Good morning friends!
Corn 349’6 +’6
Soybeans 993’6 +’4
Chi Wheat 415’0 +1’4
KC Wheat 415’6 +1’2
Cotton 68.60 +.40
Overnight rice action was really slow amidst more selling in the crude oil markets. December CL made a new low for the move in the overnight breaking 46 dollars. The FOMC announcement will come at 1:15 today but no one I follow expects any changes to rates in this meeting.
Cotton has bounced off the recent test of 68. The carry in the market points toward some certainty about the availability of supplies by December delivery. Rain is forecast for the cotton areas of WC Texas. Last week when the weather reports were not as friendly, the carry went to an inversion. Cotton is going to be a wild ride the next month, I would look to roll December puts into March if you are still harvesting cotton through Dec delivery. Otherwise make the sale and lift the position.
I expect the grain markets to track crude to a certain extent, especially corn and beans.The corn markets have some exposure to the Mexican Peso (chart below) which has been getting pounded of late since the Clinton victory has become less certain. Soybeans have a built a hefty long position in the back of the curve as demand has been outstripping expectations. Because of that soybeans are very susceptible to a pullback like we are seeing in Crude. Informa will be out later this week with their crop estimates, but the point for the market is that most traders expect another bump in the US soybean yield in the November report next Wednesday.
If you have been watching the baseball the last few days you will notice the warm temps across much of the northern Midwest.
A few showers are falling across the NC Midwest, but none of the totals are expected to exceed .I expect we will see more problems pop up in the US drought monitor in coming weeks as soil moisture across the Southern plains will continue to decline, this could stretch from Tennessee all the way to Western Kansas. The South American weather forecast is looking better with rains forecasted for the drier parts of north Brazil and dry weather for Argentina where the heavy rains hit last week.
US wheat and corn is the most competitive in the world and China is buying beans non stop. I think there is downside in the trade but I wouldn’t be selling into the floor. There are fantastic buying opportunities out there if July corn would make a push to where Dec has been currently trading. Its dry in South America, at some point that will show itself especially considering Brazil is tapped out on the export offers.
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