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.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.