Around the Markets

Organic Corn trading activity is picking up but prices remain subdued with bids near $7.25 and offers at $7.75 for the balance of Q4, as well as Q1. The carry for Q1 has evaporated as consumers are sitting on their hands. Imports continue to soak up demand as a strong U.S. dollar makes imports more attractive. The dollar index has surged nearly 3.5% since the Presidential election driven by climbing U.S. yields.  NON-GMO yellow #2 CIF remained steady at $0.10 premium over conventional the balance of Q4, and Q1.

Corn board futures prices retraced their recent gains, as hedge fund traders reduced shorts and added to long position in futures and options. Per the most recent commitment of trader’s report released for the date November 22, 2016, managed money significantly reduced short positions in futures and options while adding to long positions in futures and options, a flip flop of the prior week.  Managed money, that is short futures and options, outnumber managed money that is long by approximately, 60K contracts down from 85K contracts, 1-week ago.

Mid-west organic soy bean trading activity is moderating for Q4.  Prices remain near the $17.25 levels as farmers appear to have contracted what they need for beans, generating the cash they need for corn storage. The carry for the second quarter is flat. NON-GMO soybean CIF for November and December delivery are trading $0.10 –  $0.30 above cash but the recent rise in conventional prices could put upward pressure on premiums.

The growth in the organic space is for proteins, which is driving feed demand. The Agricultural Marketing Service recently reported that year to date organic whole milk sales are up 16.6% compared to sales within the same period last year.

Soy bean prices are breaking out technically closing above a downward sloping trend line on relatively solid volume. The next level of target resistance on the futures contract is seen near the May 2016 highs at 1080.

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