Monday’s bring gaps higher in the grains complex, cotton, and wheat, initially.
Wheat is lower today, but still only taking back half of Friday’s gains. Looking at the money movement it seems as if the wheat market is in a stand-off, waiting to decide on a bearish or bullish tone.
Moreover the old adage of “be careful what you wish for you just might get it” comes true for instance over the weekend rains of substantial volume fell over the HRW wheat crops of Texas, Oklahoma, and Kansas. They were, of course, needed given the D3-D4 drought conditions of the past two months affecting the area. Had there not been the U.S. / China news wheat would have sold off while the other grains rallied.
Soybean futures gap higher to start the week as China and the U.S. agree to stop the tariffs for the time being. Raising the question whether China really increases U.S. agricultural good imports? The market didn’t respond that much.
Corn futures are holding on to the recent gains, and right around the previous highs. To break above the $4.30 region, we might need a significant story for a catalyst higher. Nonetheless, the corn market has a bullish skew.
Cotton futures are trading 200 to 230 points higher after they posted strong 79 to 152 point gains in the front months on Friday. Nearby July was up 2.28% on the week. A jump in exports is seen following Chinese commitments to import more US ag commodities if a trade deal is reached.
Thursday’s CFTC cotton on call report showed mills trimming their unfixed July sales by 5,442 contracts. That position was still at 49,643 contracts on Friday May 11. The Commitment of Traders report on Friday showed large spec funds reducing their net long position in cotton futures and options by 8,605 contracts.
Monday’s also bring our attention back to how trade wars are good and easy to win, for the time being.
Monday’s also means USDA Crop Progress Reports this afternoon. LaSalle Street is expecting 82% of the nation’s corn crop to have been planted this weekend, up from 62% last week. It is also looking for 55% of the bean crop to have been planted, up from 35% one week ago and for the Good/ Excellent rating for the HRW winter wheat crop to be a few points higher.
Below is a recap of last weeks’ report.