Good afternoon friends!
Corn 356’2 +3’0
Soybeans 1023’2 +2’4
Chi Wheat 415’2 +3’6
KC Wheat 418’4 +’1’4
Cotton 69.34 +.08
Markets traded in a tight range after making a push early in the session. The rally in beans has changed dynamics somewhat in recent days, which has me wondering if a trend change is coming. In the early stages of this rally, soybean oil led and meal followed. We have seen meal now take over as oil sells off. From what I have read, we are not seeing shortages of soy meal anywhere. Oil is what is in short supply, a sell off in oil and a rally in meal tells me that folks are covering positions.
US weekly soybean and wheat export sales through the week ending October 20th were a bit higher than expected, with corn in line with trade estimates. Bean sales through last Thursday totaled a healthy 75 Mil Bu, up 2 Mil on the previous week. Cumulative bean sales are up 24% on last year, just a few million bushels of the record of 1,249 Mil posted in 2014. Corn sales totaled 31 Mil Bu, down 8 Mil from the prior week; wheat sales totaled 24 Mil Bu, up 4 Mil. Corn sales to date are up 85% from last year; wheat sales remain up 26% from a year ago.
There is a debate online about how much damage the rains in Argentina have changed carryouts longer term. It’s still really early to determine, but I imagine the spec longs have added 50,000 contracts on this move alone. That leaves tremendous amount of covering that would occur if shorts come in or longs exit. Throw in a record US yield and I think rallies have a hard time surviving above 10.00 X17.
Cotton saw some decent export numbers this morning, which will support price at this juncture. Technically the charts look poised for a bounce. Again, I am targeting Dec 17 at 73 cents for next round of hedges on next year’s crop.
On a side note, December OATS are up 7% today. I have little understanding of the oat market, but some say “oats knows”. I don’t know what they know, but I imagine a move in oats is a welcome sight for those in the wheat and corn trade. Any increases in feed substitutes should help.
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