Ag Market Update - November 19, 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           .6335             .6279               .6312             + .0018          - .0233

Dec 16 Cotton           .6425             .6395               .6414             + .0010          - .0164

Dec 17 Cotton                                                         .6363             + .0004          

Dec 15 Corn             3.6550           3.6025             3.6375            + .0200          - .5725

Sep 16 Corn             3.8525           3.8175             3.8450            + .0225          - .4350

Jan 15 Soy               8.6300           8.5250             8.6050            + .0275          - 1.4925

Nov 16 Soy              8.8075           8.7175             8.8000            + .0300          - 1.1200

July 16 Wheat          5.0050           4.9075             4.9800            + .0500          - .9900

 

Cotton LDP - 5.12 cents/lb (Friday through next Thursday)

Today's Market Report
As you can see by the settlements above, it has been a very quiet day in our agricultural commodity markets as harvest season pressure continues to hamper any potential advance in prices for the most part.  This will be a very short update as there is little to report on other than MORE wet weather here in South Georgia as we continue to try and gather cotton and a few remaining peanuts.  Cotton prices continue to try to begrudgingly move higher, but thus far the advances have thus far been very small.  We have closed higher each of the four days this week, but cumulative gains have only been 113 points.  March cotton gained 18 points today, settling at .6312.  2016 crop cotton settled at .6414 in the December contract.  Grains were fractionally higher, trading within very tight ranges.  The corn crop is all but in the barn in the US, checking in at 97% harvested earlier this week.  The soybean harvest isn't all that far behind.  Therefore, with the exception of cotton, which still has 30% of the crop still in the field, most of the 2015 crop is finished in the United States and people, whether they want to or not, will start casting a wary eye toward 2016.  Right now, 2016 simply doesn't look too exciting from a farmer's perspective, to say the least.  Look at the quotes above: as a cotton farmer and ginner, it feels like 2015 has been the worst one in recent memory, mainly from harvest weather, but also from price action or lack thereof.  But look at corn, soybeans, and wheat.  Where cotton prices have fallen 3.69% this year, corn has lost 15.7%, soybeans 17.3%, and wheat 19.8%.  I think this means we will probably see more cotton acres next year; not because cotton prices are good, cotton just isn't as bad as everything else.  Cotton also has an added incentive via the Loan Deficiency Payment and added value from historically high cottonseed prices.  Here in the Southeast, many growers will continue to plan everything around peanuts and the inflated PLC payment associated with that crop, but I do think we found out this year that you can quickly max out on peanuts, both in terms of payment limitations and the ability to gather them in a timely manner.  In addition, it is "farming suicide" to plant peanuts behind peanuts behind peanuts.  We still need to have proper rotation here in the Southeast and I think that means cotton, corn, and peanuts, with some wheat mixed in here and there.  If you add soybeans to that mix, you will need to reduce your peanut acreage for sure.  Just trying to get somewhat of a handle on 2016 on a quiet dreary day in our markets.  There will be plenty of changes between now and when planters roll next Spring, but right now it looks like another year where every penny must be spent wisely and yields must be maximized, just to get by.  It would certainly be nice if we could get some type of price point relief from the seed and chemical manufacturers, but I think the chances of Obama invading Syria are considerably higher than that pipe dream.  And I don't mean to belittle these manufacturers; they are providing us with unbelievable technology on the farm.  We have never seen better cotton varieties, with quality features that rival that Pima or Acala cottons and yields that are closer to a ton to the acre instead of a half ton in some cases.  Still it's hard to stomach planting a seed that costs almost $120/acre when cotton is trading in the 60s. Anyhow, I'm running longer than I intended to, but I see cotton acres increasing moderately, peanut acres down but still producing an oversupply, and grain crops decreasing next season but still needed for rotational purposes in 2016.  I type that thinking that cotton prices could see a moderate increase in the coming weeks and months, which makes absolutely no sense.  However, sometimes these markets simply don't make a lot of sense.  It just feels to me that our market doesn't have much intent on checking out prices that start with a "5", at least not for extended periods.  The LDP will decrease slightly next week; with a large portion of the crop gathered in the last few weeks, we might be need to be ready to jump next week on both market price and the LDP if we get a move toward the .6400 - .6450 level that I think we might see.  Stay tuned and let's all hope for some sunny, breezy weather as we head toward Thanksgiving so we can start to see a potential finish line on a very forgettable 2015. 
Inside the Cotton Market
 Cotton commentary will return next week.  Have a good weekend.