Ag Market Update - September 17, 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     

 

Dec 15 Cotton          .6321              .6230              .6240              - .0031           - .0202

Dec 16 Cotton          .6239              .6190              .6207              - .0008           - .0371

Dec 17 Cotton                                                        .6324              - .0010

Dec 15 Corn             3.8550            3.7925            3.8050            - .0550           - .4050

Sep 16 Corn             4.0175            3.9700            3.9700            - .0475           - .3100

Nov 15 Soy              8.9050            8.8050            8.8425            - .0300            - 1.2125

Nov 16 Soy              8.8700            8.8000            8.8300            - .0125           - 1.0900

July 15 Wheat          5.0575            4.9700            4.9750            - .0725            - .9950

Today's Market Report
If the cotton market had an less of a pulse it honestly would need some type of defibrillator.  Three days and nights within a 100 point range will make a sane person watching it go nuts, but that is just what we have seen over the last three sessions.  Today, December cotton settled at .6240, down 31 points in another round of less that lackluster volume.  And what's worse, I don't see any change on the immediate horizon.  Nevertheless, the big news today surrounded the Federal Reserve and whether or not they would raise interest rates at their 3rd quarterly meeting of the year and of course, they decided not to do so.  Federal reserve rates will remain between 0% and 0.25%, at least until they convene again in December.  The stock markets initially reacted favorably to the news as expected but have since dropped into negative territory since I began typing this update.  The grain market had a negative day today with corn, soybeans, and wheat all off by roughly a nickel per bushel.  Corn and soybeans had continued to trade constructively higher in the last two days in our stead, while wheat just can not seem to get up off the mat under huge supplies and dreadful demand.  It will be interesting to see how the grains finish the week during Friday's session; if they can recoup today's losses, the charts for corn and soybeans will look pretty good, although that is indeed a pretty big "if".  While aside from an early freeze, the growing season for corn and soybeans is all but complete.  It should be noted that on the crop condition rankings going back 25 years, a composite average rating for corn is 254.  The current crop is rated at 274, which would be the 7th best crop in the last 25 years.  The 2014 crop ended up at 287, the 3rd best in that time frame.  For soybeans, the average rating is 247.  The current crop is rated a 261, while last year was the best bean crop in the list at 284.  I say all of this because while this years crop may not be a bin buster nationwide, it is far better than average and coupled with last year's huge crop (a good deal of which is still in storage), some wild price move higher most likely just isn't currently in the cards.  When I look at row crops as a whole, coupled with current worldwide demand and the apparent fragile global economy, I just can seem to find any reason for our markets to rally.  I know that sounds, reads, and believe me, it types depressingly, but as the old saying goes "it is what it is".  We are seeing a strong sell-off in the US dollar as a result of the Fed's decision, down by nearly a full point, so that could lead to some end of the week strength for commodities tomorrow one might argue. 
Inside the Cotton Market
I am simply not going to bore you with a long diatribe about the cotton market today as there simply isn't much to say.  The weekly export report was ok, coming in just under 100,000 bales, but still far below the 150,000 needed per week to reach the apparently growing USDA target.  For the record, we haven't sold more than 150,000 bales since the 3rd week of March, so hand to mouth buying continues to be the theme of the week when it comes to cotton buying for foreign mills.  The market has traded a whopping 130 point range for the entire week after the head-scratching USDA report last Friday.  As we await the crop in the US to start to move from field to gin, I see no reason in the world that the current range of .6200 to .6400, or .6100 to .6500 if you want to give yourself some leeway, will give way.  Here at home, peanuts are starting to be dug and cotton is being defoliated in drips and drabs.  We have about 12 loads of cotton to be picked up from a customer who got ahead of that last rain event and is currently picking a few hundred acres.  I would anticipate that in about a week, we may have enough cotton to fire up the gin for at least a day or two.  I have read where some defoliation and limited picking is also going on in the Mississippi Delta and Louisiana, if they can find anything down there left to pick.  I think Louisiana had about 500 acres of cotton planted, last I checked.  Until something happens in our market, I will continue to update this letter sporadically, perhaps once or twice per week.  I would hazard a guess that once widespread picking and ginning starts here in Georgia, but more so in West Texas, the market should react and I will have more to bore you with in this space.  For now, I would say the market remains an exercise akin to watching paint dry, but I wouldn't want to do a disservice to drying paint.