- Cotton prices hit new high for December.
- Resistance ceiling prices are threatening to achieve one dollar.
- Fundamentally, demand exceeds supply.
Cotton: Bullish news: Traders hold a record number of cotton buy contracts. Buy contract open interest exceeds a two-year high. Fund traders have the highest buy side open interest in 15 years. Supply is bullishly tight. Chinese economic news is positive.
Export sales are projected at 15.5 million bales for the year. That leaves only 2.7 million bales of ending supplies. Weekly export sales increased 81 percent over 826,000 bales.
China joined Pakistan with wet weather damage to cotton. Chinese and Pakistan production will be down about 800,000 bales. That number is a guess and may not be reliable. There are no assessments concerning quality. Texas has also had some rain damaged cotton. India has harvest delays and China needs cotton.
Cotton prices hit a new high for December. Resistance ceiling prices are threatening to achieve one dollar. Fundamentally, demand exceeds supply. U.S. supply registered for delivery near a record low at 16,600 bales.
Bearish news: Last week’s export sales were below anticipations under 140,000 bales. Cotton markets are technically overbought. Farmers are selling cotton at these market prices but their selling has not yet induced harvest pressure on prices. Cotton shipments were down sixty percent at 91,000 bales.
Bearish news: There were no deliveries of soybeans on Monday or Tuesday. Soybean technical charts have turned bearish. World ending supplies are expected to increase 20 million tons to over 63 million. Palm oil prices are down 2 percent.
Trader open interest is 140,000 buy contracts. Profit taking potential is high with harvest pressure on the horizon. The crop condition rating remains high; 63 percent good to excellent is 8 percent above average.
Export inspections dropped below 7 million tons down over 50 percent. Weekly export sales of 668,000 tons met market expectations.
Bullish news: Chinese soybean imports are expected to reach 55 million tons up 15 million. Soybean export sales are up 17 percent above average. Soybean crush of 122 million bushels is above expectations. Soy-oil supply is down 200 million pounds or 20 percent.
Bullish news: December corn prices hit a new high. Corn yield estimates near 162 bushels per acre with increased export projections (up 50 million bushels at 2 billion) leave only 1.1 billion bushels of ending supply. That number is the tightest corn supply in 15 years. Corn fundamentals are demand exceeds supply. Chinese corn consumption is growing faster than Chinese supply. Corn shipments were over a million tons.
Deliveries of 378 contracts this week bring the monthly total above 6,000 contracts. Ethanol prices moved up over $2 a gallon this week. Private sources predict $6 corn.
Traders continue buying corn increasing contracts of open interest by 100,000 Wednesday. Private sources predict China will need to import 1.5 million tons of corn. Korea’s corn imports increased over 23 percent this year.
Bearish news: Corn harvest could be 11 percent complete this week. Over 50 percent of corn is mature. Corn is technically overbought.
Export sales slowed down last week. Only 584,000 tons of weekly exports are 60 percent of market expectations. Chinese agriculture officials report they have a bumper corn crop. Export inspections were down 3 million bushels at 39 million this week.
Bullish news: Last week’s export sale of 1.6 billion tons was a three-year high. USDA predicts another 50 million bushels of exports. Ending supplies are expected to be near 900 million bushels which is a tight supply.
Large sales of French wheat have tightened supplies along with German wheat quality problems have raised prices in Europe. U.S. export inspections are up 7 million tons at 30 million. Russian wheat lands remain dry. Morocco is shopping for 1.2 million tons but French wheat prices are competitive.
Bearish news: World production is expected to reach 643 million tons. Canadian wheat supply is greater than anticipated. Argentina expects a million ton production increase. Australian production exceeds expectations by 13 percent. Australian wheat exports are now anticipated to increase 20 percent. India’s grain supply, corn wheat and rice, is ample.
Weekly export sales were only 484,000 tons. That number is about half of what the market anticipated. Shipments have also decreased since the dollar values rebounded.
Bearish news: Rice is technically overbought. Markets are showing signs of entering a consolidation phase.
USDA numbers were negative. There are 130,000 more rice acres than earlier predicted. Those acres increase production 10 million hundredweight. That, in turn, raises ending supply to 8.7 million hundredweight which is 30 million more than last week.
Rice sales to Iraq were priced below the market near $9 per hundredweight. Vietnamese prices have firmed up but remain below Thailand prices.
Bullish news: Vietnamese exports are near the yearly goal. Vietnamese export business could pass on to Thailand and the United States. U.S. milled rice is now priced under Thailand rice and Vietnamese rice. Weekly export sales exceed expectations over 103,000 tons. Export shipments were also above expectations.