Good morning friends
Corn (H17) 346’2 -1’0
Soybeans (F17) 1008’2 -1’0
Chi Wheat (H17) 399’4 -1’0
KC Wheat (H17) 409’2 unch
Cotton (H17) 70.34 +.021
Much like the rains falling in Argentina, CBOT markets fall in overnight trading for the 4th evening in a row. Corn, wheat and beans are all lower as additional rain is falling across the crop areas of Argentina with some showers indicated for the drier areas of the HRW area. The specs have no doubt decreased their long position seen last week. Wheat is probably back to a record short level while corn looks to be doing the same.Friday is options expiration day for January grain options (serial options off March for wheat/corn). A close below 4.00 wheat and 3.50 corn will put additional shorts in play. I would be buying this move as the seasonals point toward better days in 2017 for corn. I remain amazed by the one sided of the wheat trade of late. Cotton markets are higher on positive US growth data. Apparently cotton, who’s exports to China sit 41% below last year are rallying on potential increased Chinese demand. Meanwhile specs remain near record long and stocks to use in the high end of the 10 year range.
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USDA export sales for corn were solid, above expectations again. Soybeans exports were good as well, easilly topping expectations. Wheat exports were poor, below expectations. Cotton exports were below last week by 11%. Demand story remains the same across the board.
I expect price action to remain slow today as there is little the bulls can hope for other than a short covering, profit taking rally. Soybeans got little bounce from exports, that may not happen. Look for tests of the 100 day EMA in beans near 980 Jan before the end of the year. Cotton is a market, like the dollar that feels like it just wants to be higher. The close yesterday was awful considering the upside price action, but bulls are shrugging it off this morning. I remain bearish but expect the price gaps to get covered at some point. It is a tough place to be for a hedger, but with profit margins where they are relative to the rest of the row crops, cotton prices need to be protected.
We have a short day tomorrow and markets are closed on Friday. So far the “bulls get Thanksgiving, bears get Christmas” trade is holding true at the CBOT.
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