Ag Market Update - November 11, 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     

 

Mar 16 Cotton          .6262              .6192               .6231             + .0032          - .0314

Dec 16 Cotton          .6352              .6316               .6325             + .0008          - .0253

Dec 17 Cotton                                                         .6337             unchanged    

Dec 15 Corn             3.6350            3.5950            3.6225            + .0325         - .5875

Sep 16 Corn             3.8525            3.8300            3.8425            + .0150         - .4375

Jan 16 Soy               8.6150            8.5425            8.5975            + .0425         - 1.5000

Nov 16 Soy              8.7525            8.6700            8.7325             + .0700        - 1.1875

July 16 Wheat          5.0575            4.9700            5.0300            + .0150         - .9400

 

Cotton LDP - 4.84 cents  (estimated 5.46 cents next week)

Today's Market Report
 First of all, a sincere thanks and a Happy Veterans Day to those of you that have served our great county over the years.  For those that are my age or may be even a tad older and certainly those younger than me, it is pretty easy for us to take your service for granted, living largely in peaceful times during our lifetime.  Veterans Day is one holiday that needs to grow in importance each and every year so that we will indeed, never forget.  As for our markets, today was a typical "No News Wednesday", even on the heels of a monthly USDA Supply/Demand report, trading was largely lackadaisical  in nature.  Cotton prices were once again dominated by spreading action as those with no physical skin in the game continue to wind out of their December positions and into the more widely traded March contract.  March cotton gained 32 points today, settling at .6231, while distant month contracts were higher by smaller amounts.  Yesterday's USDA numbers for cotton were largely unchanged and the reaction to report has certainly been muted.  Grains were a tad higher today after a largely bearish report for them yesterday.  These values for corn, soybeans, and wheat were all lower on Tuesday after the news.  An argument can be made for lower prices after the USDA raised both corn and soybean yield and production.  Soybeans production is now at a record 3.98 billion bushels.  A huge increase in world carryout for corn due to low feed usage among other things certainly doesn't lend much support to the corn market.  I would still lean on the idea that these markets are range-bound, but at least in the short term, the grain markets will tend to probably feel a little heavy.  Both the stock markets and the US dollar are moderately lower today, along with both gold and crude oil.  The cattle roller coaster is once again climbing a hill, up the three cent limit today, after a couple days of limit down moves.
Inside the Cotton Market
On cue from our Monday's "throwing at a dart board" projection, we ended up seeing largely nothing of consequence for the domestic numbers in yesterday's USDA report.  We saw Texas production edge up slightly (larger increases to come) and Carolina production edge down (larger cuts to come) so that our production number basically rolled over from last month.  Again, the USDA continues to stubbornly be very optimistic about export demand for US bales, keeping the export projection at 10.2 million bales, even though current shipments plus outstanding sales only adds up to 3.7 million bales and merchandisers claim that business is putrid at best.  Nevertheless, it would appear that we will now simply wait until the December report in four weeks to see if the USDA will act at all during this calendar year on one or either of these components of the US ending stocks number that is so crucial to how our market trades going forward.  For now, its more of the same as the market trades, pretty much aimlessly, between .6100 and .6400, and probably more succinctly between .6200 and .6300.  If the market would trade down toward .6000 or into the upper 50s, we would like see some sort of uptick in export business.  Any move above .6400, would certainly cut that spigot off.  The problem lies within that range in that the seller still doesn't have a firm idea of how many bales he has to sell and with this abnormal harvest season, he certainly doesn't have a good grasp of what type of quality he has to sell.  For now, I see no reason why we would not continue to trade this tired range, at least for another month.  For those of you with cotton ready to sell, we should see a 50-75 points improvement in the LDP rate, beginning on Friday.  If continue to trade this range, you might want to consider having your cotton ready to sell as I believe a 550 point LDP is probably near the top end of the range as far as LDP payments go.  The sun is finally shining across Southwest Georgia, for only the 2nd or 3rd day, in the last 20 days.  It is amazing how much better a defoliated cotton field looks after a few hours of sunshine.  Hopefully, we will be able to get back into these fields and pick some cotton by Friday, but I am afraid we will see a reduction, at least in the color grade.  However, with more rain expected next week, we simply can't afford to wait on the cotton any longer.