Good morning friends
Corn (H17) 364’2 -1’2
Soybeans (H17) 1064’6 -4’4
Chi Wheat (H17) 432’6 -‘6
KC Wheat (H17) 450’6 -1’2
Cotton (H17) 72.21 +.10
Overnight CBOT and cotton trading has been quiet with early soybean softness from the open last night (Nov beans down 8 on the open) paired back to unch. Today is an important day on the charts in corn as a close above yesterday’s high should encourage a push into the low 370’s. Yesterday, Nov soybeans traded to a 6 month high, wheat did as well. The flooding story in Argentina is not going away, even as the rains stop for a while. Cotton looks to be in search of demand after last week’s WASDE left the bulls holding a very heavy bag of long open interest. I look for Dec 17 cotton to make a push into the 60’s as the acreage story picks up.
As I mentioned above, the weather pattern seen in SAM over the last month seems to be coming to an end. A dryout in Argentina and some rain in the drier southern regions should help stop the falling estimates. The question will be asked for a while about how big the crop is there. I do not expect an immediate retreat in prices like we saw in the US last summer. The USDA has weekly crop progress reports that keep the trade better informed than we get out of the southern hemisphere countries. It’s going to a be a while until we get the kind of information that will give the trade certainty yield targets can bet met. Throw in the memories we have from the late problems in Brazil last spring, I think we can feel pretty decent that new crop soybean prices can hang above 10.00 on the board. I know some of you are getting calls from elevators being offered 10.00 cash new crop beans, if that works for you I would take it on 20-30% of your crop. It makes good risk management to cover some costs at profitable levels.
Wheat prices feel like they are topping out in the interim, I wonder how much push is there ahead of the March delivery period. Weather out west seemed to be beneficial for the KC crop, while MInneaopolis wheat was down substantially yesterday. Minny has led this move higher, on the back of acreage and Duram wheat moves. Below is a chart of port prices across the globe. Everything appears to be converging, which should keep prices in more of a sideways channel for now. The bulls need more production (or lack there of) fuel to keep things moving, in my opinion. Russian offers have not chased this market higher.
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