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eCOOPNEWS Volume 8 Number 1


Commodity Comment
Cotton futures continued to trade sideways this week still stuck between 5850 and 6250 on Mar.  There has been very good demand under 6000, as this week’s 440k bale export sales number shows.  On the other hand, good grower selling has been noted any time the market has rallied over 6000 leaving us stuck in the current range.  Monday’s supply demand report didn’t offer a lot of excitement as the US crop was raised slightly to 16.1 mln bales, exports and domestic consumption stayed the same which left US ending stocks up slightly to 4.7 mln bales.  There wasn’t a lot of change in the world numbers either as world ending stocks were raised by .5 mln bales to 108.6 mln due to a drop in Chinese consumption.  Next week the Indian government is supposed to start selling cotton that they purchased from their farmers this fall.  This combined with negative macro forces (strong $ and weak commodities) could pressure US prices a little lower over the next couple of weeks.  Over time though, trading at these lower levels could help get rid of the US crop and set the stage for a rally later on.  For the week Mar cotton closed at 59.23 down 153 pts for the week.
Grain prices were hit hard this week due to both internal and external factors.  First off, Monday’s supply demand report was bearish for beans and wheat.  The quarterly stocks report showed more beans and wheat on hand than a year ago and more than traders were expecting.  Beans ended the day Monday down 36 cents and wheat was down 8 cents.  Corn ending stocks came in as expected and corn stayed mostly sideways Monday.  The rest of the week, the grain complex traded sideways to lower with much of that in reaction to a stronger US $ and continued sell off in oil prices.  The US $ hit levels today not seen since 2003.  The $ index is now around 93.00 mostly due to the weaker Euro and the $ being seen as a safe haven.  This strong $ rally will make export sales more difficult going forward especially as the Brazilian crop starts to move into the pipeline this spring.  Brazilian beans will be sold in their currency (Real) which is much lower as compared to the US $.  This may keep bean prices from being able to rally very much in the next couple of months.  For the week Nov beans closed at $9.75 down 34 cents, Jul wheat closed at $5.38 down 34 cents and Dec corn closed at $4.14 down 7 cents.
                                                                        Wayne Boseman
                                                                        VP Brokerage


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