Ag Market Update - March 30, 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            .6418               .6237               .6252               - .0103           + .0145

Dec 15 Cotton            .6485               .6355                .6378              - .0090            - .0064

Dec 16 Cotton                                                           .6261              - .0067            - .0317

Dec 17 Cotton                                                           .6422              - .0067

Sept 15 Corn             4.1025              4.0550              4.1000             + .0350           - .1275

Nov 15 Soy               9.5575              9.4600              9.4925             + .0050           - .5625

July 15 Wheat           5.3400              5.1275              5.3325             + .2125           - .6425

 

Cotton LDP Payment - 3.53 cents

Today's Market Report
It was a pretty mundane, but slightly positive day for cotton until the last 30 minutes of the session when prices collapsed for no apparent reason.  After making a slightly higher high early on, the May contract fell hard late, closing with losses of 103 points, and settling at .6252.  As I've mentioned time and again, I'm no technical analyst but today's chart action would certainly qualify as an "outside down" day as the last 30 minutes basically wiped out all of last week's gains. December was an equal opportunity loser, as the contract nearly touched .6500 early on, only to finish at .6378, down 90 ticks. Grains were mostly higher, wheat more so than the others on Prospective Plantings Eve.  Wheat prices continued their yo-yo manner, gaining more than 20 cents today after a nearly 45 cent drop last week; wheat is volatile this time of year if nothing else. Corn and soybeans spent most of the day mixed, but late buying put both slightly in the positive before the close, corn by 3 cents and soybeans by a penny.  I would certainly expect those two markets and perhaps even cotton react in a volatile nature to tomorrow's Plantings number.  All of the "experts" are pretty much in a general consensus that we will see corn and cotton acres reduced, while soybean acres expand.  Analysts are expecting roughly 89 million acres of corn with about 86 million acres of soybeans to be included on tomorrow's report, with cotton acreage coming in at 9.2 - 9.7 million acres.  Personally, I think the soybean number will be higher and the corn number lower, while the National Cotton Council's 9.4 cotton number looks about right to me. And yes, we are certainly looking for more peanut acreage here in the South.   In outside markets, we saw another big jump in the value of the dollar, which had a negative effect on most other commodities.  The stock market, however, was much higher today on news of a couple of corporate mergers and the idea that central banks around the world will continue to promote and expand growth (ie print more money). 
Inside the Cotton Market
 This is one of those days when I have to say "I really don't have any idea why the market performed in the way that it did".  Volume was decent if not spectacular today as I'm sure there was a fair amount of positioning ahead of tomorrow's report.  After giving the bulls the advantage after a solid performance last week, it would seem whatever momentum they had is now gone, at least on a technical basis.  As for the report tomorrow, as I mentioned earlier, I think we will see plantings come in somewhere pretty close to the 9.4 number than we saw from the National Cotton Council earlier this winter.  If I had to stray from that projection, I believe I would say acres would come in slightly higher, as cotton prices have marginally improved over the last couple of months, while corn and soybean prices are slightly lower.  Here in Georgia, after planting 1.38 million acres of cotton last year, I think we are probably looking at 1.25 to 1.26 million acres this year as we see a large shift to peanuts due to lower corn and cotton prices and an assumed beneficial government program for peanuts.  Peanut acreage in Georgia will likely be north of 700,000 acres and possibly as high as 750,000.  I would expect corn acreage in the state to be lower, while we could see an uptick in soybean acreage.  Although our focus is on cotton, when we talk about 9 million acres of cotton and less than 2 million acres of peanuts, we see how small we really are when you see mention of nearly 180 million acres combined of corn and soybeans in the United States.  Regardless of what kind of reaction we see in the markets tomorrow, a "prospective" plantings number is just that: just noise, so to speak.  The real market mover will ultimately be the actual number of planted acres and the weather that follows.  I expect the corn market to have the most opportunity to see a significant jump in price tomorrow, but it would be one that I was ready to sell, given the opportunity.  As for cotton, I really have no idea what to expect.  The same material that I typed last week still holds true.  At this point in time, we really can't afford to go much lower as we would once again be selling cotton that we really don't have.  On the flip side, a move higher would run into a now down-sloping 200 day moving average and the likelihood of Indian selling.  As for weather, West Texas looks to be precipitation-free for the next 10-14 days with above average temperatures, while the Southeast will also start to warm with scattered showers possible.  While we are starting to look at the weather forecasts more and more, we are still a good two weeks away from much cottonseed hitting the planters.  As for tomorrow, I would expect cotton's acreage report to be a non-event, in and of itself.  However, judging by my total surprise to today's price action, I will probably be dead wrong in that assessment once again.