head of Food & Agribusiness Research and Advisory for Rabobank in North East Asia. He was responsible for cross-border F&A strategies for companies and investors across various sectors in the supply chain. While at Rabobank, Mr. Sidwell appeared regularly on Bloomberg, CNBC and Reuters TV to discuss the impacts of global and regional food & agriculture developments on Asian and global markets.
 
Prior to Rabobank, Mr. Sidwell worked on project teams at the U.S. Embassy offices of the U.S.D.A. in South Korea and Thailand. He holds a Bachelor of Science degree cum laude in Agricultural Economics with a focus on International Marketing from Oklahoma State University and a Master of Economics degree from the University of Hong Kong where he studied as a Rotary International Ambassadorial Scholar to China. Mr. Sidwell was raised on a family farming operation in Goltry, OK, where he lives with his wife Emily and their dog, Daisy. He is active in his community as a Rotarian, Ambucs member, Advisory Board and Investment Committee Member of the Cherokee Strip Community Foundation, Class 31 of Leadership Oklahoma and the Board of Governors of the Oklahoma State University Foundation.

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