Grains and Oilseeds: December corn closed at $7.47 ½ per bushel, down 9 1/2c tied to harvest pressure. After trading as high as $8.49 in early August, prices have sold off to the mid July level on profittaking and disappointment over failed follow through. We remain on the sidelines in corn. December wheat closed at $8.57 ¼ per bushel, down 12c tied to poor demand but with Russia reporting its smallest crop since 2003, we could see prices recover to the July 23rd level of $9.50 or thereabouts assuming demand picks up. We are on the sidelines in wheat as well. November soybeans closed at $15.52 ½ per bushel and as we suggested may have bottomed out after the heavy long liquidation from the early September $17.90 level. We expect demand to improve especially in the U.S. which is the world’s second biggest consumer of soybeans. Farmers have reduced sales tied to the decline in price and that should tighten supplies and improve prices. We like soybeans once again and would now get back on the long side either through purchase of futures or calls.
Meats: December cattle closed at $1.2630 per pound, up 6c on shortcovering and better cash prices. Weekly sales were up 61% from the prior week and good demand prompted the buying. We are back on the long side of cattle after having been sidelined. December hogs closed at 76.75c per pound, up 7c tied to better carcus values and higher cash prices. However, the short covering could be shortlived as prices returned to the midway point of the recent move. We would await further fundamentals before adding to existing longs.
Coffee, Cocoa and Sugar: December coffee closed at $1.6775 per pound, down 7.3c on long liquidation and profittaking after the early week gain of 6.9. Early flowering in front of the 2013-14 crop took place on the southern part of Minas Gerais, the largest arabica producing state but concern dry weather would cause flowers to abort and reduce the size of the new crop had prompted the price gains before the profittaking emerged. We prefer the sidelines for now. December cocoa closed at $2,385 per tonne, down $10 on long liquidation from the early September highs around $2,700 and back to the late August levels. Price declines reflect the new posture in Ivory Coast, the world’s largest cocoa producer, where changes in its cocoa industry last year included a plan to sell most of the beans before the actual harvest and pay farmers a guaranteed minimum fixed rate for their beans. The change could confuse the market and for that reason we are on the sidelines. March Sugar closed at 21.54c per pound down 17 points on reduced demand with pressure on prices in India and failure to re-capture the 24c July highs. The market appears to have stabilized but we prefer the sidelines for now.
Cotton: December cotton closed at 71.5c per pound, down 59 points on continued selling pressure tied to the global economic slowdown. We prefer the sidelines although the positively construed U.S. labor data could prompt renewed buying interest.