Daily Market Update - December 4, 2014

 

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 15 Cotton          .6064                .5953               .6042               + .0078            - .1842

Dec 15 Cotton            .6488                .6425               .6460               + .0068            - .1383

Dec 16 Cotton                                                               .6639               + .0095

Sept 15 Corn               4.1000              4.0075            4.0900             + .0600            - .5400

Nov 15 Soy                 9.9650               9.7375            9.9100             + .0925            - 1.3575

July 15 Wheat            6.0050               5.8775            5.9875             - .0025            - .4650

 

Cotton LDP - 5.64 cents (beginning tomorrow)

Thursday's Market Report
 It was a generally positive day for agricultural commodities on Thursday and cotton was no exception as prices moved to the highest level in almost a month, albeit trading only barely above .60 cents.  March cotton finished the day up 78 points at 6042, while next December gained 68 ticks at .6460.  Decent export sales and firm pick up in shipments were cited as reasons for the gains.  Corn and soybean futures also were firmer today as corn gained 5-7 cents across the board, while soybean futures picked up 11-12 cents.  Wheat futures were basically unchanged on the day. Like cotton, the export sales report keyed these markets as well as corn and bean sales were firm while wheat sales lagged. However, since our last update, we have seen large selloffs in corn, soybeans, and wheat and the trend for now in all three major grain crops looks to be southward for the time being. However, the downside, for now, seems to be contained as farmer selling seems to be contained as growers seem content to put the balance of their crops into their bins.  In outside markets, the dollar is lower and the stock markets are quiet.  After the big bounce on Monday, the energy markets are sinking once again, with crude oil back below 67.00.  Gasoline prices in parts of Oklahoma were reading $1.99 overnight.  
Inside the Cotton Market
 Still not much to talk about in the cotton market, but for those looking for a good opportunity to get rid of extra bales this season, that opportunity is now.  With the market at near four-week highs and the LDP moving down only 24 points (from 591 to 564) next week, we are about to have 5 marketing days to price a good slug of cotton that can net 68-71 cents should basis levels remain firm.  For the first time since November 7th, the market closed above the 20-day moving average, so there is a better than average chance that specs could fire some money at the long side of things and pump this market up a little more.  I still believe that growers should GLADLY take prices that net them north of 70 cents when the LDP is figured in as there remains gobs and gobs of cotton left to sell and a firm lid remains on top of this market in my opinion.  We should first see resistance around .6111, and if things really got wild, the 100-day average at .6345 should certainly put the fire out.  We did see decent export sales today, but my sources tell me that most of these sales are on-call sales which mean absolutely nothing with regard to the overall pulse of the market.  I don't think we've gone near low enough for mills to run to the market en masse and want to start stock piling bales of cotton on a fixed priced basis because they think the price is low enough.  On the other hand, if our warehouses are an indication, we should see shipments start to really pick up in the next few weeks as we are shipping cotton at a breakneck pace, both domestically and abroad, as mills were really running hand to mouth from old crop to new crop.  However, once the calendar turns to 2015, I believe there is going to be PLENTY of cotton for everyone.  As I seem to say in the space nearly every time that I know you are tired of reading, I'm afraid we are just looking at a very boring cotton market for the foreseeable future.  The more I think about it, I don't want to buy puts or calls, rather I'd want to sell puts or calls (preferably calls) as the market just trades a very boring range with a slightly lower bias.  Outside from some kind of foolish government intervention, there just isn't anything out there that gets us out from under 107 million bales of world stocks except for time, lower prices, and lower plantings.
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