Good morning friends!
Corn 337’6 -2’4
Soybeans 979’4 -6’6
Chi Wheat 399’0 -4’0
KC Wheat 406’6 -3’4
Cotton 68.15 -.29
COT reports will be released today, I will have an update on those in the PM wrap. This week will be macro headline driven for the grains, with the biggest short term factors are a stronger dollar, farmer selling into the December delivery and the continued reset of prices from the election. Livestock reports will hit on Friday with Cattle on feed released after the close. The macro reporting will be heavy ahead of a holiday week next week. ECB chair Draghi speaks this morning ahead of a bevy of reports, raging from CPI,PPI and US unemployment claims. The trade is trying to figure out a changing interest rate story. The fed meeting a month from now looms large.
The week has started out very negative, with soy futures quickly coming under selling pressure as Chinese soy meal futures fell to sharp losses as margin requirements were raised on Chinese exchanges. Soybean and other edible oils are drastically lower, leading the sell off in the grains. Corn and wheat have followed the liquidation of recent longs that are now underwater post USDA and election. December Chi wheat has fallen back below 400 with December corn appearing likely to retest harvest lows.I have been telling you for weeks to buy the break into the delivery period, that time has arrived. I would advise to begin building a reownership/upside insurance position on corn and wheat ahead of the growing season next year on this break into December.
Chinese soybean futures are close to limit down this morning. Dalian corn futures are mixed. The election has created some nasty price action to the downside in the Chinese Yuan. The repercussion should be higher prices, but in the short run Chinese regulators are doing all they can to squash speculation by raising Dalian margins and trading fees. The news caused Dalian soy futures to decline late Friday, a trend that continued into the new week. January Malaysian palmoil futures lost 122 ringgits to close at $2,852 RM/MT, the largest single day loss in 4 months. . A seasonal high was expected in late November or early December, but it may have come early with Chinese regulators clamping down on commodity speculation. IN a way, its the opposite of what is happening in the US with new leadership at the helm.
The US dollar continues to rally as US interest rates are going back to where they were at the beginning of the year. My sources tell me almost $1 Trillion of gains in the US interest rate market has been wiped out as investors exit. The US dollar is now priced at its best levels in a year.
The Central US weather forecast features above normal temperatures for the next 2 weeks which has some analysts arguing for reduced 1st quarter US corn feed consumption rates. No significant cold temps are in sight on the US horizon but it is really dry out west and in the US Southeast. South American weather looks to be pleasant as nice mixture of rain across N and C Brazil while needed drying helps speed planting across S Brazil and throughout Argentina for the next 2 weeks. No extreme problems appear to be in the cards.
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