Good afternoon friends
Corn (H17) 359’4 +6’0
Soybeans (F17) 1037’4 +10’4
Chi Wheat (H17) 416’2 +8’6
KC Wheat (H17) 413’4 +8’6
Cotton (H17) 70.80 -.62
WASDE was uneventful for the CBOT markets, with slight raises in world carryovers being observed. Cotton production was raised slightly, which brought the carryout higher as well. The market saw weak news, but rallied after a few minutes back into the upper part of the trading range for the week in the case of the CBOT markets. Here is the breakdown of the world and US CBOT situation.
Cotton rallied back above 69 cents December 17 after spending some time below the 69 cent level for the first time in a few weeks. Technically, cotton feels like its sitting on the precipice of falling out of bed back toward the 65 cent level given the long fund position and increasing supply picture. I advise producers to continue to sell cash cotton and keep hedges in the Dec 17 contracts. Make note of your sales and look to reown on breaks from fund liquidation. Cotton has a story but it lies in Asia and is probably more of a new crop story than an old crop one. Funds are still really long so I remain bearish, especially given the trend the USDA is now taking with production.
The US corn balance sheet was left nearly untouched from November, while we saw world stocks go up 3 mmt. . In the wheat , no changes were made to US supply or demand forecasts. World stocks crept a little higher on the fantastic growing season seen in Australia. The fact wheat was higher into the close tells me there should be optimism at these price levels. If there was one thing I took away from the Ag Think Tank I was a part of this week, it was the risk to corn and wheat lies to the upside, not the downside. I think the price action this week reflects that.
Soybeans saw little change as well, but the soy oil used for biodiesel was increased by 250 Mil Lbs to 6,200mil pounds. I thought we could have seen a better hike. The USDA left all of the South American production numbers unchanged, they will probably remain that way until Jan at the earliest.The midday weather forecast continues to show limited rainfall for the driest parts of Argentina, this will affect corn and soybeans. The close today in all of these markets is encouraging. Given the open interest of the feed grain markets, I continue to want to play corn and wheat from the long side and cotton and beans from the short side. I will say that EVERYONE at the AgTank was recommending selling soybeans. That scares the heck out of me.
COTTON HAS A RECORD LONG COT POSITION- LOOK TO GET HEDGED
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