Ag Market Update - July 20, 2015

 

by Ron Lee

 

Highway 118 West, PO Box 171

Bronwood, GA 39826

Work:229.995.2616

Mobile:229.881.3903

ronlee@mccleskeycotton.com

 

Agricultural Settlements

Commodity                 High                 Low                  Close               Change            YTD     

 

Dec 15 Cotton          .6542              .6420               .6467             - .0055           + .0025

Dec 16 Cotton          .6422              .6390               .6445            - .0019            - .0133

Dec 17 Cotton                                                         .6512            - .0019

Sep 15 Corn             4.1850            4.0450            4.0575            - .1450           - .1700

Sep 16 Corn             4.2500            4.1650            4.1725           - .0975           - .1075

Nov 15 Soy             10.0450           9.9000            10.0075          - .0600           - .0475

July 16 Wheat          5.6950            5.5575            5.5725           - .1900            - .3975

Today's Market Report
Honestly, I was watching the markets with only a casual glance today as the British Open golf tournament spilled into Monday guaranteeing that I would be even more worthless around the office than normal as I was hoping to watch Jordan Spieth wrangle the 3rd leg of the elusive Grand Slam.  And although he ultimately came up an inch or so from the eventual playoff, the tournament was thrilling with good guy Zach Johnson coming out on top while the agricultural markets sputtered to lower closes across the board in the background.  Since our last update, cotton prices have continued to go nowhere fast, but today pressed the lower side of the range and settled 55 points lower at .6467 as bearish fundamental concerns continue to slightly outnumber the bullish ones.  While I can't say for certain and without fear of being wrong, the grain markets certainly give the appearance that the recent bullish run may have already come to an end.  With weather improving across the Midwest, corn prices dropped some 15 cents across the board today, while wheat prices were hammered by a nearly 20 cent drop.  Soybeans hung in the toughest, but still dropped 6-8 cents by the end of the day. In the just-released crop condition report, we saw the corn condition remain at 69% good to excellent although 2% of the crop shifted from the good to excellent category.  Soybeans and cotton were basically unchanged from last week although cotton's excellent category bumped up 1%.  With the exception of a few scattered showers, the Midwestern forecast looks pretty good and void of extremely high temperatures as the crop heads toward the peak pollination period. While we might have missed the boat some, and I always admit we will never price the high of an given market, we will price at least a portion of our 2016 corn crop tomorrow should we get back above 4.20 basis September 2016 futures. Outside markets are very quiet to start the work week, although we will mention that crude oil has slipped back below $50.00/barrel.
Inside the Cotton Market
 Just a brief update on the cotton market as there is very little to report aside from what we've been mentioning in this space for weeks that are now growing into months.  Early on, the cotton market tried to stubbornly stay above water, even as the grain markets were getting pummeled pretty good.  However, by mid session, the worm had turned and December was trading at levels we haven't seen in nearly a month.  We still think there are some weak spec longs that should let go of the rope and allow the December contract to trade down in the .6300 to .6400 area in the coming days.  The recently released Crop Condition report will not give the bulls much ammo as the US crop continues to be the best in many years overall and the weather forecast for the next week looks promising with heat units building in West Texas and widely scattered showers hitting the Southeast. For now, we don't see the market making another leg down below .6300 just yet because as mentioned before, the potentially good US crop is a long way from being in the barn just yet.  There are some reputable voices coming out of Texas that indicate the crop out might not have enough time to reach its full potential and ideas like that and the up and down Indian monsoons should keep some support under the market for now.  That said, I still don't believe that this market has very much upside, especially if the specs throw up their hands and cover their collective long position.  All in all, just another day of a whole lot of nothing.  Those that make tremendous yields and have tremendous quality will probably end up having a decent season despite this tough, boring futures market.  Those that don't will probably have to get pretty creative.