What a week for the Ags as they seemingly tried to prove that, What goes down must come up!
- September corn picked up nearly 34 cents while Sept CME wheat picked up over 75 cents.
- November soybeans moved in excess of 45 cents higher.
- December cotton was up 361 points on the week, taking out the 67.00 resistance level in the process. Dec settled for the week at 67.51.
Cotton moved higher, despite strength in US currency and on news that continues to suggest that both 2015/16 US and world production is likely to move lower. Major analytical groups have moved their 2015/16 production and ending stocks projections lower while the pace of demand has remained seasonally strong.
Total net export sales were slightly higher for the week ending June 18 than for the previous sales period at nearly 65K running bales. Export shipments continue to eclipse the weekly pace required to meet the USDA’s export estimate with just over 206K running bales logged on the latest report.
Planting progress improved to around 94% complete as insurance planting dates faded into history. Likely, this has many suspecting a significant reduction in the USDA’s planting intentions survey figure (9.55M acres) is forthcoming on the June 30 acreage report.
However, a Bloomberg survey produced an average estimate of 9.35M acres to be reported next Tuesday. Our estimate for the survey was 9.1M acres.
For next week, the standard technical analysis for and money flow into the Dec are bullish. However, the market is showing signs of moving into an overbought condition. The US export report will likely again sport supportive figures, but the June 30 acreage report will be the premiere event.
A near unchanged estimate of planted area will likely result in a selloff, while any estimate south of 9.1M acres is likely to incite a somewhat bullish response, at least.
On Friday’s rally, we are seeing renewed interest in forward contracting from producers, and merchants are responding with a slightly improved basis. We continue to see the potential for rallies in the ICE above current levels based on the June 30 report, and see the potential for an even stronger basis for premium cotton in the fall.
If pricing opportunities present themselves in the next 10 days, it may be prudent to contract a portion of your crop, but use the option pit, as well, so you can take advantage of weather rallies as the crop progresses.
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Louis W Rose IV, PhD has worked with cotton as a producer, consultant, analyst and trader. Rose holds degrees in Education, Agriculture, Plant Science and Business (MBA) from AR St Univ, OK St Univ and the Univ of Memphis, respectively. He has held positions with Aon Reinsurance and Cargill Cotton. Rose currently provides analytic services for various clients and media outlets and is the co-founder of Risk Analytics, LLC, producers of The Rose Report, which he authors.