Good morning friends!
Corn 340’0 +1’4
Soybeans 990’4 +4’6
Chi Wheat 399’6 +2’6
KC Wheat 405’0 +1’4
Cotton (H17) 70.32 -1.38
Markets are all slightly higher in the overnight, except for cotton which is getting pounded after a disappointing export number. It feels like the market is starting to settle in from the election last week, I look for the trade to stay complacent through the week as short term certainty sets in. SAM producers are watching their currencies get weaker vs the USD, which gives them more competitive offers vs the US at the ports. The US is still cheaper in corn and soy so expect continued business here, especially on the short term export markets. Longer term we should start to see commitments head to South America into winter.
Cotton had the highest close since late September yesterday and is higher again this morning. The export numbers being weak combined with the massively long spec has me thinking we could wash out back to the 67-68 cent area. Short term speculators should look to sell the price gap in March cotton near 73.50. Hedgers need to be ready to sell the gap near 73 in Dec 17. Call me if you have any questions on how to play it.
The US dollar (USD) is slightly weaker this AM with the Brazilian real trading at 3.40, the Russian ruble at 64.5 and the Chinese yuan at 6.87 to the USD. The US dollar index is holding at 100.10 with the euro positive this morning. A weekly settlement above 100.35 would bring the USD index to 13 year highs and produce buy signals on the charts for the algos. I think the market probably prices in the rate hike before it happens, a breakout could be supported by fundamentals.
There is no problem to report in SAM due to weather at this point.
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