Good morning friends!
Corn 347’4 (-‘6)
Soybeans 955’6 (-7’6)
Chi Wheat 405’4 (+10’0)
KC Wheat 415’6 (+12’6)
Cotton 67.69 (-1.98)
Somebody wake up the band, wheat just had a double digit up day. Holy moly its been a while. The rally is coming from the currency markets as the Russian Ruble surged to 12 month highs, creating some currency arbitrage in the wheat markets COMBINED with the lead higher in Minny wheat. As a wheat bull I am not throwing a party yet, Minnesota ran into its 200 day MA and only closed up 2 cents A lot of the buying in wheat could have come from spread covering. Regardless, I think wheat finds its way to push on the early summer trading ranges near 430-440. At that point I expect a lot of short covering to have occurred and I will have lost my edge somewhat. I remain long and will cross that bridge when I get there. I look for follow thru to this if exports beat tomorrow.
Cotton saw covering in the opposite direction as the hurricane models have Matthew avoiding some of the cotton areas that felt threatened in the Carolina’s and Georgia. (T’s and P’s to the folks in Florida).We look for the USDA to increase stocks to use levels in the upcoming report, I remain bearish and encourage selling Dec 17 cotton on any push into the 71-73 cent level. Downside targets remain 65 cents, with an eventual test of 60 by the end of the year.
Corn was flat today as corn-wheat liquidation was the theme. The Buenos Aires Grain Exchange this morning pegged that nation’s 2016-17 corn crop at 36 MMT, up from 30 MMT in 2015-16.Private analytical firm Informa Economics this morning boosted its projected 2016 corn production to 15.215 billion bu., which is up 31 million from its previous forecast and 122 million bu. higher than USDA’s September report. Corn exports tomorrow morning will be key to getting prices above 350 dec. I look for significant farmer selling pressure on tests of 360.
IN soybeans, Informa increased its projected 2016 soybean harvest to 4.3 billion bu. with an average yield of 51.6 bu. per acre. I think the USDA comes in around this, which should be bearish. I look for soybeans to take its turn as whipping post in grains for the next few weeks if weather would allow for harvest to move forward. Price action today was positive given the test and rejection of 950, but I look for 970 to hold rallies pre report with a test of 940 coming sometime before next week.
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