Good afternoon friends
Corn (H17) 358’2 +11’6
Soybeans (F17) 1053’0 +15’6
Chi Wheat (H17) 408’0 +3’6
KC Wheat (H17) 408’6 unch
Cotton (H17) 71.08 +.04
Quick note before I get into it, I will be out of the office tomorrow through Thursday morning at the Kevin Van Trump Annual Grain Conference. If you are in the KC area and would like to attend, I think there may be a seat or two left. This is always the best thing I go to all year, but I think this year might be even better than in the past. The show is Wednesday in KC. Learn more HERE.
Also, Turner of Turner’s Take talks about the Italy referendum on his podcast today. Its worth a listen – INSIDE COMMODITY FUTURES
What a day in corn. I had to go back months to this summer before I could find a 3+% up day. The culprit? You guess it, South American weather,specifically Argentina and Southern Brazil. Its way too early to start talking about crop losses, but the combination of low moisture in the soil now and dry/warm forecasts through February are enough to get this massive short spec position moving to the gates like a black Friday sale. Dec 2017 corn is knocking on the door of 390 and March 18 corn is pushing toward 4.00. Carries have stayed firm which tells me nothing has been realized yet, but the threat is here. Keep in mind Brazil has little product to sell to anyone right now, the US is the export market in this hemisphere. If you caught the break into delivery, hold on. Don’t let breaks shake you out. Congrats to those who re-owned the delivery, much like September corn, December corn delivery re-owning worked.
Don’t want to leave beans out of the party. We saw another massive purchase by the Chinese again today, with a tender for old crop beans to the tune of 426 KMT. The sale was a monster and shows how much soymeal is needed within China. Between the bullish seasonal period and the room funds have to add, I think we could run higher in new crop but I remain bearish longer term with acres being the reason. The only thing that would change that is corn prices rallying substantially into the year end, which is in the cards given the fund picture.
The KC-CHI spread going negative KC tells me wheat saw some short covering today but the story in wheat remains negative. ABARE estimated its 2016/17 wheat harvest at a record large 32.6 MMTs or 8.4 MMTs larger than last year. The US faces fierce competition across the globe, that doesn’t appear to be changing as the SAM harvests come to market.
Cotton had a flat day. Same story applies, good seasonals but a lot of up front supply waiting to come to market. Sounds like India remains dry, but without a US problem the funds appear to be topped out and can’t push price much more. SELL THE GAP at 73 on Dec 17.
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