Tuesday, February 21, 2012

Speculators Ditch Cotton, Rabobank Likes Soybeans

I've been blathering* on about cotton since last fall and seriously since December.
You could see it in the price action though, a wall in the 96-97 range and then weak-to-down which are scary words because they are often followed by "Waterfall decline". Oh well.
Cotton was recently trading up .67 at 93.32. Corn is down 6.5 cents at 6.3875. Beans are up a penny at $12.7475

From Agrimoney:
Speculators turned their most negative on cotton prices for nearly three years, amid improved ideas for world supplies of the fibre and concerns about the resilience of demand from top importer China.
Managed money, a proxy for speculative cash, slashed its net length in New York cotton futures and options by 15,238 contracts in the week to February 14, data from the US Commodity Futures Trading Commission showed.
The slump left net length – the advantage of long positions which benefit when prices rise over short holdings, which profit when prices drop – at 212 lots, the lowest since early 2009.
And it followed a rash of evidence of cotton supplies easing from the tight conditions which spurred a jump in prices to record levels last year.
Rising supplies
On February 9, the US Department of Agriculture, in its key Wasde crop report, raised its estimate for world supplies of the fibre at the close of 2011-12 by 2.4m bales to 60.8m bales, adding that cotton's "stocks-to-consumption ratio of just over 55% is sharply higher than the past two seasons"....MORE
Also from Agrimoney, Rabobank has some of the best grain analysts around but here they do a bit of a switcharoo*:

Soybeans best bet among crop futures - Rabobank
Rabobank upgraded soybean price forecasts, and stuck with ideas that corn futures will end the year well ahead of rates currently being factored in, citing South America crop downgrades and the dynamics of the forthcoming battle for acres.
The agricultural lender said it was, within the agricultural complex, "most bullish" on soybeans, and lifted futures price forecasts for both the current and the April-to-June quarters, citing the squeeze on supplies from worsened production prospects and Chinese imports which would exceed many forecasts....MORE
Sept 13, 2011 
Comodity Softs: "Goldman sides with soybeans, but Rabo prefers corn"
Feb 1, 2011
"US Drought and China Lend Support to Cotton Prices"