What goes up must come down.
On Tuesday, that old adage applied to New York cotton which - having soared 11.5% in three
sessions for July delivery, after strong US export data spurred ideas of a
market squeeze – succumbed to gravity in a big way.
As Agrimoney.com mused earlier, large volumes (record ones
in the last session for a spot cotton contract) are often associated with
And the July cotton lot tumbled the exchange maximum of 4.00
cents to close at 81.32 cents a pound (albeit still remaining 6% higher week on
'Export sales are
The fibre was little helped by some fundamental data, with the
US Department of Agriculture overnight saying that farmers had god 33% of their
cotton planted in the week to Sunday, closing the gap a little with the average
"Planting progress made significant headway," said Louis
Rose at Rose Commodity Group.
He also noted that stocks certified for delivery against New
York futures rose some 25,000 bales on Monday, to take two-day expansion to
This growth "suggests to us that some export sales are being
cancelled at current and recent price levels", easing the aforementioned
All eyes will be on the USDA's weekly export report on
Soybeans vs grains
But is it also true that what comes down must go up?
Not to many wheat
investors, it appears, who it appears followed up latest price falls by taking
out fresh short bets.
Not that all observers see this as a wise idea.
"I don't see the value in being especially short corn and/or wheat at the bottom end of
ranges which have held up relatively well over the last 3-6 months," said Tregg
Cronin at Halo Commodity Company.
Still, shorting grains appeared a bit of a theme, with such
positions often hedged against long bets in soybeans.
"The 'buy beans/sell corn and wheat' trade has been
reinforced by today's session," said Mike Zuzolo at Global Commodity Analytics.
'Not finding much
That said, in Chicago-traded soft red winter wheat, in which
speculators already have a hefty net long, futures did manage to recover from
early losses to close up 0.1% at $4.24 ¼ a bushel.
It was Kansas City hard red winter wheat, in which managed
money had rebuilt a net long, that took the hit, falling 1.2% to $4.23 ½ a
That lost the contract (again) its premium over Chicago,
despite it having a higher protein content, which should make it more valuable,
and the prospect of further rain for the southern Plains, where hard red winter
wheat is grown, and disease pressures are already rising – while crop condition
ratings are falling.
Rain is forecast for the central times when it is "not a
good time for rainfall, especially given increased rust being prevalent in
fields being reported," Mr Zuzolo said.
"Wheat is not finding much support from drop in crop ratings
due to disease and an unwelcome wet forecast as funds pressure market in
defense of short positions," said Benson Quinn Commodities.
"Market focus is on supplies and world supplies for corn,
beans and wheat are record large."
'Weather is a mixed
Still, futures in corn
actually managed a flat close, at $3.67 ¾ a bushel for July, offered some
support by ideas of non-ideal, if hardly disastrous, weather for the latter
stages of US sowings.
"Weather is a mixed bag, with favourable weather through
Thursday in the central and eastern Corn Belt," where wetness have delayed
seedings, "offset by heavy late week/weekend rains in the south west Midwest
and eastern Plains".
CHS Hedging said that "the 6-10 day forecast shows
temperatures moving cooler, with some areas in Colorado moving below freezing.
"Precipitation remains above-average for most of the Corn
Belt," which may be helpful for crop already seeded, but may hamper fieldwork.
meanwhile, gained 1.1% to $9.76 ¼ a bushel for July, bouncing back above 20-day
and 40-day moving averages, and challenging the 50-day, at some $9.778 ¾ a bushel,
at one point too.
Country Futures' Darrell Holaday flagged a USDA "announcement
of a 132,000-tonne old crop soybean export order to unknown this morning.
"That has provided some support to the soybean complex."
Indeed, it provided some further idea of US competitiveness
in soybean exports against Brazilian supplies undermined by an appreciating real.
The real gained 0.4% against the dollar, to R$3.0978 to $1, while the greenback itself fell 0.8%
against a basket of currencies to a six-month low, boosting the affordability
of US exports.
The strong real, in depressing the value in Brazil of assets
traded internationally in dollars, is also seen as having slowed dramatically farmer
selling of crops such as soybeans.