Good morning friends!
Corn 347’2 +1’0
Soybeans 1008’0 +8’4
Chi Wheat 410’6 +’6
KC Wheat 411’2 +1’2
Cotton 68.57 +.12
It’s election day in the US. By tonight, we should know who the next president will be but I would be ready for contention and chaos as that has been the theme of the process this year. Expect a lot of action in the US dollar as early poll results are released. Grain traders need to look through the fog of what will happen over the next 15 hours to the USDA report, released tomorrow morning at 11 am central.
USDA crop progress reported that 93% of the soybean crop and 86% of the corn crop was harvested through Sunday. US winter wheat crop ratings held steady at 58% GD/EX, which is above the 5 year average, plantings are 91% complete for the winter wheat. Nothing really of note regarding US wheat, export offers are steady to higher globally and the areas out west are dry.
Soybeans were up in the overnight again on the back of higher Malaysian palm oil prices. The WASDE could provide some negative data but the longer term seasonals are all strong through the end of the year, so the funds will probably be there to buy any breaks. I remain bearish the new crop 2017 contracts but I wouldn’t rule out another test of 10.00. Soybeans remain torn between huge US production and massive world (Chinese) demand.
South American Crop Consultant Dr. Michael Cordonnier hiked his 2016-17 corn crop estimate for Brazil by 3 MMT to 86 MMT, noting a good start to the growing season and higher safrinha corn acreage on the back of better planting conditions.. He left his Argentine corn and soybean crop pegs at 35 MMT and 58 MMT, respectively, and noted a neutral bias toward both crops going forward. But he says flooding is again threatening crop potential in some regions. Too wet could be a story to follow out of Argentina.
Cotton harvest in Texas is moving along but it remains behind historical average. Texas, the largest producing state is at 39% harvested vs 51% average and 49% last year. This should be supportive in the short run. Cotton prices stand to be most sensitive to the USDA tomorrow but I expect little change. . The lower close from yesterday was negative when you look at the macro picture higher. For tomorrow, I expect cotton production to come in above 16 million bushels and ending stocks to come in near 4.4 million bales. The weather has been solid since the last report. Cotton remains over bought on the spec side, but there is room for the funds to add if they would go back to the historical highs. Seasonally, we tend to see cotton bottom the first few weeks of November. If the spec position were not so large, I would think about taking hedges off on breaks to 66, but I plan on holding into the new year to see how the crop turns out.
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