Did cotton''s finish
in the last session at a two-month closing low of 67.31 cents a pound for
December delivery herald something more significant?December futures are
definitely starting to trend down more on the short term charts," Ecom
said."If we see another night closing down 30 points [0.3 cents per pound]
then this would be a good indication that momentum is building, and if momentum
to the downside starts to build this market will have a downside
break-out," the trading house said."With the low 66s cents per pound
as a downside target we could see this area by early next week."
''We expect prices to fall''
At Commonwealth Bank of Australia, Tobin Gorey said that "we expect prices
to fall further."The debate about where prices ''should'' be will become
more pressing once prices fall into the 66s".At McCleskey Cotton, Ron Lee said that "the fact that
Thursday''s settlement was the lowest in two months will likely bring more
speculative selling to the board, maybe as soon as Friday."The market certainly looks as if it wants to probe
lower."
Supply vs demand
But not in early deals, when the December contract posted a small gain, of 0.1%
to 67.37 cents per pound as of 09:30 UK time (03:30 Chicago time).There is hope
for bulls, largely from the demand side of the balance sheet, prospects for
which were hardly dampened by US export sales data last week, unveiled on
Thursday, of 253,200 running bales of upland cotton for 2017-18, up 64% week on
week.The
December contract has, in dropping below 67.5 cents, gone to levels "where
buyers had emerged several times in October", Mr Gorey said.
Mr Lee said that "demand is said to be resting heavily below 67.00 cents a
pound", adding that "we may soon find out if that is indeed the
case".On the supply side, however, "you have thousands and thousands
of bales waiting to be hedged on the slightest hint of a higher move" in
prices."If
those two collide, you get, guess what, a market that continues to largely go
nowhere."
Dollar rises
There remained something of that feeling in grain markets too, where price
moves were hardly substantial in early deals.That said, they were largely
positive, despite a firm dollar, which added 0.4%
against a basket of currencies, boosted by the US Senate''s approval of a budget
that bolstered hopes of President Donald Trump succeeding in pushing through
tax reform measures, including lower corporate levies.A stronger dollar cuts
the affordability of assets, such as many agricultural commodity derivatives,
denominated in the currency.
''Harvest is moving fast''
Wheat futures
added 0.3% to $4.34 a bushel in Chicago for December delivery, continuing to
find some support from better-than-expected US export sales data on Thursday,
and an Informa downgrade to expectations for US winter wheat sowings for the
2018 harvest.That said, Benson Quinn Commodities advised that "I don''t see
much of a reason to build a position in the wheat markets unless you are
extending coverage, which would be near decade lows in the winter wheat
contracts".Soybean futures added 0.3% to $9.89 a bushel for November."US
harvest is moving fast with no rains in the Corn Belt, and technicals are
oversold," the broker said.
"But
market needs to be fed every day and there just really was nothing to feed the
bears to pressure market lower."CBA''s Tobin Gorey said that "the
market''s concerns about Brazil''s dry soybean regions continue, but weather
forecasts are not changing enough to move the market one way or the
other".
Mandate talk
Among the soy processing products, soyoil extended
its revival, adding 0.4% to 33.95 cents a pound, amid hopes that the US will not
after all undermine its mandate for biodiesel, which is made from vegetable
oils.ADM Investor Services flagged "news that Trump officials have
directed the EPA to stand down on efforts to weaken the biodiesel mandate."The
agency was told to abandon a possible reduction in biodiesel requirements and a
proposal to allow exportable renewable fuel to count towards domestic
quotas."
In
Kuala Lumpur, rival vegetable oil palm oil added 0.4% to 2,734 ringgit a tonne.Export
data from cargo surveyor ITS showed Malaysian shipments up 11.6% month on month
in the first 20 days of September, a little higher than the 10.3% rate of
increase at the 10-day stage.Sticking with Asian markets, Dalian soybean
futures for January bounced a touch off contract closing low to the session
last time, adding 4 yuan to 3,725 yuan a tonne.
''Open harvest weather''
Back in Chicago, corn bucked
the positive trend, easing by 0.1% to $3.48 ½ a bushel,"Harvest weather
continues to be open through the end of the week with some precipitation
expected in the eastern belt over the weekend," ADM Investor Services
said.
Source: Agweb.com Wednesday, 18 October 2017