Headlines:
- Cotton extends rally. But wheat futures tumble
It was sure better to be a bull in cotton than wheat to start the week. OK, New York cotton – which for July traded at 87.18 cents a pound at one point, up its expanded daily limit of 5.00 cents a pound and the highest for a spot contract since June 2014 – could not hold on to all those gains. Nonetheless, the July contract ended at 85.32 cents a pound, a gain of 3.8% on the day, and up 11.5% over three sessions, since strong US export data sparked ideas of a squeeze on supplies. Commerzbank, flagging that “the cotton price is continuing to soar”, noted that the US Department of Agriculture “has been continuing its series of upward revisions” to estimates for US cotton exports, most lately last week, when it added 500,000 bales to its forecast for shipments in 2016-17. “At the turn of the year exports of only a good 12m bales had been anticipated, whereas now the figure is already 14.5 million bales – the second-highest export volume of all time,” Commerzbank said.
- Corn, sugar miss out on hedge fund short-closing. Are price rises ahead?
Corn missed out on a rash of short-covering by hedge funds in grains, raising ideas that it might attract some buying ahead, amid ideas that sugar could, at least, find fresh appeal among speculators too. Managed money, a proxy for speculators, reduced its net long position in futures and options in the top 13 US-traded agricultural commodities, from cattle to wheat, by 41,049 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows. The change reduced the net short – the extent to which short holdings, which profit when values fall, exceed long bets, which benefit when prices gain – to a four-week low of 154,194 contracts. And it reflected in the main short-covering in grains, including the soy complex, in which hedge funds cut their net short back below 350,000 lots.
Summary:
The WASDE report came and left with little fanfare for the Corn and Soybean markets but Wheat has been feeling some pressure after little damage for the Wheat crop was reported. Corn and Soybeans were mostly mixed today with no real news of significance to carry either market in a strong direction. Corn was positive through midday but gave way to some selling starting at about 11:30 EST. Likewise, Soybean was stronger ‘til about noon eastern but it too gave way to sell. July Corn finished the day down 3.50 cents but July Beans managed to at least finish in positive territory, up 2.75 cents. There were trade rumors circulating that China might be buying US Soybeans but no confirmation of the buying ever materialized and for now there was little weather pushing the market in either direction. The word on the street is that Soybean is a bit overpriced compared to Corn. The mixed price action suggests that the market may be working its way to bring prices to balance. Good weather conditions over the weekend pushed Wheat prices even lower today with July Wheat shedding one tick shy of 10 cents.
