Good evening friends!
Corn 358’0 +4’2
Soybeans 982’2 +9’6
Chi Wheat 421’0 +1’0
KC Wheat 426’0 +4’2
Cotton 71.14 -.01
Corn and wheat find support on the breaks while cotton and soybeans jump higher with the crude oil market. The mitigated disaster that is the US livestock market has some hand in this as well. Corn has come all the way back to the 200 day MA where it stalled out last week. I think there is a decent chance it breaks through at some point soon. The prices are still low relative to investment in the product and the short position looks to still be in the early phase of an unwind. US NOLA corn is offered at 168 per MT while the Brazilians are up at 190. I think the US corn export market has a chance to run that high before Brazil harvests. Another 15% on corn prices puts front month right near 4.00. Stay long corn here and say a prayer we see a rush out of shorts at the 200 day MA. I assume there are a boat load of stops parked over last week’s high in corn.
We are starting to see the export markets here creep a little bit which is very supportive for corn and wheat, beans are a little higher as well. Check out the spreadsheet I have complied going back to early September. Eventually the market is going to wake up to the idea that the global stocks in corn and wheat are due to Chinese stocks that are probably smoke at this point, and Brazil has little on hand to get it to harvest. US The US demand story shouldn’t change in the short run, even with higher price points.
Beans and cotton (oil seed markets) are moving higher with crude oil. The rally is bringing 10.00 into play for deferred contracts starting in May of 17 for beans. I expect producer selling to continue and the story to rotate to newer crop supply once harvest wraps up. The export market in soybeans has been flat over recent weeks while cotton appears to be pricing in demand from China that I’m not sure we will see. I’m short here and certainly not feeling that good about it. I just continue to lean on this chart and keep telling myself that when supply arrives, selling should happen from speculators on both short and long side, along with producers. That said, were probably going to cover the gap at 73 in Dec 17 so there may be more pain ahead. It’s hard to sell into a market when you are already short, but I would encourage it in this scenario.
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