Good afternoon friends!
Corn (H17) 367’2 +2’0
Soybeans (H17) 1037’2 +10’2
Chi Wheat (H17) 431’6 +1’4
KC Wheat (H17) 443’6 +3’2
Cotton (H17) 76.32 -.05
CBOT Markets are all higher behind a 1% up move from front month soybeans. Bear spreading has been the theme in cotton as new crop prices trade at the summer highs. This week will be a slower one from a macro data release stand point, but February WASDE will be released on Thursday which should be the focus of all 4 row crops we cover. Chinese markets re-opened today after a week long break with strong gains being noted on the Dalian corn and soybean markets. WASDE this week shouldn’t show any big changes, but in the case of cotton the open interest is at historical levels and going higher. I think there is a really good chance the highs for the year are made sometime before end of the 1st quarter.
I had the fortune of joining the folks over at US Farm Report on Friday for a nice conversation. We touched on cotton, WASDE for corn and soybeans and the risks on wheat right now. Here is a great shot of me trying to figure out which camera to look into….click on the image to watch the entire show.
I think as I was saying this the markets were making highs. The bottom line with cotton is that the emotion of the trade is taking over. I would feel really good about your sales if you made them on Friday. Selling with this kind of hype an optimism from the bulls is hard, but it usually pays off. Remember last year, a lot of you sold corn in the 4.20’s around the 4th of July. That was about 20 cents too early, but in the long run those sales looked great. I expect the same to happen here. If you feel like its too hot for a futures sale, look at the puts. Do something up here, this kind of OI set up warrants it.
China came out with some Ag notes over the weekend. The Chinese mentioned they will work to stabilize hog production, boost demand for dairy products, and find new ways to use China’s massive but decaying grain stocks. This is the first time that a Chinese farm program has actually discussed boosting demand – and not maintaining self sufficiency in grain/food production. There are some guys out there who think China is sitting on a mountain of corn. That may be so, but they have been off the gas with imports since 2012. I imagine quality is a concern.
France estimated its 2017 crop seeding at 2016 levels, 360,000 HA of durum wheat (down 4.6%), and 1.437 Mil HA of rapeseed (down 7.1%). French farmers are one of the only groups of producers that are reducing oilseed acres in favor of grain. EU corn supplies should be a drag on world stocks numbers.
Localized heavy rainfall of 3-5.00” fell in NC Buenos Aires on the weekend which sparked regional flooding,as a result we are seeing beans up today. The rest of the country enjoyed rainfall of .25-1.50”. The forecast calls for heavy rains through the northern third of Brazil for the next 2 weeks with near to below normal totals for Argentina. No extreme heat is foreseen through the period and outside of harvest delays across N Brazil, the general outlook is favorable for South American crops. The USDA will release their February Crop report on Thursday. WASDE should increase their corn ethanol use forecast by 25-50 Mil Bu & potentially raise US corn and soybean export forecasts. The Brazilian soybean crop is also expected to rise to 105 MMTs. ARC looks for a rally effort into the USDA data. If WASDE causes fireworks, its probably in cotton.
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