Good morning friends!
Corn 353’2 +3’6
Soybeans 960’0 +4’2
Chi Wheat 421’6 +5’6
KC Wheat 419’4 +5′
Cotton 69.59 +.27
Powerful upside price action in the feed markets continued in the overnight as corn and wheat made another push, December corn finally popping its head above 350 in the December contract. November soybeans are coming along for the ride with smaller gains, Nov has significant resistance in the 970 area. If that gets taken out a run to 10.00 is definitely in the cards.
Corn should trade as wheat trades, hedgers should look at deferred contracts for opportunity where the carry provides. FYI, just because cash doesn’t trade 4.00 futures doesnt mean the July or September contracts wont. If you can afford to hold you corn for a while, the carry on the board could give you some love here.Corn exports were within expectations this morning.
Soybeans, like corn are a yield and harvest story right now. Exports this morning were above expectations as the overseas markets remain supportive. We know the demand is going to be there for a while, but I think we could see supply come up too. Combined with the probability farmers move beans off the combine first, I think the upside is somewhat capped. The funds have room to buy beans, but there are relatively few short sellers who will cover.
News from the overnight was pretty slow before the US export numbers were released. Last year’s French wheat crop was downgraded again, the total production stands around 32% below the year before. All of this price action is happening as we see a record fund short position in Chicago, and wheat’s chart pattern looks a bit more supportive. I look for December wheat to stall around 430 or so. Egypt this AM ignored cheaper US HRW offers, instead buying three cargoes of Russian and Romanian wheat around 180 per MT, for mid-November delivery. Hard Red Wheat was offered to Egypt at $173, but was disqualified on Egypt citing specific milling specs. Whether or not it’s true HRW can’t be used to make Egyptian bread, the tender’s results further confirm the US’s newfound competitive position in the world market. Lower protein this evening is offered out of the Gulf at $180/MT, some $5/MT above Russian but otherwise the world’s cheapest quality milling wheat. Wheat has a some tail wind for the first time in a while. The market remains heavily oversold so wacky price action should be expected. Wheat exports were within expectation.
Cotton looks to be a spectator today amidst the short covering on the CBOT. Cotton lacks a story without further production problems. My contacts in Texas are squirming a bit about quality, but I remain bearish here with the fund story already stretched out in cotton. Sell Dec 17 at 73.00.
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