In order to package a “partial” trade deal, China is tossing around the idea of buying more ag products, and specifically said another 10 Mmt of soy. This is 337 Mbu, or about 58% of the soy carryout. No wonder ag markets are hyper-sensitive to prospects of a China trade deal, due to the staggering numbers of potential exports. We noticed on Tuesday, the 3 most sensitive markets to a trade deal – soy, cotton, and pork – all took off to the upside in sync. Cotton was already open at 0730, and made an intra-day low then. Hogs and soy bottomed on their openings at 0830 and followed cotton higher. This suggests the “big money” flow is all-in on these 3 markets, should a partial deal happen. Here is that catalyst to push price into the mid 60s, if it gets finalized.
A fast moving cold front with limited rain will pass through the Delta this weekend.
Forget the report, the possibility of a partial trade deal with China “trumps” whatever numbers roll out tomorrow. Cotton traders know full well how China’s plans to stock, and destock ag commodities can rock the markets. An extra 10 Mmt of soy, or 370 Mbu, is worth $3.7 B. If China decided to buy $1B more cotton from the US, that would be 3.3 Mb. Its numbers like these that keep the Big Money boys interested, and their fat fingers on the buy button.
There is a little life on the chart, if not the balance sheet. Dec at mid day is threatening to rise above the 89 day avg, tested for the 3rd time since the high of 9/13. Momentum is positive on day and weekly charts. Seasonals are choppy to erratically positive into month end, then a negative trend runs to late Nov.
As always, please use protective buy and sell stops when trading futures and options.
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