Good afternoon friends
Corn (H17) 355’0 +1’4
Soybeans (F17) 1031’6 +4’6
Chi Wheat (H17) 408’2 unch
KC Wheat (H17) 404’6 -6
Cotton (H17) 71.24 -.18
Corn and wheat markets were quiet in the overnight trading within 1% of yesterday’s close. Soybeans had a little more volatility but an early evening selloff has been erased as beans now trade up a penny or so. Cotton weakness continues, albeit less than some of the shorts would like. USDA WASDE is released at 11 AM. The December report is normally not a big deal, but I will be keen to see how the USDA looks at our markets from the demand side creating a slightly smaller carryout (corn and beans) while in cotton Ill be interested to see if production numbers change at all. Stocks to use in cotton remains elevated compared to the 10 year average, I look for that to go higher.
Argentine and South Brazil weather forecast has been rather static in maintaining a dry weather profile for the next 10 days with 100 degree temperatures in the cards. The selloff in beans and corn yesterday had more to do with perverted moisture than changes to the forecast. The 12-15 day forecast of the GFS model keeps trying to break out rain across Argentina and S Brazil, but that moisture does not get pulled forward in the forecast. The extended EU model is far less enthused by rain chances keeping them mostly across N Argentina and S Brazil. Rainfall across the remainder of Brazil looks to be abundant with seasonal temperatures.
Chinese soy products and Malaysian palm oil are both trading lower, the palm oil pushed to a 4 year high on Tuesday but like bean oil have come off in recent days. Following the December WASDE report, its South American weather that will key to CBOT values going forward. India will remain on my radar though. In cotton, I look for selling (maybe heavy) if the USDA report doesn’t support the specs at these levels. March cotton has gone under may, so the cash markets are not flashing problems. Watch how March trades sub 70 cents.
TRADE IDEA: Buy bean oil calls ahead of the USDA. I discuss this in the audio below.
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