Good morning friends
Corn (H17) 357’2 +’6
Soybeans (F17) 1032’2 +3’2
Chi Wheat (H17) 408’0 -1’2
KC Wheat (H17) 411’0 -1’6
Cotton (H17) 71.22 -.45
CBOT markets were very slow last night while cotton markets opened slightly lower and remain so into the 7 am hour. Cotton and beans had impressive days yesterday given the amount of pressure the USD has been putting on markets of late. Cotton exports were decent but the pace of US exports lags the averages just slightly. USDA doesn’t have the cards to raise demand projections in the next USDA report, which should keep a lid on things in the short run given the massive amount of length from the spec side. Cash remains solid with gins on the buy side, but I remain skeptical of prices above 70 cents for the long run. 69 cents remains a solid floor for Dec 17 cotton but in my opinion a break lower is only a matter of time in that market.
Equity options and cotton options expire this morning, they will be cash settled in equities.
Informa acreage and production estimates yesterday:
US 2016 production
Corn crop near 15,275 mil bu vs USDA est of 15,226 (yields near 176)
Soybean crop near 4,381 mil bu vs USDA est of 4,361 (yields near 52.6)
This sounds about right, although I would love to see a state by state breakdown.
US 2017 corn acres near 90,151 mil vs 94,310 mil (2016) -4,159 mil
US 2017 winter wheat acres near 33,213 vs 36,137 (2016) -2,924
US 2017 soybean acres near 88,892 vs 83,648 (2016) +5,244
US 2017 cotton acres near 10,470 vs 9,950 (2016) 520
I expect cotton acres to be higher than this but its pretty close. Winter wheat acreage is about right, while i question the corn/bean numbers. This is where many had it last year but the producers chose to chase corn. Given yields were so good last year in corn, I wonder if the producer feels the same way this year. 90 million corn acres is bullish, especially with yield problems but I just can’t imagine the USDA agrees.
Informa est US 2017 corn crop near 14,10 billion bu est.yield 170.4
Informa est US 2017 wheat crop near 1,904 est yield 46.9
Informa est US 2017 soybean crop near 4,166 billlion bu. est yield 47.2
We will see on those yields. The road to those production numbers will have bumps, given the corn and wheat acres and the short fund positions i think producers will see rallies in which to sell into.
The SAM weather forecast is unchanged overnight. Hot/dry weather will remain for another few days, needed showers breaking out across Argentina on Sunday, and pushing northward next week into Southern Brazil. Rain totals are estimated in a range of .25-1.25” with all sorts of rain indicated during the 6-10 day period with totals ranging from .5-2.00”.This could be a crop saver for now. The trade has begun to remove some of the weathe premium put in last week but there is a good chance the trade is disappointed. I remain bullish corn with sales targets near 370 March and bullish wheat through 430 March. Soybeans are a monster right now. Chinese soy crush margins are at 3 year highs and China is expected to be active in new forward purchases as the value of the Chinese yuan continues to sag. South American crops are a long ways from being made and with US export demand still robust, it’s a big crop/big demand marketplace. The acreage numbers will hold new crop down, but think we could see another push into the mid -10’s on front month. Cotton is a sale in the gaps near 73 cents March.
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