Regards the report, our production estimate will likely be north of what the USDA comes up with. It is likely that they will hit the crop for at least 1 Mb, and not do anything with TX as there is not enough time or evidence to do so. When survey requests are made, we issue what we think are correct numbers. A guess of a guess is that the USDA will show a crop of 20.5 Mb, then have to raise that on subsequent reports.
There was a small surprise when crop indexes came out. The overall number actually rose a couple ticks, in spite of Irma and Nate. TX was the biggest mover in the report. Looking at COT reports, we were a little surprised to see that cotton has the largest net long position of all the ags, and last week saw a slight increase.
Time is on the bears side, as the pipeline gets filled in the US and the ROW gets their crop in. After 7 weeks of hurricane scares, freeze and frost scares, and too much rain and not enough sun, the weather looks very promising for the rest of the month. Its going to be very interesting to see the numbers for GA and TX tomorrow, and also states such as LA, FL, AL and SC, all of which had plenty of rain when not wanted. Grain crops in Southern states are bin-busters, as those crops thrived in the wetter, cooler late summer and early fall. The lowest production estimate we have heard is 19.8 Mb. That would be a surprise. Look for Indias crop to keep growing.
After a month of chop, and a narrow range, the market has built up ample momentum for a breakout. The weekly chart rolled to Dec, with hardly any change. The decline from the May high to July low was 2070 points, then followed a 50% correction. If this leg down is equal to the first, the target is 5550. There are two long term cycle lows due late next spring, the 27.5 month low in May, and the 22 month low in June.
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