Ag Market Update - May 11, 2015


by Ron Lee


Highway 118 West, PO Box 171

Bronwood, GA 39826




Agricultural Settlements

Commodity                 High                 Low                  Close               Change            YTD     


July 15 Cotton          .6631              .6465               .6539             - .0077          + .0339 

Dec 15 Cotton         .6592              .6455               .6528             - .0066          + .0086

Dec 16 Cotton                                                        .6516             - .0047          - .0062

Dec 17 Cotton                                                        .6675             - .0047

Sep 15 Corn            3.7025            3.6425            3.6550            - .0300          - .5725

Nov 15 Soy              9.5700            9.4875            9.4950           - .0250          - .5600

July 15 Wheat         4.8450            4.7625            4.8100            - .0050          - 1.1650

Today's Market Report
Cotton futures continued a recent pattern of trading to start the work week, while it was a generally quiet day for the rest of the commodity complex.  A slightly, stronger dollar generally had negative effects for most commodities, but losses were fairly contained.  Cotton was probably the weakest of the lot, but as we have seen in most every trading session lately, speculative buying on the close kept losses fairly in check.  Once down as much as 150 points, July clawed back late to settle at .6539, down 77 ticks.  December cotton, really weak early on in the day, also rallied to finish at .6528, down 66.  Grains were negative across the board, but losses were miniscule.  Corn futures were down 2-3, soybeans off by 2-3, and wheat down 1-2.   The trepidation around the markets was fairly expected with another USDA monthly Supply/Demand report out tomorrow at noon.  Basically, all of the agricultural commodities remain under pressure to a favorable start of the growing season for corn, soybeans, and cotton.  Any unforeseen bullish change in the numbers tomorrow could jolt these markets higher, one would think.  The People's Republic of China did lower interest rates over the weekend as economic growth continues to stagnant.  This is the third such cut in the last six months, as the government tries to help ease the very debt burden of companies and individuals.  While that is going on, the threat of higher interest rates here in the US continue to keep markets at home rather wary.  Crude oil, after trading up toward 62.50 last week, is back closer to 59.00 in late afternoon trading.
Inside the Cotton Market
Cotton futures were down by more than 100 points when I showed up this morning and when recent lows were taken out, it seemed like we could be in for really ugly session.  But, alas, just like the previous five or six days, heavy buying (or lack of selling) in the last hour of trading kept losses somewhat in check.  Even so, we saw the market close at the lowest level since the huge up-day of April 23rd today.  As I've mentioned in previous updates, the market seems to keep coming back to the 65 cent handle in July and all I can say is that "Cotton is apparently worth about 65 cents !"  The abundant but perhaps excessive rains in West Texas along with perfect planting weather for the Mid-South and Southeast will continue to keep a lid on prices for the December and March contracts for now.  However, just as is always the case here in Southwest Georgia where we are always 10 days from a drought, we have gone from sopping wet to nearly bone dry in just that amount of time.  A general rain would be most welcomed, especially for dry land corn, which is already at a critical juncture.  Tomorrow's USDA report will be interesting on several levels for cotton interests.  First, many are expecting a tick higher in exports, based on recent sales, which would tighten the US ending stocks and seemingly put a bid underneath the July market.  This will also be the first report that takes a shot at the 2015-16 production number for the US crop.  Most observers are looking at a crop of somewhere around 14.0 million versus last year's 16.3 crop, although it is far to early to make a guess other than going on traditional yield and abandonment curves.  I can tell you that I feel very confident that abandonment rates in West Texas will like be far lower than the previous four to five years.  If they continue to get timely rains, which are usually prevalent in El Nino years, we could see a tremendous Texas crop and considering that nearly 60% of the US crop will come from the Lone Star State, we could see a crop much larger than that 14.0 million bales.  Of course, if this comes to pass, it will be very hard for prices to rally.  I still believe that the 67-68 cent level in December will continue to be a very hard nut to crack and growers should look to price a portion of production if prices creep back up to that area.  We should be here tomorrow with an update on the monthly Supply/Demand numbers and a recap of the day's trading to see if these numbers had any big effect on prices.