Good afternoon friends
Corn (H17) 354’2 -3’6
Soybeans (F17) 1025’4 -3’6
Chi Wheat (H17) 408’6 +7’6
KC Wheat (H17) 405’0 +5’0
Cotton (H17) 71.44 +.39
Position squaring was the name of the game today as the markets that have performed over recent weeks saw weakness, while the dregs of the commodity space, wheat, performed well. Profit taking was the biggest impact of the day ahead of the USDA report tomorrow at 11 AM.
CONAB (Brazil) released its latest crop guesses for Brazil today to little surprise. The soybean crop estimates remain north of 102 MMT while the corn projections were held steady near 83 MMT. 83% is about 20% higher than last year, but keep in mind Brazilian corn had a pathetic end to the growing season. The weather story out of Argentina appears to have run its course for now, but its still really early. The forecasters I believe in are thinking we will see weather problems (lack of moisture) as we get into early 2017. I remain a buyer of corn on breaks and a seller of soybeans on rallies. The funds remain long soybeans vs everything else, I would be ready for those spreads to narrow as the end of Q4 approaches.
The story out of India today was bullish wheat, as the Government there lifted import taxes on wheat. Details about how much wheat India will import is sketchy, but the act of this tax relief tells the market there are problems. India and the rest of South Central Asia remain very dry, which could cause ag markets to rally. The US does little biz with India but a world carryout cut in any of these markets should help our row crop prices.
The news out of India makes me nervous for cotton as well, but given the historically long fund position I would remain short side hedged, especially in Dec 17. I look to hedge more in the 73 cent range. Cotton bullish seasonals remain on the books through Christmas, but I do look for funds to cover profitable positions as we get into the end of Q4. Cotton falls into that category.
I’ll be back tomorrow with the podcast in the morning. I was at the Van Trump “Think Tank” all week, I look forward to reporting on that.
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