Ag Market Update - March 5, 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           .6407               .6308               .6323               - .0037           - .0216

Dec 15 Cotton           .6525               .6455               .6474                - .0029           - .0032

Dec 16 Cotton           .6425               .6419               .6400                unch              - .0178

Dec 17 Cotton                                                             .6569                unch

Sep 15 Corn               4.0750             4.0300            4.0550              + .0075          - .1725

Nov 15 Soy                 9.7800            9.6425            9.6600              - .0675           - .3950

July 15 Wheat           5.0300             4.8725           4.8775              - .1525            - 1.0975

 

Cotton LDP - 2.52 cents

Today's Market Report
 Weak economic data out of China, surging dollar values, along with a (literally) negative export, sent cotton futures lower for the sixth consecutive session on Thursday.  The news also bled over into other commodities, as most spent the day in negative territory.  May cotton lost 37 points, closing at .6323, while new crop December lost 29 points, and finished at .6474.  Both closes were at the lowest level in some two weeks.  While corn was able to scratch out a fractional gain, both soybeans and wheat were lower, with wheat prices getting especially hammered, falling to fresh contract lows.  Again, the surging dollar and weak exports were named as the chief culprits.  The stock markets were able scratch out a small gain with all eyes on the all-important jobs report, due out in the morning.  That report is reported to have a big influence on the timing of a Federal Reserve interest rate increase.
Inside the Cotton Market
 The market continue to sink under its own weight today as the aforementioned reasons gave buyers little reason to up there stake in cotton today.  Exports at -62,000 bales were certainly ugly to the eye, but somewhat expected in trade circles. Perhaps the biggest surprise was that the cancellations came from China, as opposed to the recent reductions in Turkey.  On the bright side, and about the only shining light today, was a marketing-year high in actual shipments at 360,000 bales as the West Coast Port Worker strike is finally coming to a resolution and the pace out of the Eastern ports remains brisk.  News out of China today that has their economic growth rate at only 7%, the lowest level in nearly a quarter-century likely did the cotton market no favors as well.  The market is reaching a level now where it really needs to dig in with both heels if the long specs are to remain in tenuous control.  That said, the market really can't afford to move back toward the .5700 - .5800 area lows and risk running out of US bales.  I would suspect trade buying to show up here and lower to stem the tide of lower prices in the short run. I would expect the 100-day average at .6183 to certainly hold support.  As for new crop prices, we continue to see them basically track old crop prices for all intents and purposes.  As you can see above, despite the recent move lower, December cotton has still performed better than corn or wheat since the beginning of 2015.  How will this translate into acres is anybody's guess.  Most around here seem to still believe that peanuts will be the be-all, end-all in 2015, but I still believe they are far from the silver bullet, especially for the grower with the longer term view on things.  With the rain here today, the cold ground temperatures, and the forecast for rain all next week, we could see a few corn acres shift back toward cotton if this trend continues, although with today's technology and horsepower, it doesn't take a whole lot of time and energy to get a lot of corn in the ground around here.  The cynic in me still believes, with everyone wanting that magical 70 cent cotton, the best plan is to have orders resting a couple cents below there to begin a marketing plan.