It was a very volatile trading session in US equity markets overnight as Chairman of the US federal reserve delivered a testimony to US congress that was fairly supportive of continued asset purchases. The DOW shot up 155 points but as he answered fairly direct questions on the “exit plan” that suggested it was coming sooner rather than later, the market quickly reversed and finished down 80.4 points. This also saw continued strength in the $US against all major currencies and our dollar broke technical support below 97c and this morning was trading at 0.96943.
Cotton futures finished lower for the third session in a row with the July contract falling 41 points to 83.45c/pound, the December contract which represents the new crop was firmer, closing up 24 points to 84.39c/pound. The July/December spread widened to almost 100 points as traders roll from July to December, also selling pressure came from forecast rains in Texas which should relieve supply concerns from the US biggest producing state. Certified stocks remained above 500 000 bales, according to ICE, this represents some of the highest levels seen since June 2010 and weekly sales to china have been encouraging for this late in the season giving an indication of tight global supply outside of China. All eyes will be fixed on US weekly export data due out Thursday (our Friday).
There was strength in grain markets overnight with Chicago wheat for July delivery up 8 cents at 688.5c/bushel and July corn gained the most in a week jumping 18.5c to close at 658.5c/bushel. Both grains rose on positive sales data from the USDA and also signs of increasing use in livestock feed. Wet weather in the next two weeks will delay sowing in the Midwest. Planting was 24% completed as at May 20 down from 42% on average over the previous 5 years.Soybean futures were higher overnight finishing at 1494.25c/bushel up 16c for the July contract, the price has risen for five straight sessions making it the longest rally in more than a year. Traders have commented that it is mainly spread trading related.
Locally, we have seen some moisture across most regions over the past 24 hours, with anywhere from 8 to 17mm falling. We have not seen this weather event have any dramatic impact on pricing as yet. Sorghum prices continue to perform strongly delivered into Narrabri at a $275 and a $305 NTL track out there today. We also have continued demand for high moisture sorghum, particularly off the Liverpool Plains. Strong demand continues for feed type wheats, particularly SFW 70/10 & ASW both in the system and ex farm. With the recent rain we are starting to see more selling interest in new crop wheat. Multigrade wheat prices for 13/14 crop are currently sitting around the $281 NTL track for limited tonnage due to a weakening basis. Old crop and new crop chickpea interest remains relatively flat, which is reflective in a sub $500 delivered Narrabri number, which is back $15 from 2-3 weeks ago. With cotton futures falling below 84c/lb we are starting to see more interest from the mills in buying Australian cotton, this coupled with a weakening AUD and carry in the market we see opportunity to place orders at $460/bale for both 13 and 14 crop. Please call the office with any enquiries or to firm up where prices are today.