Good morning friends!
Corn 342’4 +1’0
Soybeans 994’0 +4’4
Chi Wheat 399’4
KC Wheat 407’4 -‘4
Cotton 70.75 +.27 (March)
CBOT markets were quiet in the overnight amidst another push above the 100.00 price point on the dollar index. Crude oil has backed off as treasury yields rise. For today at least, prices appear to be back in the correlation found after the Trump win. I hesitate to give the USD index too much of a follow here as I see the index as flawed. For folks like me who analyze global export markets, it is better us of analysis to follow the pairs themselves. The Brazilian real has fallen to 3.45 vs 1 USD was almost to (3:1 pre-election, 4:1 before Rouseff impeachment), the Russian Ruble at 65.4:1 and the Chinese Yuan at 3.88:1. The Yuan is at an 8 year low against the USD which helps prices for US products going there (copper, cotton, soybeans) while the stronger Real has more ramifications for corn and to a certain extent soybeans. Right now Brazil does not have much to bring to the export markets in either market so we could see this currency weakness ignored for now.
Cotton futures are up slightly as there are some concerns coming out about the Chinese cotton crop. Chinese cotton futures were up 1% in the overnight. The Trump victory has put some ideas in the market that incomes could be going up here in the US, which also supports. Supply should not be a problem but the International Cotton Advisory Committee lowered their world ending stocks from 17.78 MMT from 18.10 MMT last month and 19.14 last year. While this is all baked in the cake by now, the bullish seasonal that takes place between now and Christmas has me wanting to roll hedges out on the curve to better handle short term price spikes. Producers should have orders in to sell price spikes into the mid 70’s, with hedging orders in for more Dec 17 sales at 73.00.
The Central US weather forecast offers a cooler slant this AM with better moisture chances for the Plains and the Midwest next week. Both Euro and NAM are in agreement that several storm systems look to raise rainfall potential into the closing days of November and a potential shift of temps into December.Its not clear yet if the parched wheat areas of the SE and Kansas will get much. The South American weather forecast is decent with showers to continue across N and C Brazil while S Brazil and Argentina enjoy dry weather to speed summer row crop planting amid adequate to surplus soil moisture.
Today we get US crude and ethanol inventories after the US PPI report at 7:30. Tomorrow we see US exports for the week before Friday’s COF report. I remain bearish soybeans (selling call spreads), while bullish corn and wheat after the Dec delivery period exhausts itself.
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