Good morning friends
Corn (H17)  362’0  +3’4
Soybeans (H17) 1061’2   +15’0
Chi Wheat (H17) 430’0   +4’0
KC Wheat  (H17)  451’2    +2’2
Cotton (H17) 72.54   +.27

Anytime I leave for a vacation, I always expect chaos in the markets.  While “chaos” may be a little heavy of a term for the recent price action, the up move in soybeans certainly has my attention. The long weekend saw rains in Argentina turn into more flooding, which has caused private analysts to start to write down yields below where the USDA has Arg production near 57 MMT.  I am hearing some folks say with the expected acreage loss, we could see 48 MMT.  A 20% loss in Arg yields should keep beans on bid for a good while.  Sunday night price action has the shorts running for the hills as old crop ramps over new crop and 17/18 Nov bean spreads pop back up to recent highs.  Watch Nov 17-18 bean spreads, if they would take out the double top here, we could easily see front month beans take a run at 11.00.

The US Dollar Index is making headlines this morning for its severe selloff, adding to the correction that we have seen as the inauguration approaches.  Trump has been talking about the USD in recent days and the issues that could cause problems for US companies trying to compete with the emerging markets (China).   Adding to the USD weakness were comments from Chinese president Xi Jinping at the World Economic Forum in Davos in which he defended globalization and free trade.   It seems inevitable that trade relations between the two largest economies in the world will be strained moving forward which is dollar negative. The Russian Ruble is trading back below 60:1 against the USD this morning, the second time it has poked below the 60-handle since July of 2015.  As I have mentioned before, wheat producers need to be rooting for a stronger Ruble.
ANYONE WITH CORN TO SELL BY THE MARCH DELIVERY SHOULD LOOK TO PLACE HEDGES OR LOCK IN PRICE ABOVE 370 MARCH. 
Reuters reported Chinese buyers have canceled up to seven cargoes of ethanol due to arrive by the end of March as it looks likely the countries 5% import tax on ethanol will revert back to 30%.  While no official announcement has been made, ethanol was not on a list of products receiving preferential 5% duties in 2017, leaving most traders to assume the tariff would head back to 30%.    According to Reuters, domestic ethanol in China amounts to around $2.16 per gallon vs. US ethanol quoted at $1.46, but when a 30% tariff and freight are added in the import margin is erased.  China was one of the largest destinations of US ethanol in 2016 with the country taking 179.1 million gallons of US ethanol Jan-Nov 2016.
Cotton markets are slightly higher as the charts flag sideways.  The USDA report from last week was bearish in my opinion, sparking little talk about better demand down the road.  The record long position remains, which is good for bears given the potential for a selloff but does reinforce the bullish commodity story given the data and the lack of liquidation. The wheat acreage coming in so low on Thursday shoould have cotton bulls worried.  Those wheat acres will be switched to something, I expect cotton to pick up its fair share.
This week will be dominated by the Trump inauguration along with the talk about trade war from Davos. Remember, its a holiday week so the reports from USDA will be pushed back one day. We get some USDA livestock data at the end of this week but other than that, its probably weather/dollar watching when it comes to the row crop picture.  Expect outside market volatility this week as the world prepares for Trump to take his place as the leader of the free world.