January soybean prices are near the middle of a nine-month range. Bullish factors in the news: (1) the USDA’s December supply/demand report cut in its U.S. and global carry-over estimates, and (2) strong foreign demand. U.S. soybean exports are up 40 percent for the marketing year since September first.
Bearish factors include (1) favorable weather in the soybean growing areas of Brazil and Argentina, the two biggest soybean growers and exporters after the United States, and (2) the USDA’s Nov. 10 hike in its US soybean production estimate to a record 3.319 billion bushels. That is a 12 percent increase. Speculators are holding a large number of long positions. Carry-over estimates for the United States are estimates to be 255 million bushels. That is an increase of 85 percent. Global carry-over is expected to reach 57million tons, up 34.6 percent.
March corn prices rallied to a six-month high. Bullish market news: (1) the USDA cut in its U.S. corn production estimate. (2) This has been the slowest US corn harvest since 1986. Only 92 percent of this year’s corn crop had been harvested as of Dec. 13, which may lead to reduced yields and further cuts in corn production estimates.
Bearish factors include (1) USDA’s hike in its U.S. and global carry-over estimates, and (2) the rebound in the dollar index to a 2.5-month high which may impede grain export prospects. Speculators are taking profits from buy positions on corn. Long positions were reduced to 194,766 contacts in December.
The crop is anticipated to reach 12.921 billion bushels. That represents a 6.8 percent increase over last year. Carryover is expected to drop 2.9 percent to 1.625 million bushels. Global of 132.41 million tons represents a 9.3 percent decrease since last year at this time. Corn fundamentals are looking bullish but prices will need to rise before acres move out of soybeans.
Wheat prices are trading on weak fundamentals. They slid to a 1.5-month low last week. Wheat prices had increased to a six-month high last month, which was an upward correction from September’s 2.5-year low.
Bearish news includes: (1) the USDA’s hike in its United States and global wheat carry-over estimates, and (2) decreasing foreign demand for U.S. wheat. U.S. Wheat exports are down 32 percent this year.
Bullish news: (1) dollar weakness can boost U.S. wheat export prospects. (2) Speculators are buying and so are commodity hedge fund traders on speculation wheat is undervalued relative to other grains. Speculators hold a small number of short positions. Crop production estimates 2.216 billion bushels. That number is 11 percent lower than last year. Carry-over is estimated by USDA to be 900 million bushels. That is a 37 percent increase for the year and a nine-year high. Global carry-over predictions were increased to 190.91 million tons.
Cotton prices surged to a 1.5-year high.
Bullish news: (1) the 48 percent increase in November Chinese cotton imports. There were two successive monthly increases after 16 consecutive months of declines. (2) USDA cut in its U.S. and global carryover estimates. The global cotton production estimate was cut to 102.72 million bales. The percentage decrease is -4.4 for the year. U.S. production is down 1.8 percent for the year. Global cotton supplies estimates of 51.81 million bales are down 15.2 percent since last year. Cotton prices must increase to attract more acres.
Bearish news: (1) USDA increased its U.S. cotton production estimate to 12.59 million bales. That represents a small 0.7 percent increase since the November estimate of 12.496 million bales. China’s cotton imports from are down 33 percent from last year. Speculators have a large number of long positions (43,556).
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