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Cotton and Corn Prices Drive Bullish Sentiment

February 17, 2011

It’s a bullish atmosphere in nearly all commodities right now. How bullish depends on the commodity and the relative strength of the other commodities, says Kevin Van Trump, CEO of Farm Direction, speaking at the 2011 National Farm Machinery Show.

Cotton is the big news maker today. With cotton prices pushing limit higher today and options showing limit higher moves for the at least a couple more days, that is surely to get the attention of southern producers who have favored grains and oilseeds in the recent past. “I think with cotton prices surging to this level. There was talk early on that guys didn’t have equipment to plant a lot of acre, but the latest studies now that they can pay for the equipment with one year’s production,” he says.
 
As for soybeans, he believes there will be more acres than many people are expecting due to the increase in winter wheat seedings this fall. “I’m not certain we’ve accounted for all the second crop soybean acres because of the large number of wheat acres.”
 
Technology on the soybean side will also come into play, he believes. He says seed companies have dedicated significant money to soybean genetic research and that is beginning to pay off in yields. “I know the national average doesn’t show it because we’ve had some issues in some spots. Yields may be higher than most people are estimating, so I’m not as crazy bullish on beans as some others are.
 
“I’m more bullish on corn because of the domestic demand. Demand is off the charts. A lot of people want to compare corn production to 1995-96 markets. I don’t see it because of ethanol. With us being the world’s largest exporter of ethanol now, even over Brazil because of the price of sugar and the dollar being weak, we have to remain the world leader in ethanol. With that said, I think you’ve got a bigger chance of corn pushing higher.”

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