This is the Friday, March ten, 2023 installment of Market Plus.

Again with us, Jeff French.

Jeff, I didn't want to hit you out of left field with this one, but Cotton, we need to talk about cotton down 7% on the week.

We are below 80.

This has been a trend lower.

We've been stuck sideways, but really kind of leaning one way.

Was the floor in yet?

It didn't look good.

I mean, limit down on Friday.

Four month low below that key support of $0.80.

Again, it's about momentum a lot of times in these commodities and momentum right now is down.

I looked at the charts here today.

$0.77 has to hold.

If it takes out, $0.77 is going to be a quick ride down to 70.

Well, is this all about acres?

I don't think, you know, the May contract is not about acres, in my opinion.

It's mostly, if not all, to do with the action in the stock market and recessionary fears.

Stock market down 1400 points on the week.

That selling spilled over into everything.

And one of the biggest commodities that is affected by a recession is obviously the cotton.

And they definitely hit it hard.

Cotton needs to show life.

Really quick, next week or else it could be it could be ugly.

That's I won't say old school thinking, but that that's traditional thinking, that cotton is tied to the stock market.

And I know the stock market is not the economy.

That's not to say, you know, when we hit 30, 25, 20, it's not of 300, 300, 11,000 more jobs.

We've averaged averages like 350,000 new jobs over the last three months.

Unemployment still at 50-year lows.

Interest rates keep ticking up.

We might get another half point, 25 basis points.

Is the economy in your eyes right now, Jeff?

This is a very strange time in economy.

I mean, it's just, you know, bad economic data is bad.

But right now, good economic data is even worse because the Fed has come out so hawkish with his testimony here this week.

That the market is very scared of increasing rates and we saw the market react to that.

So yeah, very strange time here.

This week also, we had the second biggest bank failure in history.

We're talking about an institution that had $210 billion in assets and it's gone.

So, I don't know if it's the start or the end, but I know we are in very strange economic times here right now.

We're in economic times.

The lows have corn either in the barn or yet to plant.

Let's start with Scott in Augusta.

He leads our Corn Question Parade.

Do you think the corn market might be overdoing it a little bit?

You know, short term it is a little bit oversold, but when you take a step back and you got to kind of erase the last three years of this bull market move, I mean, you're dealing with $6 old crop corn, $6.10, $6.20 and $5.50 new crop corn.

So those are still pretty high prices historically.

But yeah, in the near-term it is overdoing it.

But if you think it can't continue to go down, just look at the wheat market.

I mean, it's been down a dollar 30 the last week, the last three weeks.

And that's probably some of the reason that the market the corn market was down here is this week as well.

All right.

Hold on, wheat folks.

We're getting to you in a minute because we have a lot of questions about that market as well.

Let's go to James and Spencer, northwest Iowa.

When will the next swing up in the corn and bean market happen?

You know, we'll have to see how the action is next week.

You know, I have always had the rule that you just you don't buy the first rally and we saw the rally here on Friday especially in the corn market and the wheat market.

Most likely that was profit taking going into the weekend.

But, you know, you got this fringe crop that's going in late.

There's already talk of the Brazilian farmer cutting back on planted corn acres and moving into either wheat or milo because of the lateness and they're late because they've had big rains and the crop is big, the bean crop that they're harvesting right now.

So, I'd be a buyer if December corn can hold $5.50 for the next two days, Monday and Tuesday of next week.

I might start buying some there and then the May corn if we can get back above $6.18.

I'd be patient here for the next couple of days.

You get to go first.

USDA report came out this week.

The next one will be acreage planting intentions.

Will any of this action that's happening right now over the last well, say, two weeks with the week ahead, will that flip any acres in anyone's mind that has acres to flip, that haven't already done something in the fall or in the spring?

I don't see it.

I mean, maybe some of the fringe acres but I think most of the acres they get switched is because of weather, you know, unless it's just a really big price disparity.

But, you know, we haven't changed in the new crop.

We haven't changed that drastically.

I mean, we've come down here, no question.

But, you know, the planting, you've got to remember the planting intentions are intentions.

And it was done during, you know, mostly during February.

And those acres can change.

But it is it is expected to be a heavier corn year.

That shouldn't surprise anybody.

It was a heavier bean year last year.

So, we'll just have to see what it comes out.

Also, quarterly stocks numbers on March 31st.

That probably has a bigger indicator on the market as well.

Okay, let's move to wheat.

Brant in Enid, Oklahoma, wants to know.

We have always been told that Kansas wheat is the biggest price driver, but Kansas has only a 17% good to excellent crop rating.

Is this no longer the biggest driver?

Well, it's maybe a little too early to be following those, or at least the market to be reacting to those.

Yeah, it is very low rated 17% when the average for this time of year is about 34% good to excellent.

So, it is but it's improving and the market likes that Oklahoma improves 13% there last week, parts of Kansas again, northern part and the eastern part, improving in the southwest remains extremely dry.

But then you had ease, the soft wheat, I mean, they've been in really good shape.

They had an excellent winter, had a lot of moisture and that prospect of having a bumper crop on the Chicago wheat.

So, right now it's probably a little early to be looking at those condition ratings to drive the price.

But if we stay down at those levels here in the next two months they will definitely drive the price.

All right.

So, you're looking ahead or looking behind.

Let's or looking ahead, let's look behind a little bit.

Brandon in Montana wants to know.

Jeff, what did we do to deserve this backlash in the futures market?

We talked about the Russian pact.

That was one thing you mentioned, rain in Russia.

Rain in some Europe parts moisture here and one of the biggest things is the funds short 100 to on Thursday on the big decline Chicago wheat alone went up 12,000 contracts.

So that is people after a dollar selloff, to me, is probably throwing in the towel saying I just can't handle this sell off anymore and selling some wheat.

But again, I we have to get through next week.

We've got to get through these negotiations.

You know, the indications right now is the deal will be signed.

Everybody wants it.

But who knows?

We don't know what Russia wants.

So, I know they want to sell more fertilizer.

But again, you know, they're at war.

Anything can happen.

And if the deal does fall through you're looking at 3 million metric tons per month.

That's not going to be fun.

You mentioned all the shorts.

So, somebody who's going to say, by golly, that looks like a good opportunity to go long.

And will we see any interest on some of those tech signals, like an algorithm that might flip or just somebody who, like in the Big Short decides to play the opposite end of the boat?

There will be I mean, there always is and you have to look at the open interest.

And right now between Kansas City and Chicago wheat, open interest in the futures and options as at a ten-year low.

I mean, when you have, you know, a run up like we did in May and then pretty much we cut the prices in half in the last eight or nine months you washed out a lot of players in this field.

So, with the funds short 100,000, 120,000 contracts when they decide to flip and buy back their shorts, yeah, you could experience some very sharp volatile rallies.

Let's stick with some volatility.

Let's talk about Argentina and Argentinean acreage estimates.

Ken in Michigan wants to know there are big swings in Argentina, soybean production gases.

How does one work through these discrepancies?

Yes.

So, I mean, the USDA report cut that off guard, to cut the trade off guard, I mean.

They slashed the Argentinean crop.

Most likely they're taking their cue from some of the big private forecasters out there.

They're still down there in that 31, there's one out there that's down there at 20.

But you got to remember you have to yes, no question, I mean, they they've had a big I think yields are down 70%.

But you go north and you got to look at a whole you know, you.

Look at Brazil and Argentina compared to last year.

They're still going to produce more beans than last year and that's because of the massive crop.

They got, you know, 5.6, five and a half to 5.6-million-bushel crop.

So, it's a big one coming.

But yeah, you could probably see some tightening.

The trade is probably a little bit lower than that 33 but what I didn't like, Paul, is the market's reaction.

I mean, we rallied for 30 minutes.

We could not even make a new high for the month and then we just broke the remaining three days of the week.

So, when a market doesn't respond to bullish news, you need to take notice.

Hmm.

Good note to end on.

Thanks, Jeff.

That's Jeff French, everybody.

Next week, we are going to take a look at how oyster farmers are making a profit while cleaning up the environment.

And we'll have commodity market analysis with Arlan Suderman.

Thanks for joining us and have a great week.