June 12, 2006
Corn, Soybeans and Cotton have all opened strongly higher today over weather concerns both here and in China.
In the Midwest (corn and soybeans) there are concerns about hot, dry weather moving into this major crop belt later this week.
It is still very hot and extremely dry in West Texas and southwestern Oklahoma with current forecasts showing no rain for the next two weeks. Texas is our biggest cotton producer and, to put it mildly, is already in very bad shape.
East Central China (a major agricultural area) is dry and entering the third week without rain in some places. This is following reports out of China ten days ago that yields on their cotton crop may be down by 25% this growing season.
There is NO WAY to know if the weather will worsen or improve, but weather markets are probably the most dynamic force we ever see in the futures arena. With problems brewing in both of these MAJOR producers and users, and with world stocks to usage ration already projected to be at decades low levels in corn and cotton....? As a trader, I don't think you just sit around and watch...You get on NOW, define your risk, plan on adding if they "go"...and see what happens.
I assure you, all of these markets can "heat up" in a hurry...If you are interested, give me a call...today.