Ag Market Update - March 17, 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     

 

May 15 Cotton          .6087              .6019              .6021              - .0028           - .0086

Dec 15 Cotton          .6283              .6221              .6225              - .0031           - .0217

Dec 16 Cotton                                                        .6235              - .0037           - .0343

Dec 17 Cotton                                                        .6396              - .0037

Sep 15 Corn              3.9550           3.8575           3.8675            - .0800            - .3600

Nov 15 Soy               9.5475           9.3950           9.4000             - .1150            - .6550

July 15 Wheat           5.2100           5.0625           5.0675             - .0950            - .9075

 

Cotton LDP Payment - 4.95 cents

Today's Market Report
Filing this report only because I haven't done one since last Thursday.  If I had my drothers, I'd skip because there is very little to discuss in our markets and what there is to discuss nobody wants to hear it.  Cotton prices, after a brief move higher late last week, have resumed their lower push with prices falling to a fractional new low for the move today with May closing at .6021, down 28 points.  December cotton lost 31 points, settling at .6225.  For the record, cotton prices have finished lower 13 out of the last 14 sessions.  That said, cotton's performance looked pretty good when you compare it to corn, soybeans or wheat today.  The grain profile was lower all session long, and the closing prices for each commodity were near the lows of the day.  Corn lost 7-8 cents, Soybeans 11-15, and Wheat dropped 7-10 cents.  As we approach prime time planting season, it's pretty obvious that none of our major row crops are clamoring for additional acres.  In fact, I hear several reports of farmers in other major growing areas switching out pretty large acreage into crops like grain sorgham and milo.  There was an interesting article on Reuters today noting that many Midwestern corn growers are planting to cut back on their fertilizer rates this coming year as prices for anhydrous ammonia simply has not fallen anywhere near the level of  commodity prices despite their chief ingredient being half price of one year ago.   The article can be seen at http://uk.reuters.com/article/2015/03/17/usa-agriculture-fertilizers-idUKL2N0WI29O20150317.  As a farmer, it has to be tough to look at the board these days and see input items, aside from diesel fuel (and it isn't dropping like it should) not moving lower.  I know the seed companies would never agree to it, but for a sunk cost like a technology fee, I would say that the first company to float that fee along side the applicable commodity futures price would attract a pretty big following from the farming community. Unfortunately, all of these input companies seem to know exactly what the market will bear.  But off my soapbox... For the first time in a while, we don't have the dollar to blame today for the lower prices as the dollar finished fractionally lower as well.  Most everything was down as well today with the stock markets, crude oil, and even most metals closing lower.  Just a poor performance day all the way around. 
Inside the Cotton Market
Despite the lower close today, it could be inferred that cotton performed better than most anything else on the board today.  While the close was a fractionally lower one, it could give those that believe in double bottoms something to chew on, I would surmise.  In addition, the market was higher for the entire overnight session which indicates at least some overseas buying is happening at these lower levels.  While I am moving to more of a bearish longer term feeling for cotton, I still can't get on board with getting short current crop at .6000 when we basically are out of certificated stock and certainly running short on premium high grade cotton left in farmer control.  The next big report day will be two weeks from today when the USDA gives its annual Prospective Plantings report.  For cotton, I can't see how this will be much of a market-maker as virtually everyone sees cotton acreage in the US somewhere between 9.2 and 9.7 million acres. Between now and then, the market will continue to watch the dollar and its actions over the next couple of weeks along with the weekly export report.  I would assume that we have seen the bulk of the cancellations already, so I think the export report will provide the market friendly news between now and the end of the month.  Unfortunately, any movement in the market to the upside will likely be capped by the all important 100 and 200 day moving averages and the more we trade sideways to lower, the lower those averages go.  To that effect, where we once saw .6700 as an upside target, it now looks like .6500 would be that guess.  After that and once we turn our focus to new crop prices, it all becomes about acres, planting progress, and the weather as you all know.